rience, education, and training.” This book [subtitled Human Capital Accounting for the
Knowledge Economy] explains why it is possible, in terms of economic theory and accounting
practices, “to implement new human capital information and decision-making systems.”
HOW TO USE THIS LEADERSHIP TOOL
“All organizations now say routinely, ‘People are our greatest asset.’ Yet few practice what they preach,
let alone truly believe it.”
—Peter Drucker, THE NEW SOCIETY OF ORGANIZATIONSEffective understanding and use of human capital is closely aligned with creating an effective
organization. Every organization needs to understand and realize a return on its human capi-
tal. Yet, just as with bricks and mortar investments, no one strategy will work for every orga-
nization. The big-picture model presented here was inspired by the work of Friedman, Hatch,
and Walker in their book, Delivering on the Promise.
WEB WORKSHEET
SECTION 13 TOOLS FORLEADINGPERFORMANCE 419
❑ Clarify your overall direction, goals, and
strategy. Include and integrate human
capital requirements.
❑ Consider using a balanced scorecard.
❑ Highlight the values underlying the human
capital strategy.
❑ Use systems thinking to integrate and
highlight trade-offs.
[☛2.1 Systems Thinking, 2.5 Values, 2.8
Balanced Scorecard, 3.1 Strategy]
❑ Appraise the current human asset base;
assess investment needed to support the
human capital strategy.
❑ Use impact measures like the cost of
replacing a person: impact of loss of
intellectual and skill assets.
❑ Involve stakeholders (have the process
mirror your values as well as expected
outcomes).
[☛2.8 Balanced Scorecard, 5.7 Stakeholder
Groups ]
❑ Design systems and programs that support
the human capital strategy (e.g.,
recruitment, development, training,
succession, incentives).
❑ Use systems thinking to integrate and
highlight trade-offs.
❑ Involve and communicate with
stakeholders.
[☛2.1 Systems Thinking, 4.1 Organizational
Design, 8.3 Organizational Communication]- Balanced
Strategy
Clarification - Human Capital
Impact Appraisal - Design/
Redesign of
Human Systems
Some things to do Your action plans