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Human Capital Measurement Model

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The basis for Intelligence about People by Theo Veldsman and Penny Abbott

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Human Capital Measurement Model

  1. 1. Theo Veldsman and Penny Abbott
  2. 2. Context of development of HC Measurement Model: SABPP HR Standards and Audits
  3. 3. Context of development of HC Measurement Model: SABPP HR Standards and Audits
  4. 4. Context of development of HC Measurement Model: SABPP HR Standards and Audits Through these interlocking initiatives, we can become a talent driven country
  5. 5. Design team Anthea Saffy Anglo American Platinum Deon Pieterse ARM Elsabe Bell Britehouse Gerhard Olivier Hebron Gregory Lee WBS Ian Rothmann Afriforte Ina Rothmann Afriforte Maropeng Sebothma SARS Mmabethe Baloyi EOH Mpho Magau UJ Paul Pretorius Hebron Penny Abbott SABPP Reuphillan Kasselman Forte Advisory Services Rita van Kraayenburg ARM Theo Veldsman UJ Tracy Harper EOH Zia Attlee Knowledge Resources
  6. 6. “Intelligence” Attaining information of value
  7. 7. Why do we need better Human Capital intelligence? People play central role in knowledge economy Disruptive innovation through people is key to sustainable future We continue to question return on investment in our human capital - we need to know if we are a going concern in relation to people dimension of our organization  Without good intelligence, one cannot make good decisions: are we improving, are we allocating resources properly, are we focusing energy and money on right things, how do we compare?
  8. 8. Having a HC Measurement Model is: Good practice discipline for all South African employers in same way as financial, risk management and other such frameworks Intended to encapsulate “state of the nation” in human capital terms at national, organisational and operational levels Based on clearly defined measurement domains A guiding and aspirational framework, which can be customized/localized to fit different sectors and/or strategic directions by assigning different weightings to measurement domains Intended to enable all employers to measure, and therefore understand, critical aspects of their human capital in order to implement their organisational strategies and objectives successfully and effectively Vision for HC Measurement Model
  9. 9. NATIONAL Human Capital Confidence Index – is SA “a going concern” in terms of Human Capital? ORGANISATIONAL/ ENTITY OPERATIONAL Three levels of HC Reporting Board Level Human Capital Report – is our organisation “a going concern” in terms of Human Capital? Management reporting on core metrics along the HC Value Chain (HR Management Standards)
  10. 10. Value of using HC Measurement Model Simplifies complexity of measurement components and, over time allows for establishing connections between them Enables us to talk same language Informs HC discussions by explicating mental model and guides conversation to focus on right things Enables comparability
  11. 11. Design specification for HC Measurement Model Each measurement domain should clearly link to performance and enable evidence based decision making Reporting should always be on comparative basis, internal or external, against past periods or against appropriate benchmarks to give “norms” or “targets” Metrics should be highly focused on few key metrics (80/20 principle) Metrics reported at higher levels should follow clear “drill down” hierarchy to metrics at lower levels Allow for predictions and “What Ifs”, allowing one to take pro-active actions Follow integrated reporting principles
  12. 12. Five HC Measurement Domains INPUT •Human Capital Availability INPUT •Human Capital Wellbeing ACTIVITY •Human Capital Cost, Investment and Growth OUTPUT •Human Capital Contribution OUTCOME •Human Capital Wealth Creation 1 2 34 5 BUSINESS MODEL OF GLOBAL INTEGRATED REPORTING INITIATIVE (GIRI) Outcomes measure quality and impact of outputs Outputs are measurable value added to organisation as result of effective human capital processes and activities (combination of inputs and activities) Activities convert human capital inputs into valuable outputs through human capital processes and actions Inputs are basic components of human capital resources measured through fundamental data about workforce Supporting excellence in Human Capital Management through sound measurement and analysis
  13. 13. Domain Definitions INPUT •Human Capital Availability INPUT •Human Capital Wellbeing ACTIVITY •Human Capital Cost, Investment and Growth OUTPUT •Human Capital Contribution OUTCOME •Human Capital Wealth Creation 1 2 34 5 Supporting excellence in Human Capital Management through sound measurement and analysis Right people available at right time to do job, relative to present and future requirements of organisation State of work-related health and well-being of employees. (WHO 7 components of wellness) Resources allocated / activities undertaken to build and maintain employees’ ability to deliver against requirements People producing measurable value add to performance, innovation and success of organisation. Impact of Human Capital outputs on stakeholders
  14. 14. Context matters Cycle of measurement and reporting takes place within internal and external context Internal context is shaped by organisational strategy and design External context is shaped by various drivers, e.g.: Legislation Governance standards Socio-economic-political-cultural trends Research driven evidence in the HR Management profession Therefore metrics chosen must be appropriate for context. Set of metrics in this framework need to be appropriate to South Africa However, domains of measurement remain constant across contexts
  15. 15. National Human Capital Confidence Index Human Capital Availability (Input) • What is match of supply and demand of economically active people (skilled and unskilled) in country? • Where are specific under-supply and over-supply situations? Human Capital Wellbeing (Input) • What health and wellbeing issues impact on general productivity potential of economically active population?
  16. 16. National Human Capital Confidence Index Human Capital Cost, Investment and Growth (Activity) • What are we doing in terms of learning and development in school and post-school education system? • How much are we spending on whom for what in post-school education system? • What are we doing and how much are we spending on job creation efforts? • What health and wellbeing interventions are having positive impacts on productivity? Human Capital Contribution (Output) • How productive is employed population? • What is level of innovation? Human Capital Wealth Creation (Outcome) • How do different sectors of the employed population share in wealth created in the country? • How attractive is country to international talent?
  17. 17. Board level Human Capital Index Human Capital Availability (Input) • Do we have the skills we need to execute our strategy? • Do we have people who can fill critical roles in the planned future? Human Capital Wellbeing (Input) • What is the state of health and wellbeing of our employees? • Have we identified and are we dealing with critical health and wellbeing risks among our employees?
  18. 18. Board level Human Capital Index Human Capital Cost, Investment and Growth (Activities) • What are we prioritizing in terms of the human capital value chain relative to our strategic priorities? • What are we spending/investing on these activities and how is this allocated across various employee groupings? Human Capital Contribution (Output) • What is the level of performance overall of employees and of different employee categories? • What impact do learning and development interventions have on the overall competence of the workforce? • Do employee innovations add value & support/challenge our strategic direction? • How does our human capital contribute to our customer satisfaction levels? • Do we comply to legislation – for example, Occupational Health and Safety, Employment Equity?
  19. 19. Board level Human Capital Index Human Capital Cost, Investment and Growth (Activities) • What are we prioritizing in terms of the human capital value chain relative to our strategic priorities? • What are we spending/investing on these activities and how is this allocated across various • employee groupings? Human Capital Contribution (Output) • What is the level of performance overall of employees and of different employee categories? • What impact do learning and development interventions have on the overall competence of the workforce? • Do employee innovations add value and support/challenge our strategic direction? • How does our human capital contribute to our customer satisfaction levels? • Do we comply to legislation – for example, Occupational Health and Safety, Employment Equity?
  20. 20. Board level Human Capital Index Human Capital Wealth Creation (Outcome) • How have we grown our intangible assets? • What is our image/reputation as an employer? • How fulfilled are our employees? • Do the stakeholders feel that they share fairly in our wealth creation?
  21. 21. Where to from here? VALIDATE MODEL OPERATIONALISE – SET UP DATA COLLECTION AND REPORTING MANAGEMENT SYSTEM BUILD TECHNOLOGY PLATFORM ROLL OUT
  22. 22. Where to from here? POTENTIAL TIME LINES • FIRST NATIONAL HC CONFIDENCE INDEX REPORT JANUARY 2017 • BOARD LEVEL REPORTING PACKAGE MID 2016 • OPERATIONAL REPORTING PACKAGE MID 2016 • BENCHMARKING SYSTEM ON STREAM JANUARY 2017
  23. 23. Conclusion An effective HC Measurement Model will give us an accurate, timeous people intelligence to become world class in human capital management at national, organisational and operational levels

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