Human-Capital Management – HCM
Maximizing Your Return on People
New tools can show which investments in employees are driving company performance now and which you should emphasize to advance your strategic goals.
Most traditional HR performances metrics-such as employee turnover rates, average time to fill open positions, and total hours of training provided-don’t predict organizational performance.
Organizations’ strengths and weaknesses in human capital management (HCM) can be assessed by monitoring the performance of HCM practices that fall within five broad HCM driver categories. In general, improvements or declines in organizational performance can be tied directly to improvements or declines in HCM practices.
The power of HCM improvements to drive performance can be seen in a diverse array of organizations from large manufacturers, public schools, and financial services firms. In each industry, HCM maturity scores are directly linked to a range of performance improvements.
Just as Six Sigma techniques involve continuous refinement of processes base on feedback, the HCM evaluation approach is used iteratively: An initial assessment indicates the HCM changes that should positively affect performance; performance responds to the changes; HCM practices are reevaluated, leading to further rounds of suggested changes; and so on. Note that as organizations and their environments evolve, the key HCM factors that drive performance may shift. Thus, it’s important to regularly measure and adjust HCM practices and correlate them to organizational outcomes.
By using rigorously designed surveys to score an organization on the range of Human-Capital Management practices across the five major categories, it’s possible to benchmark an organizations HCM capabilities, identify HCM strengths and weakness, and link improvements or backsliding in specific HCM practices with improvements or shortcomings in organizational performance.