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Human Capital Measurement
Approaches, issues and case studies

Robinson D, Hooker H, Mercer M
Report 454, Institute for Employment Studies, August 2008

a study supported by the IES HR Network

This HR Network report is one of the outputs from an action learning project that took place between February 2007 and March 2008. The report describes the process we followed, summarises the themes and issues that emerged, and suggests a practical, workable approach to people measurement that yielded results for several participating organisations. It also contains the results of a scan carried out by IES to assess human capital measurement progress in the UK and abroad, and (probably of particular value to HR practitioners) case studies describing how nine of our participants approached people measurement within their organisations.

Our approach was to run a series of workshops, at which participants heard presentations from companies that had already made great strides progress in people measurement, and received inputs from IES (reports on relevant research and the results of our external scan). They discussed what they wanted to achieve, and the issues they were encountering, and reported on progress. The balance of external/IES input and contributions from action learners shifted over the course of the year, as participants shared what they were doing back at their workplaces to develop and implement their new people measures.

An array of issues arose during the course of the project, and these were debated by the group during workshop discussion sessions. Three of the most important are:

• Terminology: Hardly anybody within the group used the words ‘human capital’, instead preferring to use terms such as ‘people measures’, ‘workforce intelligence’, or ‘key people indicators’. The general consensus was that ‘human capital’ was a poorly understood concept and would be meaningless to most managers.
• Context: Although every participating organisation had some basic measures in common (eg headcount, absence rates, employee turnover), there was no mileage in developing a standard set of measures for everyone to use. Every organisation differed in the ways in which they identified, used and disseminated their key measures, and what was very important in one context might be much less relevant in another.
• Buy-in: Support from the top, and manager engagement, was crucial to success. The trick here seemed to be to find out what was important for the top team, and present it straightforwardly with some pointers to help interpretation. Once the attention of top managers had been captured, the questions that they asked typically led to managers throughout the organisation becoming involved. Unfortunately, top teams sometimes lost interest or decided that resources could be better deployed elsewhere; two private sector companies had to pull out of the project when their teams were disbanded.

Human Capital Measurement: Approaches, issues and case studies, Robinson D, Hooker H, Mercer M. Report 454, Institute for Employment Studies, 2008.
ISBN: 978-1-85184-398-5. £30.00. [PDF price: £15.00]

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