Human Capital Measurement Model

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  • Theo Veldsman and Penny Abbott

  • Context of development of HC Measurement Model: SABPP HR Standards and Audits

  • Context of development of HC Measurement Model: SABPP HR Standards and Audits

  • Context of development of HC Measurement Model: SABPP HR Standards and Audits

    Through these interlocking initiatives, we can become a talent driven

    country

  • Design team

    Anthea SaffyAnglo American Platinum

    Deon Pieterse ARMElsabe Bell BritehouseGerhard Olivier HebronGregory Lee WBSIan Rothmann AfriforteIna Rothmann AfriforteMaropeng Sebothma SARSMmabethe Baloyi EOHMpho Magau UJPaul Pretorius HebronPenny Abbott SABPP

    Reuphillan KasselmanForte Advisory Services

    Rita van Kraayenburg ARMTheo Veldsman UJTracy Harper EOHZia Attlee Knowledge Resources

  • Intelligence

    Attaining information of value

  • Why do we need better Human Capital intelligence?

    People play central role in knowledge economy

    Disruptive innovation through people is key to sustainable

    future

    We continue to question return on investment in our human

    capital - we need to know if we are a going concern in relation

    to people dimension of our organization

    Without good intelligence, one cannot make good decisions:

    are we improving, are we allocating resources properly, are we

    focusing energy and money on right things, how do we

    compare?

  • Having a HC Measurement Model is:

    Good practice discipline for all South African employers in same way as financial,

    risk management and other such frameworks

    Intended to encapsulate state of the nation in human capital terms at national,

    organisational and operational levels

    Based on clearly defined measurement domains

    A guiding and aspirational framework, which can be customized/localized to fit

    different sectors and/or strategic directions by assigning different weightings to

    measurement domains

    Intended to enable all employers to measure, and therefore understand, critical

    aspects of their human capital in order to implement their organisational strategies

    and objectives successfully and effectively

    Vision for HC Measurement Model

  • NATIONAL

    Human Capital Confidence Index is SA a going concern in terms of Human Capital?

    ORGANISATIONAL/ ENTITY

    OPERATIONAL

    Three levels of HC Reporting

    Board Level Human Capital Report is our organisation a going concern in terms of Human Capital?

    Management reporting on core metrics along the HC Value Chain (HR Management Standards)

  • Value of using HC Measurement Model

    Simplifies complexity of measurement components and, over

    time allows for establishing connections between them

    Enables us to talk same language

    Informs HC discussions by explicating mental model and

    guides conversation to focus on right things

    Enables comparability

  • Design specification for HC Measurement Model

    Each measurement domain should clearly link to performance and enable evidence

    based decision making

    Reporting should always be on comparative basis, internal or external, against past

    periods or against appropriate benchmarks to give norms or targets

    Metrics should be highly focused on few key metrics (80/20 principle)

    Metrics reported at higher levels should follow clear drill down hierarchy to

    metrics at lower levels

    Allow for predictions and What Ifs, allowing one to take pro-active actions

    Follow integrated reporting principles

  • Five HC Measurement Domains

    INPUT

    Human Capital Availability

    INPUT

    Human Capital Wellbeing

    ACTIVITY

    Human Capital Cost, Investment and

    Growth

    OUTPUT

    Human Capital Contribution

    OUTCOME

    Human Capital Wealth Creation

    1

    2

    34

    5

    BUSINESS MODEL OF GLOBAL INTEGRATED REPORTING INITIATIVE

    (GIRI)

    Outcomes measure quality and impact of outputs

    Outputs are measurable value added to organisation as result of effective human capital processes and activities (combination of inputs and activities)

    Activities convert human capital inputs into valuable outputs through human capital processes and actions

    Inputs are basic components of human capital resources measured through fundamental data about workforce

    Supporting

    excellence in

    Human Capital

    Management

    through sound

    measurement

    and analysis

  • Domain Definitions

    INPUT

    Human Capital Availability

    INPUT

    Human Capital Wellbeing

    ACTIVITY

    Human Capital Cost, Investment and

    Growth

    OUTPUT

    Human Capital Contribution

    OUTCOME

    Human Capital Wealth Creation

    1

    2

    34

    5Supporting

    excellence in

    Human Capital

    Management

    through sound

    measurement

    and analysis

    Right people available at right time to do job, relative to

    present and future requirements of organisation

    State of work-related health and well-being of

    employees.(WHO 7 components of

    wellness)

    Resources allocated / activities undertaken to build and

    maintain employees ability to deliver against requirements

    People producing measurable value add to

    performance, innovation and success of organisation.

    Impact of Human Capital outputs on stakeholders

  • Context matters

    Cycle of measurement and reporting takes place within internal and external context

    Internal context is shaped by organisational strategy and design

    External context is shaped by various drivers, e.g.:Legislation

    Governance standards

    Socio-economic-political-cultural trends

    Research driven evidence in the HR Management profession

    Therefore metrics chosen must be appropriate for context. Set of metrics in this framework need to be appropriate to South Africa

    However, domains of measurement remain constant across contexts

  • National Human Capital Confidence Index

    Human Capital Availability (Input)

    What is match of supply and demand of economically active people (skilled and unskilled) in country?

    Where are specific under-supply and over-supply situations?

    Human Capital Wellbeing (Input)

    What health and wellbeing issues impact on general productivity potential of economically active population?

  • National Human Capital Confidence Index

    Human Capital Cost, Investment and Growth (Activity)

    What are we doing in terms of learning and development in school and post-school education system?

    How much are we spending on whom for what in post-school education system?

    What are we doing and how much are we spending on job creation efforts?

    What health and wellbeing interventions are having positive impacts on productivity?

    Human Capital Contribution (Output)

    How productive is employed population?

    What is level of innovation?

    Human Capital Wealth Creation (Outcome)

    How do different sectors of the employed population share in wealth created in the country?

    How attractive is country to international talent?

  • Board level Human Capital Index

    Human Capital Availability (Input)

    Do we have the skills we need to execute our strategy?

    Do we have people who can fill critical roles in the planned future?

    Human Capital Wellbeing (Input)

    What is the state of health and wellbeing of our employees?

    Have we identified and are we dealing with critical health and wellbeing risks among our employees?

  • Board level Human Capital Index

    Human Capital Cost, Investment and Growth (Activities)

    What are we prioritizing in terms of the human capital value chain relative to our strategic priorities?

    What are we spending/investing on these activities and how is this allocated across various employee groupings?

    Human Capital Contribution (Output)

    What is the level of performance overall of employees and of different employee categories?

    What impact do learning and development interventions have on the overall competence of the workforce?

    Do employee innovations add value & support/challenge our strategic direction?

    How does our human capital contribute to our customer satisfaction levels?

    Do we comply to legislation for example, Occupational Health and Safety, Employment Equity?

  • Board level Human Capital Index

    Human Capital Cost, Investment and Growth (Activities)

    What are we prioritizing in terms of the human capital value chain relative to our strategic priorities?

    What are we spending/investing on these activities and how is this allocated across various

    employee groupings?Human Capital Contribution (Output)

    What is the level of performance overall of employees and of different employee categories?

    What impact do learning and development interventions have on the overall competence of the workforce?

    Do employee innovations add value and support/challenge our strategic direction?

    How does our human capital contribute to our customer satisfaction levels?

    Do we comply to legislation for example, Occupational Health and Safety, Employment Equity?

  • Board level Human Capital Index

    Human Capital Wealth Creation (Outcome)

    How have we grown our intangible assets?

    What is our image/reputation as an employer?

    How fulfilled are our employees?

    Do the stakeholders feel that they share fairly in ou

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