Putting people first creates better businesses, but this requires investing in measuring human capital

Measurement of results
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Edward Houghton
Research Manager
CIPD
In association with
Core
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The argument for the importance of people to organisations has, for far too many years, been framed in the terms of the workforce being an asset that is owned by and available to the business.

The tired adage of people being an organisation’s “most important asset” has, in many ways, lost the shine that it perhaps once had, instead becoming a cliché and too often an empty statement leaders use without respecting the true essence of the term.

The HR community is well placed to evolve the outdated perspective of people as an asset from one of hollow statements and throwaway fluff to something much more meaningful and with true weight. Something that recognises that the knowledge, skills and abilities of people has real value, and can only be unlocked if we respect and invest in employees and nurture them to grow.

Two things organisations must be thinking about now

For me there are two key elements that organisations need to be thinking of; the health and wellbeing of people and the ability for them to contribute to the business in a way that makes the most of their skills and abilities.

Understanding the health and wellbeing of the workforce is a key way in which an organisation can unlock potential in employees.

Whilst historically HR may have touched on health by adhering to regulations and codes, there is now a much deeper understanding that organisations must build healthy workplace environments that not only protect and enable employees to work effectively and safely, but that also create the right cultures and environments in which people have good physical and mental health and can make the most of their skills and knowledge.

However, while an organisation may have a number of health and wellbeing programmes in place, if its people are under undue pressure to perform, consistently working long hours or being regularly expected to deliver greater results for with fewer people or resources then these wellbeing initiatives are ultimately doomed.

Organisations must know how people are performing and where the bottlenecks are

That’s why it’s essential that organisations have a true understanding of how its people are performing, where pressure is building up, where skills or capability gaps lie and where there may be some flex in the system to manage busy times.

In the race to gain a competitive advantage, to grow a business and to take on new opportunities, businesses will often say ‘yes’ first then try to answer the ‘but how?’ question afterwards.

In the meantime, the workforce are expected to rise to the challenge and do what it takes to succeed. But is this really the foundation of a sustainable business, or a sustainable workforce?

All too often, operational demands are placed above the wellbeing and capacity of staff. Human capital metrics and regular data analysis can help organisations to assess whether organisations have the manpower, skills and wider resources needed to successfully execute business demands - without risk of working excessive hours or burning out due to lack of resources or the right leadership capability.

They can also help organisations assess the engagement and wellbeing of their workforce - if these are low, businesses will struggle to achieve their goals and risk harming their workforce in the process.

For instance, analytics may help to pinpoint to trends of increased employee sickness and long-term absence may highlight areas where the workforce is struggling. Equally, data may indicate a high turnover of staff or retention issues that should also be understood in more detail and addressed.

Wellbeing and engagement are of course complex constructs in the rapidly changing world of work.

Our report Growing the health and wellbeing agenda: from first steps to full potential considers wellbeing as consisting of five dimensions: health, work, values and principles, collective and social, and personal growth: health, work, values and principles, collective and social, and personal growth. All of these can be catered for through a considered HR system and can be captured and explored through data analytics, both at an individual and at an organisational level.

The CIPD’s research also found that many organisations take a reactive approach to managing wellbeing, instead of taking proactive steps to address wellbeing issues in their workforce which leads to a culture of fire-fighting rather than proactive care.

As the old saying goes, ‘prevention is better than cure’ so it’s worth exploring the reality of how people are working in order to understand where resources and training might be needed and where wellbeing might be at risk.

The impact on employee wellbeing of workplace pressures is clear; around 38% of employees surveyed feel under excessive pressure, and 43% agreed that long working hours are normal for their organisation.

Organisations continue to create environments in which people are unable to work both healthily and productively, therefore damaging individuals and the ability of the business to benefit from a healthy, engaged and productive workforce.

Using data analytics and surveys can help to pinpoint specific teams departments or initiatives that are struggling and

Maintaining a healthy workplace cannot be done in isolation by the HR professional. It needs to be part of the company’s wider culture and part of a holistic approach based on partnership across the various business functions.

For instance, in its role as custodians of the organisations value chain, the finance function is well position to partner with HR to articulate how well the business is working with people in mind.

Key performance indicators are one area where HR and finance can collaborate to understand whether key workforce indicators are performing as required.

For example, when CIMA explored organisation value drivers, and the key performance indicators that point to their effect on the business, it identified quality of people is a key driver, and productivity, engagement and talent pipelining as key performance indicators.

These strategic HR measures demonstrate the central importance of people to business performance. 

Ultimately the route to more productive high-performing organisations has to come from a place which understands and respects how people create value in business, and where HR professionals with their partners in the business are actively enhancing the wellbeing of the workforce.

Only by investing in the measurement and reporting of human capital will organisations truly be able to evidence that they believe that people, and the knowledge they bring to work every day is of the greatest value to the enterprise today.

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