Thursday, December 14, 2006

Human Capital Reporting - Don Taylor

Don Taylor has posted an interesting discussion of the state of human capital reporting. A very interesting post/article and quite thought provoking, and some useful references too. I agree that the lack of real metrics is a big limitation in moving the perception of people value in business. Our research also shows that most organisations do not even understand their basic data very well, let alone be sophisticated enough to really understand added value in either performance or human capability.

But even if the lack of metrics is a problem (which it is), I do not believe it is the cause of the problem, just an effect. The real challenge is in getting business leaders to truly understand the relationship between human capital (if that is the term we want to use) and business performance - both current and future.

In the majority, business leaders are simple animals. Their behaviour (as opposed to rhetoric!) is largely linked to what will drive results. If they definitely know that investment in people improves bottom line results more than cutting costs or increasing marketing then they will do it more often. Unfortunately they don't really know that, although plenty of people may try to tell them. In this sense, the human capital debate is in more of the "faith" business (like marketing in some sense) than it would like to be.

Metrics and models help to develop the discussion and start to provide a robust basis for moving from faith to evidence. But this is a long road, and, at least in the short term, basic is better!


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