E. External perception
- Job applications: vacancies.
- Job offers: job acceptances.
Measuring human capital
The points that should be borne in mind when measuring human capital are:
● Identify sources of value including the competencies and abilities that drive busi-
ness performance.
● Analyse the relationships between people management practices and outcomes
and organizational effectiveness.
● Remember that human capital measurement is concerned with the impact of
people management practices on performance so that steps can be taken to do
better. It is not just about measuring the efficiency of the HR department in terms
of activity levels. It needs to be value-focused rather than activity-based. For
example, it is not enough just to record the number of training days or the expen-
diture on training; it is necessary to assess the return on investment generated by
that training.
● Keep measurements simple – concentrate on key areas of outcomes and behav-
iour.
● Only measure activities if it is clear that such measurements will inform decision-
making.
● Analyse and evaluate trends rather than simply record actuals – compare the
present position with baseline data.
● Focus on readily available and reliable quantified information; however, although
quantification is desirable it should not be based on huge, loose assumptions.
● Remember that measurement is a means to an end, not an end in itself. Do not get
so mesmerized by the process of collecting data as to forget that the data is there
to be used to support decision-making and generate action.
HUMAN CAPITAL REPORTING
Human capital reporting is concerned with providing information on how well the
human capital of an organization is managed. There are two aspects: first, external
reporting to stakeholders through, in the UK, the compulsory Operating and
Financial Review (OFR). The second aspect is internal reporting, which also informs
the leadership team and stakeholders generally about how human capital is being
Human capital management ❚ 47