What is HCM?

People are the biggest cost for most organisations. And the people currently hired are the principal source of value creation. The people employed – the skills they have, how they are paid, how they behave, their attitudes, values and ambitions – have a huge impact on the way in which customers respond to the organisation and on performance.

Despite this, the way people are managed is not always a high priority for executives. For historical reasons, organisations are focused on assets that are owned by the business – technology, intellectual property, and so on – rather than the people who are hired – the human capital. But in most modern organisations, there are more losses and gains to be realised from changing the way human capital is measured and managed, than from buying, selling or managing fixed assets. The Payroll World Human Capital Forum is a practical forum based on sharing ideas on approaches that are proven to be effective in people management.

Can we measure value?

The emphasis of the forum will be upon pragmatic, employer-based solutions that have been used and demonstrated to show an improved approach to management based on a better understanding of the workforce, using people-related measures. Research indicates that the following principles can be used to create a strategic approach to people management, based on workforce measures:

• Deploying a mix of quantitative and qualitative measures – for example, monitoring the turnover rate of higher performers, and also the employee engagement level through opinion surveys.
• The principle that human capital measures inform executive decision-making alongside other measures, and that judgement is still required.
• The importance of recording indicators that are relevant to the business, rather than relying solely on those that are historically, or most easily, recorded.
• Measures have to take account of the dynamic and changing nature of a business, with care taken to interpret and identify trends.

It doesn’t have to start with an expensive, corporate-wide intellectual capital method implemented by consultants. It can begin with straightforward measures such as staff turnover, absence, or correlation of bonuses to performance, combined with intelligent interpretation of what these indicators are saying about the business. This is exactly what some founder members of the forum have done.

Just as accountancy has seen a development from double-entry book-keeping to financial analysis, so people-related measures can evolve to become a powerful organisational tool – and potentially even more valuable than accountancy, given the dominance of the value that resides in the employee population, especially in the services sector.