Preface

Somewhere in nearly every organization’s annual report, C-level executives remark that employees are “the most important asset” in the organization. Until recently, that’s where notice of this incredibly valuable asset stopped. The executives believed that accurate measurement of the management of this asset was impossible. Now most know it is possible, but find that their organizations are not adequately equipped to measure the performance of the department with the greatest responsibility for that asset: Human Resources. Making informed decisions regarding critical Human Capital-related issues like the acquisition, development, and deployment of employees is of paramount importance to the ongoing success of any organization.

Many areas of executive decision making are indeed supported by sophisticated, time-tested tools and methodologies. Finance and marketing are now considered to be hard core sciences. The systems in place make use of a wide variety of metrics gathered internally and externally on inputs, processes, and outputs relevant to the business of the organization. The framework underlying these systems is relevant to almost every part of the organization. So why then is the one asset base of any organization without which it cannot exist—its employees—allowed to escape this measured scrutiny?

What is needed is an approach that integrates the measurement of Human Capital assets (and not just the cost of their acquisition) into the decision support models used by finance and operational executives. The Finance department is responsible for providing the tools and methodology related to implementing strategies that support the mission and objectives of the organization. So too, the Human Resources department should be responsible for the development of tools and methodologies relevant to Human Capital assets and their place in the organizational mission, objectives, and strategy. This represents a significant new level of responsibility for the Human Resources department and those who work within it. Along with this additional responsibility will come greater accountability and an opportunity to elevate the perception of Human Resources to the science it is.

To make matters easier, many of the measurement tools needed by Human Resources already exist and simply await implementation. We know that C-level executives want to know more about what Human Resources is doing to support the overall performance of the organization; metrics, the right metrics, can quickly and easily show them that their statement to shareholders about the value of their employee assets is completely accurate.

This book outlines the ways, means, and actual metrics that can transform the perception of Human Resources in any organization. Not just a cost center, Human Resources is a critical player in the improvement of organizational performance when it comes to the management of Human Capital. When metrics are used as a means of measuring and improving the performance of Human Resources in the mission, objectives, and strategy of an organization, it becomes a clear contributor to the bottom line. Case studies from top organizations complement the provided framework with solid examples of what works, what doesn’t work, and how to learn from the process. If followed, the counsel of this book will give you the necessary tools to improve work, people, and performance in your organization.