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Related Experiment Videos

Maximizing your return on people.

Laurie Bassi1, Daniel McMurrer

  • 1McBassi & Company, Golden, Colorado, USA. lbassi@mcbassi.com

Harvard Business Review
|March 14, 2007
PubMed
Summary
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Traditional HR metrics fail to predict organizational performance. A new Human Capital Management (HCM) framework offers metrics to assess people management, predict performance, and guide investments for better business outcomes.

Area of Science:

  • Human Capital Management
  • Organizational Performance Metrics
  • Strategic HR

Background:

  • Traditional HR performance metrics often lack predictive power for organizational success.
  • A gap existed for robust systems to measure and leverage human capital for strategic advantage.

Purpose of the Study:

  • To introduce a novel Human Capital Management (HCM) framework for assessing organizational performance.
  • To demonstrate how HCM metrics can predict organizational outcomes and guide strategic investments in employees.

Main Methods:

  • Developed a framework based on five core HCM drivers: leadership, engagement, knowledge, optimization, and learning.
  • Utilized rigorously designed surveys to score HCM practices on a maturity scale (1-5).
  • Linked changes in HCM maturity scores to organizational performance indicators.

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Main Results:

  • The HCM framework enables benchmarking of capabilities and identification of strengths/weaknesses.
  • Improvements in specific HCM practices correlated with positive organizational performance (e.g., sales, safety, stock returns).
  • Maturity scores over time track progress and inform targeted improvement efforts.

Conclusions:

  • HR departments should adopt HCM measurement tools beyond traditional metrics.
  • Effective human capital management is crucial for strategic responsibility and organizational culture.
  • This framework provides a data-driven approach to optimizing workforce investments for superior performance.