Measure Your Way to Better Human Capital Management

By Desda Moss Jun 27, 2011
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LAS VEGAS—Want to show your value as an HR professional? Measuring the state of your HR operations is a good place to start, Kristie W. Evans, CEO/thought leader of HR Logistics, LLC in Raleigh, N.C., told attendees June 27, 2011, at her presentation at the Society for Human Resource Management (SHRM) 63rd Annual Conference & Exposition on “How to Measure Your Current State of Human Capital Management and Build Credibility.”

But before beginning such an assessment, Evans said, HR professionals should ask themselves what pressures are creating the need for such a project. “Is it something that’s been requested? Is it because of complaints? Have there been reductions in staff? An increase in work volume? A reorganization?

“Why you are doing it influences what and how you will measure your current state of HR management,” said Evans.

A lack of standardization of HR metrics, the sense that HR is an expense without demonstrated return on investment, and poor alignment of HR processes and business goals often result in HR leaders facing a credibility problem even before they’ve begun measuring HR’s current state, said Evans.

“You have to work doubly hard to be objective and to assimilate the information you receive. And you have to be ready to act on what you might find out.”

Building credibility as a business leader requires that HR create credible and consistent measurements that are relevant to the specific needs of the organization and that are supported by reliable data that can be replicated so that the impact of human capital management can be charted over time.

“Take something like employee morale that seems to be distant from the bottom line,” said Evans. “If you can show that low morale is dragging someone down to working at 50 percent of their capacity, you can link that to quantify that as much as half their salary is being wasted. That’s real money.”

It’s easier to get senior leaders such as chief executive officers and chief financial officers to accept your findings if they’ve been involved in the process along the way, Evans said. It’s also beneficial to give them an analysis of the risks inherent in maintaining the status quo. “Will it make the business obsolete?Create security or compliance risks? Deplete precious resources?”

The process should conclude with a final report to executives that summarizes the results of your study, outlines a plan of action and describes how the plan aligns with the business’ goals and long- and short-term strategies.

“Show them how the solution—the ‘future’ state—reduces expenses or increases profits. Don’t wait to be asked for information about the state of human capital management. Show your leaders that this is information they need to know.”

Desda Moss is managing editor of HR Magazine.

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