IT directors must plan with HR how they will measure staff value
Last November the Accounting for People taskforce, sponsored by the
Department of Trade & Industry and led by Patricia Hewitt,
issued a report which set out recommendations for listed companies
to communicate the value of their human capital to
shareholders.
The aim is to provide investors and staff with a means to
effectively judge how one firm differs from another in terms of how
human capital is managed and the value of their return on
investment in people. The report's main recommendations were:
lReports on human capital management (HCM) should have a strategic
focus, be balanced, objective and based on sound data
lThe report should clearly represent the board's understanding of
the links between HCM policies and practices and its business
strategy performance
lThe report should normally include details of the size and
composition of the workforce, employee retention and motivation,
skills, competencies and training, remuneration and fair employment
practice, leadership and succession planning
lThe report should be susceptible to review by auditors, provide
information in a form that enables comparison over time and use
commonly accepted terms and definitions.
The recommendations are due to come into force within the next two
years, so IT directors will need to work with human resources
departments to ensure that HCM systems are established and can
deliver the required data.
Businesses are aware of the high costs of employment as a
percentage of total costs, so there is no doubt that meaningful
metrics will be a vital aid to effective business management. But
the real challenge for IT directors is to establish a system that
not only allows for reporting on the performance of people, but
also for the data to be analysed and the results acted on.
The information required will come from multiple sources that need
to be integrated, such as enterprise resource planning, customer
relationship management and legacy HR systems. For many businesses,
an ERP system may not yet include HR data.
Data overload, which occurs in many organisations, can potentially
blur HCM issues. Business users of HCM data will require simplified
access to quality information. This, combined with system
functionality and flexibility, could make pulling data together an
arduous task.
The data can be collected from existing systems without the need
for manipulation or re-keying, which means it will be accurate and
suitable for review by auditors. Portal technologies, for example,
create an unprecedented opportunity to integrate data from multiple
sources.
Single, integrated data sources greatly increase information
integrity and control, and when combined with personalised delivery
of information, the usability of the data will be greatly improved.
Web browsers also make it easier to access information and
web-based tools are cost-effective to maintain and use.
IT directors will need to work with the rest of the business to
combine data collection with reporting into a clear framework of
key HCM metrics and variables suitable for use by the business.
The interpretation, analysis and return on investment business case
can then be demonstrated by HR business partners and third parties
to provide the business with a value added service called "internet
enterprise performance management".
This way, businesses will be able to gain insight into the drivers
for improving company performance by measuring and analysing the
human impact on financial outcomes and identify and apply people
solutions that will improve these outcomes.
Ricky Forde is senior manager at IT
professional services firm Deloitte