Human capital reporting
Analyzing and reporting human capital data to top management and line managers leads to informed decision-making about what needs to be done to improve business results, the ability to recognize problems and take action to deal with them, and the scope to demonstrate the effectiveness of HR solutions and thus support the business case for greater investment in HR practices. Data must be accompanied by analysis and explanation.
The EC Accounts Modernization Directive requires companies to prepare a business review. This has to disclose information that is necessary for understanding the development, performance or position of the business of the company, including the analysis of key financial and other performance indicators, and information relating to environmental and employee matters, social and community issues, and any policies of the company in relation to these matters and their effectiveness.
As Baron and Armstrong (2007) observed, the development of HCM should be regarded as a journey. It is not an all-or-nothing affair. It does not have to depend on a state-of-the-art HR database or the possession of advanced expertise in statistical analysis. It is not difficult to record and report on basic data and, although analytical ability is necessary, the level required should be possessed by any HR professional.
At the beginning of the journey an organization may do no more than collect basic HR data on, for instance, employee turnover and absence. But anyone who goes a little bit further and analyses that data to draw conclusions on trends and causation – leading to proposals on the action required supported by that analysis – is into HCM. Not in a big way perhaps, but it is a beginning. At the other end of the scale there are the highly sophisticated approaches to HCM operated by such organizations as Nationwide and Standard Chartered Bank.
HCM CASE STUDIES ON APPROACHES TO MEASUREMENT
Nationwide Building Society
Nationwide feeds its human capital information into an intranet-based information system that gives users an assessment of how they are doing against a number of indicators. It uses a dashboard of red, amber and green indicators to give each business unit an idea of how they are faring on a number of key drivers of employee commitment. This is backed up with advice on how improvements might be made.
Standard Chartered Bank
Standard Chartered Bank uses a human capital scorecard to analyse its data. This is produced on a quarterly and annual basis with various cuts of the same data produced for different business segments and countries, in addition to a global report. This comprises a series of slides with commentary to enable managers to understand the data.
The data is also included in twice-yearly board reviews on people strategy and forms part of the annual strategy planning process. The scorecard data is reviewed within each global business by a top team ‘People Forum’. At country level, each local chief executive and his or her management committee reviews key trends in order to specify areas they need to focus on.
In addition, the bank uses qualitative analysis to examine trends and this has led it to identify the role of the manager as mediating the relationship between engagement and performance. In turn, this has led to a focus on qualitative research to identify what raises the bank’s best managers above the rest. A further example is a qualitative analysis of high performance in selected customer-facing roles to determine the key behaviors that continue to drive customer loyalty.