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Now, we've recently covered the link between Recruiting and Performance, the benefits of eHR to the Enterprise, Client Stages and (a couple of years ago), and, a primitive look a strategy. Why, we've even covered the Elements of Recruiting Strategy, recently. So far, however, we've not attempted to articulate the details of an overarching human Capital Strategy.
In a nutshell, it's simple and obvious: The purpose of a Human Capital Management program is to maximize the return on an organization's investment in Human Capital. What is less obvious are the questions of the limits of possibility, the importance of specific measurements and the clarity of quantitative objectives. Although there is a lot of mat to the notion that Human Capital can be expected to have a return, some basic work remains.
To our knowledge, no one has yet to define the fundamental tool needed to make Human Capital an essential component of top level strategic thinking: the economic conversion equation. That is, no one, that we're aware of, can say with certainty "If you invest X dollars in human Capital, you should expect Y return." We get closer with each passing day but a benchmark measure is simply not available yet. When you compound this situation with the looming labor shortage (which should skew predictable returns), the question looks like it may not get answered. That leaves the possibility of actually measuring possible productivity improvements very open and intuitive.
In our dialog with Brent, he suggested "The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment" as a good read. (It wasn't all that long ago that we would have been floored to get a reading list addition from Monster, times certainly change.) The book makes an extremely compelling case for important qualitative objectives in the development of strategy. In fact, the notion that qualitative factors should be critically important in Human Capital Management is an astonishing move forward in an area that is the traditional home of the "cost per hire" mentality. (Cost per Hire, an approach that rarely even take account of lost productivity and directs the organization to the lowest bidder every time - regardless of quality - is a nonsensical tool for the mindless.).
The great thing about the Balanced Scorecard is that it creates a context that is far larger than the traditional Management By Objectives approach to individual performance assessment. It describes where people fit in the organization, how they align with overall strategic goals and how they might best contribute to the overall success of the organization. This, in itself, is a huge move forward in the process of maximizing the return on human Capital Investments. In lieu of good measurements, better information is a sound alternative.
The Balanced Scorecard System is designed to make strategy the central focus of the organization and compel people to behave in fundamentally different ways. It harkens back to Deming's notion of Total Quality, updated to account for the dynamic aspects of contemporary organizational issues. Still, it falls short in the predictable areas.
If there were a Human Capital Conversion formula, it would be possible to ask "What is the return on an investment in the Balanced Scorecard Approach?" or "Does the balanced Scorecard Approach make our employees more flexible or less? Is that good or bad?" So many Human Capital decisions involve gut-based decision making that we occasionally wonder if it is worth trying to introduce quantitative clarity.
The Balanced Scorecard is not really an effective measure of human Capital utilization and return. It's better understood, we think, as a complex communications device that may be worth installing in your company. Monster appears to be absorbing the core idea (alignment with strategy) and applying it to its customer relations.
What's exciting is the fact that Monster is beginning to engage its clients on these sorts of questions. Their qualitative approach to aligning Monster with customer strategic objectives is liable to revolutionize the way we all think about customers. We're just quietly wondering whether or not qualitative alignment is enough.
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All Rights Reserved. Materials written by John Sumser © TwoColorHat. All Rights Reserved.
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