Unlocking the HR Dollar($) Language through Human Capital Modelling & Productivity Analytics

It’s time for HR Business Unusual?

Human Capital is a very strategic function in any business and is the most valuable Business Asset. In my previous blog posts, featured under “JET Leadership – Hire to Lead” i have highlighted that in the modern business world today, organizations are competing on only two major fronts:i.e

  1. Talent Space
  2. Market Insights

If you are a HR leader, you may therefore already be aware of the following global Human Capital Insights;

  1. Advanced firms effectively applying workforce analytics improved their firm’s profit by 65% – Havard Business Review 2013.
  2. Only 4% of HR teams are using any form of predictive analytics today – Josh Bersin

Could this be calling for a new HR Skill Set? Or just needs a business mindset shift? My engagement with HR teams have revealed that as much as many appreciate the role of talent productivity analytics, many are still struggling to implement them in their businesses.

Modern HR trends attempts to apply the following Profit Derivative function:
Predict Productivity -> Predict Performance -> Predict Profit
As a litmus test in your organization, please try evaluate how your Human Capital function is positioned to report on the following insights:

  • Human Capital Business KPIs for strategic reporting – What data to keep, measure, track, analyze and predict (Forward thinking) [Exist/Do not Exist]
  • Human Capital Scenario modelling and forecasting – Predicting Productivity , Performance and Profit – We call it the “HR Dollar($) Language”. – What are your Top key HR “What if” Scenarios. [Exist/Do not Exist]
  • Human Capital Financial Statements. – Human Capital Value statement, Human Capital Asset statement and Human Capital Flow statements (What is your value Allocation in various jobs) [Exist/Do not Exist]
  • Integrating enterprise wide Performance Data with talent data and interactive real time Human Capital dashboards for profit improvement. [Exist/Do not Exist]

Does your organization have above reporting capability? A seasoned Human Capital function should be able to articulate the following value contribution amortizations:

  1. What contribution does your human capital investments have on the financial performance?
  2. What is the optimal number of employees per business operating scale?
  3. What is the marginal return of $1 (one dollar)invested in Human Capital?
  4. What is the Human Capital value contribution by different jobs?
  5. What is your true value withdrawal from your turnover?
  6. What is you future predictable Human Capital Value?

Good news is that currently there are many HR models that seeks to predict enterprise performance through Human Capital Analytics. It all begins with measuring, tracking, observing, predicting the RIGHT business drivers which then defines your Productivity Yield Curve. I call this the HR Dollar($) Language.

Armed with this trending toolkit, any HR Executive will have a leading bargain power in the boardroom.

For more resources, please drop me an email and i will be glad to share insightful steps towards this journey.Through our HR Fusion Lab program, we equip HR and business leaders with hands-on practical skills useful in designing, implementing and interpreting the Business Value in Human Capital investments. We train and coach HR Business Partners on tracking, measuring, analyzing, predicting and reporting HR Value Statements and adopting HR Dollar($) Language in the boardroom.

Do not forget to also check on my regular Human Capital Modelling & Productivity Analytics masterclasses where we get a deep dive to this field.

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