An article A new way to measure internal performance by Derek Sankey who discusses with Brian Reidy (Towers Watson) how organizations are using human capital metrics (HCM) to better understand their workforce. One can only laud the article’s prescription to improve measurement of our organization’s workforce contribution, effectiveness, wellbeing, etc.
Nothing can be worse in an organization’s life than to make investments without having the capability to determine the investment’s success. A complimentary thesis is the metrics need to be capable of analysis including trends. there are four things critical to using metrics:
- Having ones that measure what is useful. We often only measure what is easy, which is often irrelevant. PLAN
- Having the discipline to apply the metrics in our operations (shelf ware measures are waste). DO
- Reviewing on a relevant periodic basis the metrics outputs. This is a fundamental navigation practice. Performance management is the art of human performance navigation. CHECK
- Make decisions and enact them that will keep performance on track, including steering away from problems, pursuing emergent opportunities, sustaining effort and outputs. ACT
I have demonstrated the third and fourth points above by asking clients”If they (or someone they knew) had ever run out of gas while driving?” Almost always the event has happened (at least to someone they knew). My second question is, “Was the gas gauge working?” Again the answer is invariably yes. People seem to have an unique capacity to ignore important information and continue to act as if it did not exist.
My first thought and concern with HCM is the information is often “leading indicator” in nature. This is the easiest information to ignore as it usually fails the urgent important test. The gas gauge example above is a leading indicator (until you run out of gas). We can rationalize that as important as this information is, we have more important (probably just urgent) issues to deal with right now.
An interesting aspect of Tower Watson’s framework for utilizing HCM includes the linkage to business strategy: “build cross functional teams to reflect the human capital needs of the entire business.” I would only add that the focus of this effort needs to be on current operational and future strategic priorities.
Using Tower Watson’s approach suggests the following useful performance management cube practice:
- Determine what is needed in human performance to achieve each operational and strategic priority. WHAT TO.
- Determine what capabilities/competencies/information/feedback are needed to enable appropriate human performance in each priority. Included in this are the relevant HCM. HOW TO.
- Determine what commitment/engagement is needed (specifics please) in the critical roles for each priority. WANT TO.
- Determine the context that encourages, enables, complements the achievement of 1 – 3 above. This is the role design and context piece – performance does not operate in a contextual vacuum. This is the critical contribution of leadership to an organization’s human performance. ENABLE TO.
Another perspective on the application of suitable HCM is to consider the conceptual points of measurement from a process perspective:
- Inputs – do we have the right people, in the right amount, with the right skills, with the right attitudes in the right place at the right time, etc. to succeed? Performance cube links: what to, how to, and want to.
- Throughputs – are the people efficiently (using their time and efforts well), being effective (errors, waste, rework, teamwork functioning, meeting milestones, etc.)? Performance cube links: how to, want to, and enable to.
- Outputs – are people delivering on their expectations in a timely, cost effective and materially satisfactory manner? Performance cube links: what to, how to, and enable to.
- Outcomes – do the outputs make the beneficiary differences we are looking for anyway? Is our world a better place because of what we achieved? Performance cube links: what to and enable to.
HCM can be applied to all four system measurement levels. I suspect, though we would be very pleased if we could do an effective and efficient job at measuring at the input and throughput levels. Why? Because, if we have the applicable HCM in place we can manage performance in real time in a navigational sense. The output and outcomes level HCM will give us insights into how well we had established the context which is a measure of leadership performance.