1. Session Plan 14 March 2013 The aim of the session is to :
Introduce human capital management
Our objectives are that we
Must consider Human capital measurement and Human capital reporting
Should examine examples of human capital reporting and then
Could consider practical implications of human capital management
Focus on general discussion of key themes brought out in the class – slides are for reference and pretty comprehensive – I may split the session into two depending on how we progress and allow plenty of time for independent research.
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2. HUMAN CAPTIAL MANAGEMENT
The provision of guidance on effective people management by the systematic analysis, measurement and evaluation of how people policies and practices create value
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3. HUMAN CAPITAL MANAGEMENT AIMS
Obtain, analyse and report on data that inform the direction of HR strategies and processes
Use measurements to prove that superior HRM strategies and processes deliver superior results
Reinforce the belief that HRM strategies and processes create value through people
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4. HCM AS A BRIDGE BETWEEN HRM AND BUSINESS STRATEGY
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5. THE ELEMENTS OF HUMAN CAPITAL
Intellectual capital
Social capital
Organizational capital
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6. THE SIGNIFICANCE OF HUMAN CAPITAL
It is the knowledge, skills and abilities of individuals that create value,
which is why the focus has to be on means of attracting, retaining, developing
and maintaining the human capital they represent, thus producing:
A human capital pool that cannot be imitated or substituted by rivals
Human capital advantage that results from employing people
with competitively valuable knowledge and skills
Competitive advantage
This resource is part of a range offered free to academics and/or students using Armstrong’s Handbook of Human Resource Management Practice, 11th edition, as part of their course. For more academic resources and other FREE material, please visit and then click on Academic Resources.

7. THE PROCESS OF HUMAN CAPITAL MANAGEMENT
Reporting measurements
Drawing conclusions about the significance of the measurements
Guide to future action
Measurements
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8. HUMAN CAPITAL MANAGEMENT QUESTIONS
What skills do we need?
What skills have
we got?
What are the key performance drivers that create value?
How can we capture, record and use the knowledge we create?
How are we going to get, develop and keep these skills?
How can we develop a learning culture?
This resource is part of a range offered free to academics and/or students using Armstrong’s Handbook of Human Resource Management Practice, 11th edition, as part of their course. For more academic resources and other FREE material, please visit and then click on Academic Resources.

9. HUMAN CAPITAL MEASUREMENT
The process of finding links, correlations and causation between different sets of HR data
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10. APPROACHES TO MEASUREMENT
Analyse sources of value
Analyse relationships between people management practices and outcomes and organizational effectiveness
Measure impact of people management practices on performance, not just the efficiency of the HR function
Keep measurements simple
Only measure activities if doing so contributes to decision making
Analyse trends not just actuals
Focus on easily available quantified data
Remember, measurement is a means to an end, not an end in itself
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11. MEASUREMENT ELEMENTS
Basic workforce data – demographic, race, age, working arrangement, absence and sickness, turnover and pay
People development and performance data – learning and development programmes, performance/potential assessments, skills and qualifications
Perceptual data – attitude/opinion surveys, focus groups, exit interviews
Performance data – financial, operational and customer
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12. NON-FINANCIAL VARIABLES
Quality of corporate strategy
Execution of corporate strategy
Management credibility
Innovation
Research leadership
Ability to attract and retain talented people
Market share
Alignment of compensation with shareholders’ interests
Quality of major business processes
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13. WATSON WYATT HUMAN CAPITAL INDEX
Four major categories of HR practice that could be linked to an increase in shareholder value creation:
Impact on market value
Total rewards and accountability %
Collegial, flexible workforce %
Recruiting and retention excellence %
Communication integrity %
This resource is part of a range offered free to academics and/or students using Armstrong’s Handbook of Human Resource Management Practice, 11th edition, as part of their course. For more academic resources and other FREE material, please visit and then click on Academic Resources.

14. THE SEARS ROEBUCK MODEL EMPLOYEE- CUSTOMER–PROFIT CHAIN
A compelling place to work
A compelling place to shop
A compelling place to invest
Attitude about the job
Serving helpfulness
Customer recommendations
Return on assets
Operating margin
Revenue growth
Employee behaviour
Customer impression
Attitude about the company
Employee retention
Merchandise value
Customer retention
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15. THE BALANCED SCORECARD Innovation and learning Financial perspective
Customer perspective
How do customers see us?
Innovation and learning
(people) perspective
Can we continue to improve
and add value?
Financial perspective
How do we appear to
our shareholders?
Internal perspective
What must we excel at?
This resource is part of a range offered free to academics and/or students using Armstrong’s Handbook of Human Resource Management Practice, 11th edition, as part of their course. For more academic resources and other FREE material, please visit and then click on Academic Resources.

16. HR SCORECARD HR competencies administrative experience
employee advocacy
strategy execution
change agency
HR practices:
communication
work design
selection
development
measurement
rewards
HR deliverables:
workforce mindset
technical knowledge
workforce behaviour
Strategic focus:
operational excellence
product leadership
customer intimacy
HR systems:
alignment
integration
differentiation
Source: R W Beatty, M A Huselid and C E Schneier, ‘Scoring on the business scorecard’, Organizational Dynamics, 2003
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17. HUMAN CAPITAL REPORTING
Strategy
Acquisition
Development
Leadership
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18. HUMAN CAPITAL REPORTING FRAMEWORK
Human capital strategy
Acquisition and retention
Learning and development
Management and leadership
Human capital management
Human capital performance
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19. HUMAN CAPITAL REPORTS
1. Set out quantitative and qualitative information
2. Set out measures of employee satisfaction and engagement
3. Analyse benchmark data
4. Identify key performance drivers and indicate how HCM is creating
added value in these areas
5. Review how well HR strategy and practice are contributing
to achieving business goals
6. Set out returns on investment in people management programmes
7 Draw conclusions on implications for HR strategy and practice
This resource is part of a range offered free to academics and/or students using Armstrong’s Handbook of Human Resource Management Practice, 11th edition, as part of their course. For more academic resources and other FREE material, please visit and then click on Academic Resources.

20. EXAMPLES OF HUMAN CAPITAL REPORTING
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21. STANDARD CHARTERED BANK: MANAGING HUMAN CAPITAL ROADMAP
How am I
recognized and
rewarded?
How do we attract
and retain the
best talent?
DRIVING BUSINESS
PERFORMANCE
How am I doing?
How are we expected
to do things here?
How do I develop
my strengths?
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22. NATIONWIDE ‘GENOME’ CAPITAL INVESTMENT MODEL
Quantify impact of employee commitment on customer satisfaction and business performance
Use existing data, eg employee opinion surveys, customer satisfaction indices, business performance statistics and employee metrics
Prove statistically that the more committed the employee, the happier the customer
Predict that increasing employee satisfaction with basic pay would produce a rise in customer satisfaction of 0.5% and an increase in personal loan sales of 2.3%
This resource is part of a range offered free to academics and/or students using Armstrong’s Handbook of Human Resource Management Practice, 11th edition, as part of their course. For more academic resources and other FREE material, please visit and then click on Academic Resources.

23. NATIONWIDE: ‘DASHBOARD’ FOR AREA MANAGERS ON KEY DRIVERS
Key drivers of committed employees
Outcomes
Pay
Length of service
Coaching
Resource management
Values
Retention
Customer
commitment 1 2 3 4 5
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24. PRACTICAL IMPLICATIONS OF HCM
High-performance working
Talent management
Human resource development
Performance management
Reward management
Knowledge management
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25. KNOWLEDGE MANAGEMENT Intranet Customers Networks
Communities of interest
Data warehouse
Processes
Performance drivers
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26. HUMAN CAPITAL MANAGEMENT:
BASIC CONSIDERATIONS
You cannot
manage
unless
you measure
But the measures
must be
meaningful
And they must
lead to action
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27. THE SEVEN ‘MUST’ ASK QUESTIONS: CENTRICA
What is the strategic agenda?
What are the key people issues driving the strategic agenda?
For each people issue, what would be the successful outcome? What would ‘good’ look like?
What information do we need to show that we achieved
‘good’ ?
Where will the data come from?
How will this information be analysed/presented?
Who is going to drive this?
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28. Further Research in this area
Zenith is an interesting case study (on Learnet)
To test your knowledge and understanding try the task included in the study