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Lending weight to people Measurement

first_imgLending weight to people MeasurementOn 1 Jul 2003 in Personnel Today Related posts:No related photos. It is now more crucial than ever before that in-house development professionalscan account for skills and competencies. Alison Thomas explains why  Do you believe that people are a company’s greatest asset? Of course you do,and your board probably agrees. But how does this translate into action?”Most organisations pay lip service to the idea, yet few measure it ormanage people in a way that allows them to give of their best,” saysDenise Kingsmill, chair of the DTI’s Accounting for People Task Force. Its aim is to come up with a framework which will help firms to giveinvestors and other stakeholders an accurate picture of their human capitalmanagement, and hence their potential for sustainable growth. Since May, thegroup has been gathering the views of interested parties, including readers ofour sister magazine Personnel Today. Now the time has come to draw conclusionsand the task force will report to Patricia Hewitt in the autumn. So what sort of measures is it likely to recommend and where does trainingand development fit in? The consultation document identifies motivation, commitment, knowledge andskills as key drivers of superior business performance and suggests a range ofindicators such as recruitment, retention, diversity, fair employment andremuneration. Training and development also features, including the matchbetween skills acquired and business objectives. “Our workforce is very underskilled compared to our major Europeancompetitors so training is extremely important. It is vital that companiesspend more time identifying and filling the gaps,” says Kingsmill. Standard metricsHuman capital may be too valuable to be ignored any longer, but defining thespecifics is not easy. “We strongly support the substance of theinitiative. What gets measured happens,” says Margaret Murray, head of learningand skills at the CBI. “However, there is such diversity of practice, wedon’t believe standard metrics are feasible and are urging the task force to godown the road of voluntary qualitative reporting.” Sharon Copland-Jones, personnel director of Shepherd Construction, agrees.”It will raise the agenda and that has to be good,” she says.”But what should we measure? Is stability relevant to success, forexample? It is in our industry, but that’s not true for everyone. We must alsobeware of churning out figures. Measuring is not an end in itself, it is ameans of making other decisions.” Linda Holbeche, director of research, Roffey Park, is even more ambivalent.”This is a positive way of putting the pressure on directors and managersat all levels to sit up and pay attention, so the principle is sound,” shesays. “In practice, I am not quite sure how we arrive at something thatwill command wide acceptance. Most theorists suggest it is virtually impossibleto isolate any individual human resource practice such as training, exceptwhere it’s crystal clear that employees embark on a programme with no skill andemerge proficient. What interests city analysts are the broader issues, likethe calibre of leadership, innovation, intellectual capital and successionplans. These are much more difficult to evaluate and very context-specific.” The task force is fully aware of these concerns. “Lots of people havetold us they would like reporting to be mandatory but to have a relativelyblank canvas,” says Kingsmill. “We have to tread a careful linebetween some sort of tick-box approach – which I think would be disastrous –and producing a bland model. So we are not going to be prescriptive, but willtry to come up with some best practice guidelines.” One fear she would like to allay is that this could end up as abureaucratic, number-crunching exercise. Instead she wants to encouragecompanies to set metrics in context, explaining what lies behind them and whataction is being taken. It is not enough to report on training expenditure or hours of training peremployee, for example, what really matters is how organisations define theskills and competencies necessary for success and how they identify theircapability within these. “They must ask themselves, ‘What do we need? Do we have it and if so,where? What do we have to do to align these capabilities with the corporateobjectives of the organisation?’ It requires real strategic understanding ofthe contribution training makes. Not just inputs or even outputs, butoutcomes,” says Hibachi. One firm which uses training as the driver for business is Telford-basedoffice supplies company, Lyreco. “In our market everyone has bigwarehouses and powerful software. We even buy the same products from the samesuppliers, so our only unique selling point is our people,” explainstraining and development director Ian Lawson. Lyreco makes every effort to improve skills and effectiveness and to ensureemployees are well cared for, as without commitment they will not put theirtraining to good use. Lawson also encourages his team to see themselves asbusiness consultants who analyse business problems and identify how trainingand development can make a difference. Interventions are measured against objectives such as productivity,reduction in accidents and absenteeism with some remarkable results. Lawson isalso a great believer in the power of competition to focus the mind and thecompany has several people development awards to its credit. Evaluation skillsNational Training Awards, Investors in People, return on investment –training departments have ample opportunity to hone their evaluation skills.Will this experience help them to make a meaningful contribution to externalreports? Angela Baron, adviser on organisation and resourcing at the CharteredInstitute of Personnel and Development (CIPD), hopes that it will. “A lotof excellent work has been done to demonstrate the value of training and thepayback. In relation to other areas, it is fairly mature and we naturallywanted to include it in our own framework,” she says. This is a reference to Human Capital: External Reporting Framework, whichthe CIPD published last month. Based on research published last November, itproposes five core categories for measurement, including learning anddevelopment, backed up by indicators such as spend on workplace learning andcompetency levels. Baron is keen to stress that there is no single formula thatcan apply in all circumstances, citing training as an illustration. “Companies in highly specialised, fast-changing fields such as IT arelikely to invest heavily in off-the-job training,” she says. “Inother sectors, the strategy might revolve around workplace learning, thecoaching and mentoring skills of managers, personal development plans andpromotion opportunities.” Baron also points to the problem of multipleinterpretations. Coming up with measures is only the beginning and you needconsiderable expertise to interpret them so as to give a true and balanced pictureof the organisation, she says. One question raised by the Accounting for People Task Force is thedesirability of incorporating of reports on human capital management into theCombined Code on Corporate Governance and/or Operating and Financial Reviews(OFRs). There is no suggestion that such reports should be compulsory, however,and it is hoped that as more businesses adopt the practice, measurement willbecome increasingly sophisticated. Murray approves of this evolutionary approach. “It shouldn’t happenovernight. It should be driven by the market,” she says. Baron agrees. “I think there is going to be quite a lengthy period ofdevelopment as companies start reporting on their human capital and come torealise the benefits,” she says. The revolution may not be for tomorrow,but one thing is sure – for the first time ever, HR and training are at the topof the agenda. “It’s an exciting time,” says Baron. “We now haverecognition that people create value but it’s up to us to grasp the opportunities,to be at the forefront of providing, evaluating and interpreting thedata.” Lawson is equally enthusiastic. “It may not be easy, but you’ve got tobe positive,” he says. “If apartheid can end and the Berlin Wall cancome down, surely we can get a measurement system in place.” The task force brief– Look at the performance measurescurrently used to assess investment in human capital– Consider best practice in human capital reporting, and theperformance measures that are most helpful in reports to stakeholders– Establish and champion the business case for producing suchreports– Produce a final advisory reportB&Q reaps rewards of peoplepolicyIf proof were needed that measuringhuman capital management brings rewards, look no further than B&Q. Since2000, it has evaluated staff engagement using Q12 and correlated scores withcustomer feedback and metrics such as staff turnover, shrinkage andcontribution to profit.The results prove conclusively that rising engagement has adirect effect on key business indicators. “It has given the boardconfidence that investing in people has bottom line impact,” says personneldirector Mike Cutt “For the last two years it has agreed to a 60 per centincrease in the training budget, which is enormous, especially for a big maturebusiness such as ours. The human capital management project was not the only factor topersuade them, but it certainly put them in a positive frame of mind.” Comments are closed. Previous Article Next Articlelast_img read more