Human Capital Analytics

Human Capital Analytics describes the process of measuring human capital processes from recruitment to retirement and all people management processes in between.

This definition means that Human Capital Analytics measures, not manages, human capital. Human Capital Analytics quantifies gaps in the management of existing processes to more precisely identify opportunities for improvement where limited financial, physical and human resources exist.

Benefits of Measuring Human Capital Processes

There are several significant benefits associated with the measurement of human capital managed processes. The most significant include a series of strategic and tactical benefits:

Strategic:

  • Catalyst for creating the high performance workforce that will increase productivity, quality and customer satisfaction while decreasing employee turnover, business risk, and cycle time

  • Significant driver of financial results: increased revenue and decreased costs, providing the opportunity for Human Resources Departments to credibly point to their efforts as value-added

  • Key contributor to wealth creation / stakeholder value: market value exceeding book value

Tactical:

  • identify gaps that exist in the management of the human capital process

  • Ensure the management of the human capital process is functioning as designed

  • Steer limited resources (financial, physical, human) toward improving the human capital process that needs it the most

  • Improve outcome results of human capital processes (ex. analyzing exit interview data at a tactical and strategic level can result in less employee turnover and better recruiting processes)
Methodology: The Human Capital Process Classification Scheme

In 1992, several founding members of the American Productivity and Quality Center’s International Benchmarking Clearinghouse created a Universal Process Classification Scheme comprised of 13 core business processes and over 100 sub-processes that apply to almost any business regardless of geography, size, or industry. Within this framework, one of the 13 core business processes the Center explored is:Develop and Manage Human Resources.

KnowledgeAdvisors has adapted the Develop and Manage Human Resources scheme in the creation of the Human Capital Process Classification Scheme, which contains 4 processes and 18 sub processes and we provide an overview of below:

  1. Manage Deployment of Personnel
    1. Forecast Workforce Requirements
    2. Recruit, Select, and Hire
    3. Succession Planning
    4. International Assignment
    5. Mobile Workforce
    6. Employee Turnover
  2. Manage Competencies and Performance
    1. Competency Management
    2. Performance Appraisal
  3. Develop and Train Employees
    1. New Hire / On-boarding
    2. Learning and Development
    3. Coaching and Mentoring
    4. Leadership Development
    5. Knowledge Management
  4. Motivate and Retain Employees
    1. Compensation and Benefits
    2. Employee Satisfaction
    3. Employee Engagement
    4. Work/Life Balance
    5. Workforce Diversity

The aforementioned 4 processes and related 18 sub-processes allow all organizations, regardless of geography, size or industry, to assess the completeness of their human capital management. It is from this mutually exclusive/collectively exhaustive framework that allows KnowledgeAdvisors to measure human capital managed processes.

Human Capital Measurement Process Flow


The Human Capital Measurement Process Flow begins with a human resource executive understanding the business strategy. This is the driver of all future decisions. It ensures from the beginning that any human capital decisions will be aligned with the organizational business strategy.

After reviewing the business strategy, the human resource executive should build a workforce development plan. The plan should achieve the strategic business goals through the desired workforce.

The workforce must then be calibrated to achieve the workforce development plan. This is done through four major enablers who formulate the previously discussed Human Capital Process Classification Scheme: Manage Deployment of Personnel, Manage Competencies and Performance, Develop and Train Employees and Motivate and Retain Employees. There are sub-processes beneath these four major enablers and for each there are measurement tools in the form of templates, standards and technology to measure these processes to ensure they are successfully managed and achieving their intended purpose.

The direct result of solid human capital measurement are effectively managed processes that yield a high performance workforce. This is a workforce that has the following attributes when measured:

  • Increased Productivity

  • Increased Quality

  • Decreased Risk

  • Decreased Employee Turnover

  • Decreased Cycle Time

If these metrics are moving in the right direction the organization is achieving optimized business results. The most significant results tie to the financial statement, primarily the income statement. If measured, the revenues have increased and the costs have decreased yielding higher margins. The results of healthy financial performance produce the ultimate effect of human capital value: wealth creation. Wealth creation is increased stakeholder value. Stakeholders include the following:

  • Taxpayers (for public sector organizations)

  • Shareholders (for corporations)

  • Employees

  • Partners

For more, please see our white paper: icon White_Paper_Human_Capital_Analytics.pdf (296 KB)