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HR Strategy Best Practice
Using Human Capital Management
to Discover & Invest in the Value &
Impact of People in Your Workplace
Lizabeth Kleintop, Ph.D.Associate Dean of Business and
Management Programs
Comenius Center for Continuing and Graduate Studies
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Fourthly, of the acquired and useful abilities of all the inhabitants or
members of the society. The acquisition of such talents, by the maintenance
of the acquirer during his education, study, or apprenticeship, always costs
a real expense, which is a capital fixed and realized, as it were, in his person.
Those talents, as they make a part of his fortune, so do they likewise that of
the society to which he belongs. The improved dexterity of a workman may
be considered in the same light as a machine or instrument of trade which
facilitates and abridges labor, and which, though it costs a certain expense,
repays that expense with a profit.
Adam Smith (1723-1790)
Smith, Adam: An Inquiry into the Nature And Causes of the Wealth of
Nations Book 2 – Of the Nature, Accumulation, and Employment of Stock;
Published 1776
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Top 30 Global Company Key Performance
Metric Comparison (1995-2005)
Higgins, J. (2011). Human capital financial statements. Marina Del Rey, CA: Human Capital Management Institute, p. 3.
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Roadmap
• Define human capital
management (HCM)
• HCM and current HR
practices
• HCM and metrics
• HCM & the financial
statements
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Elements of Intellectual Capital• Social capital
• Organizational capital
• Human capital
http://cdn.theatlantic.com/static/mt/assets/business/educationcollegewagesunemployment.png6
Human CapitalKnowledge, skills, and
abilities of people working in
an organization
– Intelligence
– Skills
– Expertise
Bring to bear using
– Education
– Change Skills
– Innovation
– Creativity
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Assumptions of Human Capital
1. People are assets to the organization
2. Investments by organizations in people
generates returns
• Human capital constitutes a key element of
the market value of a company
• People add value in organizations
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HC
M A
ND
HR
PR
AC
TIC
ES
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Key Questions Raised by HCM
• What are the key performance drivers that create value?
• What skills do we have?
• What skills do we need now and in the future to meet our strategic aims?
• How are we going to attract, develop and retain these skills?
• How can we develop a culture and environment in which organizational and individual learning takes place that meets both our needs and the needs of our employees?
• How can we provide for both the explicit and tacit knowledge created in our organization to be captured, recorded and used effectively?
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HCM and Talent Management
Business
Strategy
Human
Capital
Strategy
Business
Results
External Hires
Internal Mobility
Alig
nTraditional
ContingentM
ea
sure
Plan
Acquire
Engage
Deploy
DevelopLead
Retain
Evaluate
Forman, D. C. (2011). The global state of talent management. In L. A. Berger & D. R. Berger (Eds.), The talent management
handbook, 2nd ed. (pp. 529-531). New York, NY: McGraw Hill.
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HCM BEYOND HR
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Why measure HC?
• Human capital is a key component of market worth
• People add value and assessing this value is a basis for HR planning and monitoring
• Identifying metrics, collecting and analyzing data focus attention on what needs to be done to find, keep, develop, and make the best use of HC
• Measurements monitor progress in achieving HR goals
• “You cannot manage unless you measure.”
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Simple Illustration of Value Creation
Process Quality Process Cycle Time
On-time Delivery
Employee Skills
Customer Loyalty
Return on Capital EmployedFinancial
Customer
Internal/Business
Process
Learning and Growth
Kaplan, R. s. & Norton, D. P. (1996). The balance scorecard. Boston, MA: Harvard Business School Press, p. 31.14
HC Bridge to Showing Value
Toolsets
Effectiveness Dashboards, scorecards
Effectiveness Performance of outsource HR activities
Effectiveness Effects of HR programs on the workforce
Effectiveness Cost-benefit (utility) analysis
Efficiency Financial efficiency of HR operations
Efficiency Cost of providing HR services
Efficiency Benchmarking
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Human Capital Impact Statement Summary
Higgins, J. (2011). Human capital financial statements. Marina Del Rey, CA: Human Capital Management Institute, p. 8. 16
Total Workforce Productivity Impact Formula
and Components
Higgins, J. (2011). Human capital financial statements. Marina Del Rey, CA: Human Capital Management Institute, p. 9.
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Human Capital Asset Statement
Higgins, J. (2011). Human capital financial statements. Marina Del Rey, CA: Human Capital Management Institute, p. 11, 12.18
What does this tell you?
• Workforce value increases over time
• The workforce creates value far greater than it
creates cost
• Certain job roles create more organizational
value than others
• Training costs are more of an investment than
an expense
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What is your gain using HCM?
• Greater transparency
• A method for valuing knowledge capital
• Improved investment decisions
• A methodology for quantifying workforce
impact on financials
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Questions?
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Contact Me
Lizabeth Kleintop, Ph.D.Associate Dean of Business and
Management Programs
Comenius Center for Continuing and Graduate Studies
lkleintop@moravian.edu
t: 610 625-7704
f: 610-861-1466
1200 Main Street
Bethlehem, PA 18018-6650
http://comenius.moravian.edu
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