For many years now, all research on the topic of Human Capital Management has shown that good Human Capital Management leads directly to improved top and bottom line results as well as “market value” of organisations. The “smart” investor community have known for years that good Human Capital Management is a lead indicator of organisational performance, and have based their investment choices, in part, on this.

Furthermore, a recent study of 704 CEOs by the Conference Board as reported by the Wall Street Journal confirms what we’ve known for a while – CEO’s rank “Talent” as the number 2 priority behind “Growth”.

So, I suppose, it should come as no surprise that the American National Standards Institute (ANSI) together with the Society for Human Resource Management (SHRM) are in the process of developing standards for Human Capital financial reporting. The recommendations for public comment will, evidently, be available early in 2012 and, should ANSI certify the standards, we can expect a strong marketing campaign aimed at the investor community. If the uptake is significant enough, as is expected, other standards bodies, such as accounting standards bodies, will be under some pressure to get involved.

The newer Human Capital Management (HCM) systems enable organisations to understand and manage their Human Capital in a much more analytic, metrics-driven way than was possible in the past. So, for organisations that have adopted Human Capital Management principles and technology, the move will not be that onerous.

From executive management perspective, if you know that what you are showing in your financial statements will bring investors, then surely it makes sense to include the information. Much of the investment marketplace today is based on metrics and ratios derived from traditional financial statements. The potential of Human Capital Financial Statements as a tool for measuring and identifying the long-term potential of an organisation can only improve investor decisions.

So, how could it possibly work? Jeff Higgins, CEO of the Human Capital Management Institute, has created a detailed set of statements equivalent to the (financial) Income Statement, Balance Sheet, and Cash Flow statements. These measure the “impact” that investment and good Human Capital practice has on the financial returns of the organisation, and the financial value of the workforce at a point in time. Metrics include a “Human Capital ROI ratio” and a “return on Human Capital Investment” that measure the Total Cost of Workforce (TCOW) with revenue and operating profit respectively.

The set of Human Capital financial statements provide the answers to the following questions:

• How do we quantify the impact human capital has on financial performance?
• How do human capital metrics integrate with commonly accepted financial metrics?
• How do we measure total workforce costs to drive workforce effectiveness and efficiency?
• How do we quantify value creation in the organisation across the talent management life cycle?
• What is the impact of training on profit, productivity and total human capital value?
• What is the differential human capital value creation of different job roles?
• How do you measure workforce flow, changes, and growth like a cash flow statement?

TalentAlign is introducing these new concepts in Human Capital Management at the TalentAlign / CSSA Human Capital Management Seminar scheduled for late February 2012. So look out for the notices. This is going to make a huge difference in the lives and methods of management in the future.

If you would like information in the meanwhile, please contact us.

Some people are born leaders, but most of us learn the art of leadership along the way. The better you are at nurturing leadership potential in others, the more valuable you will be to your organization. To cultivate these skills, you must push people toward peak performance while convincing them of your commitment to their personal growth.

The following are 10 of the strategies suggested by authors Scott J. Allen and Mitchell Kusy in their book, “The Little Book of Leadership Development: 50 Ways to Bring Out the Leader in Every Employee” for creating a greater sense of ownership and direction within your team. Follow these guidelines and you will distinguish yourself as an essential leader in your own right.

Treat team members as Customers – Let them know their professional development is a readon you challenge them.

Set aside One-on-one time – Individual exchanges are opportunities for discovering passions and aspirations.

Help People set goals – ownership inspires accountability, improving chances of success.

Stretch Capabilities – Make sure team members are working on something that expands their skillsets.

Let Them Lead – Choose a meeting organiser, a mentor, a project supervisor, etc.

Encourage People to Answer “How” – Set objectives, but allow the team to come up with ways to get there.

Promote Associations – Participating in industry groups elevates professional profiles.

Share Organisational Knowleddge – Your team will appreciate and benefit from transparency,.

Share Team Knowledge – Have members document challenges met and lesson learned.

Confront Effectively – Approach confrontation as collaboration to maximise mutual gains.

Buy this book at our book store on www.talentalign.com – or look through many of the most-read and influential books on Human Capital Management available from our book store.

“ …we believe that customers will ultimately need to have a job profile and a talent profile “system of record” (based on a common competency model), much like we see for employee and organizational hierarchy data in the core HRMS.” – “Unlocking the Strategic Value From Talent Management Application Investments” James Holincheck, Gartner, December 27, 2007

Why has IT Human Capital Management become such an imperative? The main reasons are:

• Worker Shortage: the shortage of people due to inappropriate education systems and population growth rates,
• Skills Shortage: the shortage of IT skills, specifically the higher-level skills,
• The Pace of Change: New technology information is reportedly doubling every 72 hours
• Staff Turnover: IT staff turnover averages between 16% and 25% over the past 5 years – at an enormous cost to the organisation.

Recruitment alone is not able to supply the high-performers, good leaders, and ever-changing skills sets necessary for success.

Talent Management processes have the ability to provide valuable metrics, performance motivators, and insights into the competencies needed for this achievement.

A good “Human Capital Strategy” hones the organisation’s competitive position, drives better performance, and helps to retain the core skills and competencies necessary for organisational success.

So, how does one go about formulating a Human Capital Strategy. As with any strategy, Human Capital Strategy is about:

• Where do we want to go? What skills and competencies do we need?
• Where are we now? What skills and competencies do we have? Where are they situated?
• What is the “gap” and how do we close it? What action plans / projects need to be implemented?

The information available on TalentAlign.com will assist you in providing the tools and information needed to put your IT Human Capital Strategy in place.