Following my post last week, Professor William Scott-Jackson of the Centre for Applied HR Research, CAHRR, mailed me some thoughts on the current three levels of HR Capital reporting outlined in his recent research. I thought his mail added some insight, and he’s kindly agreed that I can reproduce it here:
The 3 levels perhaps also reflect a focus on:
Level 1: costs of human capital (e.g. headcount, training costs, salary bill etc) – they are easy to collect and easily compared with others – probably explain why many companies only seem to recognise the costs of people despite the phrase ‘people are our greatest asset’.
Level 2: value of human capital (e.g. headcount by value, turnover by value etc etc). This requires, at least, a decent understanding of value from a performance management system or by roles or whatever. This would at least give relative value. I think this too will be comparable at some stage but not yet as definitions and processes re value are sparse. Andrew Mayo’s model addresses this level very well.
Level 3: building differentiating strategic capabilities. The measures themselves can never be compared as, by definition, one man’s differentiator is different to another’s. The process for defining them could, however, be standardised and reported on.
Many thanks to the professor for the input. I will be inviting other experts to guest blog on this subject, too, in the new year.