How does one quantify the full value of human resources to an organization, and do it in real terms?

A Conference Board Working Group in Canada tackled that question a while back based on a simple premise: Talented people give organizations a competitive advantage in today's business environment, so even small improvements in human capability can yield bottom-line results. Making the business case for investing in people requires effective measurement of the vital indicators of organizational performance.

The working group identified three key human capital drivers of organizational success:  employee engagement, leadership effectiveness, and a talent management strategy and processes. The briefing, Measuring What Matters: People Drive Value, introduced an Employee Engagement Questionnaire, Leadership Culture Audit, and Talent Management Index—all tools to assess organizational capacity in each indicator.

“A common refrain of human resources (HR) professionals is that they are data-rich but information-poor," said Ruth Wright, Senior Research Associate. "Their measurements focus on the activities and costs of the HR function, instead of assessing how effectively investment in talent helps organizations achieve their goals. Human capital is a key driver of organizational success. Investing in people is no longer a leap of faith—it is a sound investment strategy that produces measurable results."

The Conference Board and a Working Group on Measuring Human Resources Effectiveness, composed of 14 organizations, spent 18 months developing a framework to guide measurement initiatives. The working group found that while strategies to build workforce capability need to be tailored to an organization’s strategic direction, it was possible to identify the three drivers of human capital value that are applicable to organizations in most sectors.

Engaged workforce— Engagement is best described as an individual’s intensity, focus and involvement in his or her job and organization. The Employee Engagement Questionnaire tests employee perceptions across six key determinants that collectively influence or predict engagement.

Leadership effectiveness— In previous Conference Board research, executives were concerned that their organizations lacked the leadership capacity to implement major change successfully, and to develop and retain top talent. The Leadership Culture Audit tool helps organizations assess their leadership development practices, the capabilities of their leaders (based on 16 skills and competencies) and most important, their effectiveness in executing 23 critical tasks of leadership.

Talent management strategy and processes— The working group broadly defined talent as “people you want to keep.” The Talent Management Index is designed as an organizational audit tool for HR professionals to identify whether specific practices are in place and assess the effectiveness of the outcomes of those practices.

ISHR Group applauds this consortium and patterns our own HR toolset along parallel metrics for gauging HR performance. Talk to us about making an assessment within your organization.