We all know a great team when we see one, and the sustainable, competitive advantage that great teams provide. Being from Boston, two immediate examples come to mind: The Red Sox, who won two World Series Championships in three years after an 86-year drought, and the New England Patriots, who have won three Super Bowls in four years. These teams are committed to the philosophy, " What gets measured, gets done," and they pursue it with a passion. Both organizations emphasize hiring players who score high on their ability to work as part of a team, openness to learning, adaptability, and leadership.
The importance of creating a great team is becoming even more of a business necessity in this economy. Successful businesses realize--and studies have confirmed--that the number one asset of a company is its employees. Your employees are ambassadors to your customers, and will be largely responsible for implementing your vision and helping you achieve your objectives. So how can you evaluate how you are doing when it comes to human capital? Typically, it has been measured intuitively by assessing if "it feels right." But just as intuition shouldn't be the basis for your financial future, it should not guide the direction of your HR practices.
So where should we start? What are the "right" Human Capital metrics for a given organization? Some companies are beginning by measuring revenue and profitability per full-time employee as well as for the organization as a whole. Looking at your business strategically, it's important to make sure that you are measuring the key attributes that are critical for achieving your organization's goals. What do you want to accomplish and what do you need to do to motivate your employees and customers to achieve your goals? How can you measure or create metrics around these behaviors? Once you determine the appropriate measures for your business you can begin to put a process in place that measures where you are and identifies the key behaviors needed to get you where you want to go. Then based on this knowledge you can implement best practices to improve your operations.
You will be surprised how powerful metrics can be. Even the collection and analysis of easily obtained employee demographic metrics can make a big difference. One of our clients conducted demographic analysis of their employees based on years of service; generational groupings e.g., Boomers, Gen Xers, Gen Yers; and breakdown by type of employee, e.g., full-timer, part-timer, salaried, hourly, exempt, non-exempt, etc. While company managers knew they had done a lot of hiring in the past few years and that many of the new hires were younger, they were startled to learn that nearly 30 percent of their workforce had worked for the company three years or less, and about 7 percent of their employees had 10 or fewer years of service.
Then the company applied a generational overlay to this information. The conclusion: many employees had relatively short-term ties to the organization and were from GenX and GenY. Industry trends show that the frequency with which Gen Xers and Gen Yers tend to move from employer to employer put this company at risk of losing younger employees at a fast pace. To address this situation and promote a longer tenure, the company implemented a rewards/recognition strategy that acknowledged employee achievement much sooner and more frequently than traditional programs in the marketplace.
Your organization can aspire to the use of Human Capital Analytics that the Patriots and the Red Sox--or substitute the name of your favorite team --have achieved. You can de-mystify the "soft skills" or intangibles of human resources by turning them into discrete, measurable attributes. By doing so, you can work to ensure a sound, solid team that you can count on for your business in all types of economic climates.