In our next issue of Human Resources magazine, we will kick off a two-part feature which will examine the issue of tying workforce intangibles to the company bottom line, the role of HR and executives in improving extra-financial indicators of performance and how companies can educate analysts about making more accurate long-term assessments of company performance
By Craig Donaldson
In our next issue of Human Resources magazine, we will kick off a two-part feature which will examine the issue of tying workforce intangibles to the company bottom line, the role of HR and executives in improving extra-financial indicators of performance.
It’s been an interesting exercise researching this feature. Upon speaking with analysts and executives, more often than not, they have suggested it might be better to speak with their resident HR director in the first instance. After explaining the focus of the feature and the fact that I would rather not speak with HR practitioners about this topic, I’ve been met with a response along the lines of, “Oh, so you want a business focus”.
This illustrates the long way that HR still has to go in the minds of many executives and the investment community when it comes to understanding business imperatives and making a measurable contribution to the bottom line. There is much research to back up this statement, but this simple qualitative exercise has given me further insight into the fact that a majority of the HR profession is still languishing in the netherworld of administrative tasks while trying to come to terms with business priorities, let alone making an effective business contribution.
But there is a light at the end of the tunnel. As Dave Ulrich notes in our front page story, there will come a day when analysts and investors start analysing performance appraisal and other HR-related systems that can track the performance of human capital in hard numbers. Not only will such systems assist in validating the worth of good HR; they are also more likely to weather the comings and goings of executives who like to pay lip service to good people management and point out their negative impact on positive cultures.
This is a good thing for HR. Having a CEO who honestly believes in and supports effective HR is the holy grail of many good HR professionals. While they may both intuitively know the contribution they can make to the bottom line, having an effective understanding of the metrics and systems needed to measure and track this in hard numbers will go a long way in quantifying HR’s contribution once and for all.
