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Maximizing Your Return on People

Maximizing Your Return on People. By: Laurie Bassi & Daniel McMurrer Harvard Business Review (March 2007) Presented By: Emiley Esche & Adam Schmitt. Human Capital Management.

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Maximizing Your Return on People

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  1. Maximizing Your Return on People By: Laurie Bassi & Daniel McMurrer Harvard Business Review (March 2007) Presented By: Emiley Esche & Adam Schmitt

  2. Human Capital Management • A system for assessing human capital, predicting organizational performance, and guiding organizational investments in people • Help to assess the monitoring of the HCM practices • Core Set of HCM Drivers • Leadership Practices • Employee Engagement • Knowledge Accessibility • Workforce Optimization • Learning Capacity

  3. HCM Maturity Level • Level 1 • Organization makes little or no attempt to address he stated HCM area or factor • Level 2 • Organization makes cursory, non-systematic attempts to address at least some component of the stated HCM area or factor • Level 3 • Organization demonstrates adequate, or baseline, capability that forms a good foundation for improvement in the stated HCM area or factor • Level 4 • Organization is beginning to systematically extend capability in the stated HCM area or factor • Level 5 • Organization consistently demonstrates superior capability in optimizing its human capital management in the stated HCM area or factor

  4. HCM Maturity Level • HCM maturity scores are directly linked to a range of performance outcomes • Scores are calculated on each drivers and totaled • 90 to 100 -- Superior • 80 to 89 -- Adequate • 70 to 79 -- Marginal • 69 and below is poor • Total is a benchmark to build upon

  5. Examples of HCM in Practice • American Standard (Manufacturer) • HCM enabled them to pinpoint the practices that most consistently predict sales productivity and factory safety • High maturity level indicated above average HCM practices and lower accident rates the following year • Beaufort County School District (Education) • More centralized and introducing greater consistency in teachers' use of proven instructional approaches • Financial Service Industry • HCM can be linked with a higher stock appreciation in these financial firms • High HCM score can lead to a higher stock market return

  6. Steps to Succeed in HCM • Step 1 • Employees and managers are surveyed to quantify variations in HCM maturity across functions, business units, regions, and job categories and also to document organizational HCM strengths and weaknesses. • Step 2 • Variations in HCM maturity are linked to variations in key organizational outcomes, either financial or nonfinancial. This step identifies which HCM factors are most critical to organizational performance. • Step 3 • Findings from the first two steps are then used to identify the HCM factors that significantly drive organizational performance as well as those that also represent areas of relative weakness. The results of this analysis will highlight where the organization should concentrate its HCM development efforts.

  7. Fun Fact to Remember for Happy Hour Globalization has left only one true path to profitability for firms operating in high-wage, developed nations: to base their competitive strategy on exceptional human capital management. Any benefits that, historically, have been associated with superior technology and access to capital (both financial and physical) are now too fleeting to provide sustainable advantage. The most competitive companies will be those that manage their employees like the assets they are.

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