Sort out what HCM is intended to measure

The key problem in the ongoing debate about the measurement of human capital management (HCM) is the lack of clarity in what we are trying to achieve (Personnel Today, 7 June 2005).

Unfortunately, the reporting of Paul Kearns’ Newbury Index Rating (NIR) fails to provide the clarity that is needed. There is absolutely no way that measures for maturity, strategy and value/performance of HCM (all measures of the HR architecture) can provide “the first universal framework measuring the value of staff” (requiring output measures for human capital).

The report also seems to suggest that the NIR provides an alternative to reporting in the Operating & Financial Review (OFR). However, the NIR does not provide the strategic information required in the OFR and, in any case, this would be putting the cart before the horse.

Any human capital index rating should depend on the success of reporting in the OFR, and not the other way around.

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These distinctions may sound pedantic, but they are important. Until we are clear about what we are trying to do, we will have no hope of establishing a common approach for doing it.

John Ingham
Head of HCM strategy consulting
Penna