HR Measurement again (a bit of compliance in there too)

For sometime I've been interested in the the HR analytics space. I spoke at the SAP BI and Analytics conference last year on this, and I will probably talk more about it on the european HR circuit this year.  There is lots happening in the analytics product space at SAP, but I won't dwell on that here. (where is SAP's channel 9 guy talking about the latest new toys??) I guess you will need to get to Sapphire…

CFO Europe has some interesting articles on Human Capital Measurement in the March 2006 edition. Les Hayman, the former head of HR at SAP, and now SAP Ambassador (now that is a cool title) often talks about the need for people related measures to be included in financial reporting.

It looks as if legislation (or as the article notes regulatory diktats) will force more rigorous disclosure of non-financial indicators. The IASB, for instance, looks likely to "raise the bar" on human capital disclosure. (The IASB are the grand fromage of the accounting standards world)

PWC also notes that investors are more interested in Human Capital measures than ever before. This stands to reason. When I read blogs and so on about early stage VCs, they harp on about the strength of the team. When you are talking about 5-6 people you can look them in the eye, but when it is a team of thousands, you can't. It doesn't mean that measuring it loses importance though.

The article also mentioned Valuentis (This sounds like a new disease but it isnt). They are a UK based consulting firm. they have put together a very interesting framework for measuring human capital. The whitepaper is worth a read.

Richard Phelps, now at Saratoga is one of the lead thinkers on HR measurement in the UK.

I have been very impressed with the Hackett Group, but I'll save that for another blog.

I've also read about the work of Christian Scholz, here in Germany. One our key  SAP HR partners, Pecaso, has been doing some work to access SAP data to map to his models of HR value. there is an article in SAPINFO about it. I follow up on this and find out some more details.

I have mentioned Peter Howes from Australia before, But he is the best guy I have heard on the HR measurement stuff. He deserves a lot more recognition.


This is Scholz's formula.  I think many HR folks will run when they see this…

Stricter HR reporting will be good for SAP business, as it will put pressure on department centric systems in favour of groupwide systems that faciliate reporting. But I'm not sure how many HR people are ready for a world of measurement and reporting. It is significant that this article is in a finance magazine, not an HR one. Perhaps it will be the accountants, rather than HR that drive this though. (Maybe we should do HR analytics demos to CFOS instead of HR directors??)

I like this stuff, but I'm baised. The more significant people data becomes to the broader business outside of the HR silo, the better it is for SAP's business. I want people data quality and accessablity to be high on the CFO's and the CIO's agenda. The more mission critical the data becomes, the  more likely it is to be on an SAP platform. That is what we are good at. Building applications to help deal with the complex, messy world that  is business.


2 thoughts on “HR Measurement again (a bit of compliance in there too)”

  1. I’m firmly of the belief the ‘stricter reporting’ approach is entirely wrong. It smells like finance muscling in and if my experience is anything to go by, it always seems to raise hackles, before anyone walks in to HR.

    I do believe HR or rather HCM professionals do want to measure, but it is a question of contextualising the value of human capiotal so the measures make sense to both finance and HR. That’s a tough call though we’ve been having some interesting discussions around this.

  2. I’m seeing a real interest in HR-like measurement coming from outside of the HR function. The controllers are realising that measuring intangibles is becoming more and more important. Enterprise performance management is also beginning to look at the people side. finally. Maybe this could be seen as finance muscling on HR, but I think finance functions are politcally stronger than both HR and IT at the moment. (I lot more technology investment decisions are finance driven today than a couple of years ago)

    At the same time, within HR, there is a much greater readiness to measure operational processes, especially from those organisations doing shared service.

    The best HR functions realise that the better information they have to drive business cases, the more likely they are to be seen to add value. I’m seeing the emergence of a financially literate HR professional. This person demands a level of data quality and analytical precision that has been lacking in the past.

    They expect real time answers to questions like if 10% of our engineers take early retirement, how will that impact our production capabilites in three years? Do we have a problem retaining high potential middle managers? Does better training reduce call centre turnover?

    At lot of people are anti-more compliance, I’m not, if it helps create better data and processes to make better business decisions. A stricter HR reporting climate would improve HR data quality, much as has happened in finance. That can only be a good thing a business aware HR person.

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