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Whenyousitdowntoevaluateyourorganization’sperformance,whatmeasurescometomind?Chancesare,youfirstthinkaboutyourbalancesheetmeasures:howmuchrevenuedidwegeneratelastquarter,howmuchwasourgrowthinsalesandprofitsorwhatgainsdidwemakeinourmarketshare?Next,youmaythinkaboutthecosts:equipment,material,travelandsoon.Orperhapsitisyourcustomermeasuresthatcomeupforconsideration:havecomplaintsincreased,aretheyrepurchasingourproducts?Thesekeyperformanceindicators(KPIs)areimportantandyouconsiderthemonaweekly,monthlyandquarterlybasis.Whatisoftenmissingfromthislistisanareathataccountsforoneofyourlargestexpensesandperhapscreatesthemostvalue:yourpeople,orwhatmanynowcall“HumanCapital”.Peopleareoneofthemostimportantindicatorsofanorganization’sabilitytocreateandsustainvalue:theycomeupwiththeideasfornewinnovations,theydelightyourcustomers,andtheyproduceyourproducts.Inspiteofthis,manyorganizationshavedifficultydemonstratinghowspendingonpeopleandpeopleprogramsproduceareturnoninvestment.HumanCapitalMeasurement(HCM)bridgesthisgapbyhelpingorganizationsfocusonpeoplemeasures,tobetterunderstandandpredicthowemployeescontributetotheirsuccess.Itallowscompaniestoquantifyhowemployeesareimpactedbyprogramssuchastraininganddevelopment,recognitionandwork-lifebalance.Italsoassesseshowemployeesreacttoorganizationalchangessuchasmergersormajorrestructuring.Mostimportantly,itcanprovidethesamelevelofrigorthatotherareasofyourbusinessapplytoevaluatetheirinvestments.HewittAssociateshasdevelopedaleadershippositionintheuseofHumanCapitalMeasurement.OurBestEmployersresearchsupportsagrowingamountofevidenceconnectingeffectivepeoplemanagementwithlong-termorganizationalperformance.Similarly,wehaveanumberofHCMapproachesthatwehaveappliedtohelporganizationssharpentheirpeopleinvestmentstrategies.InthisissueofHQ,wegiveyousomeinsightintoourapproachtoHCManddescribeseveralspecificclientsituationswherethisapproachhashelpedthemachievetheirstrategicgoalsandrealizetangibleresults.OurphilosophytowardHCMistoaligntheapproachtoyourspecificsituation.Weillustrateawiderangeofapproachesthatdescribehowpeoplescorecardsandkeyorganizationalperformancemetricsaredeveloped,optimalpeoplebehaviorsidentifiedandpredictivemodelsframed.HCMcanappeardauntingandcomplexbutourconsultantscanworkwithyoufromwhereveryouarestartingandtowhateverlevelofsophisticationyoudesire,tohelpyouunderstandandrealizethevalueofyourhumancapital.HCMisfun,challengingandaleading-edgework.Itprovidesourconsultantswithafeelingofsuccessanditproducesgreatvalueforourclients.MickBennettManagingDirector,AsiaPacificHewittAssociatesLLCTheaveragehumanlifespanhasrisendramaticallyfromalifeexpectancyof40intheearly1900sto75yearsattheturnofthemillennium.Thehumanracehaslearnedwhatfactorsneedtobemonitoredtoincreaselongevity:abalanceddiet,regularexercise,monitoringkeymeasuressuchasbloodpressure,cholesterol,etc.Identifying,monitoringandactingontherightmeasureshasdoubledthehumanlifespaninonecentury.Companylifeexpectancyhasnotfaredaswell.Inthelate1920sand1930stheaveragecompanylifespanwasover60years.Nowtheaveragelifespanofcompaniesis12-15years.Somanycompanieswill“die”intheirteensandonlyahandfulwillsurviveintothenextcentury.Tocomplicatethesituation,theworldasamarketplaceisshrinkingandcompetitorsstraddletheglobe.Anewserviceofferingisduplicatedwithinhours,aproductlaunchseescompetitors'‚replyontheshopshelveswithindaysandatechnicalbreakthroughiscopiedwithinweeks.Thesourcingofrawmaterialandtalentspanstheglobe.Sodoesthesupply.Alongwiththesechanges,thedaysofaloneentrepreneurwhoperformedallfunctionssingle-handedlyorwithacoupleofapprenticesarelonggone.Today,world-classfactoriesthathousenon-stopassemblylinesworkwithhundredsofemployees.Products,processesandtechnologyareeasilyavailableorduplicated.Sowhydosomecompaniessurviveandothersfailinashortperiodoftime?Thecompany’sworkforcehasemergedasakeyassetandisoftendescribedastheonlycompetitiveadvantagethatacompanypossesses.Employeebehavior,theknowledgeandexperiencetheybring,togetherwiththeircommitmenttotheorganizationarekeydriversforsustainabilityandgrowth.Squeezingsavingsinthesupplychain,ensuringhighercapacityutilizationattheshopfloor,continuouslyupgradingtheproductanddelightingcustomerswithefficientservicemodelsarealleffortsthataresteeredbyemployees.Everybusinessneedsworkerswhotakeownershipoftheirworkandtheworkplace.Theyneedtobebargainbuyers,effectivesalespeople,haveunfalteringfaithintheirproducts,zealouslyguardtheircustomers,painstakinglytrackthecompetitionandaboveall,haveanuncompromisingcommitment,loyaltyandhonestytowardstheorganizationanditsstakeholders.Tosurvive,sustainandgrowinthiscontext,whereemployeeexcellenceisrequiredmorethaneverbeforetoachievesustainablegrowth,theroleofthecorporationhasbeenchangingtoo.Theoldsystemsoftraining,monitoringandawardingemployeesareinadequate.Thesheersizeofbusinessesdeemsthatimpractical.Businessesnowneedtofocusonattracting,retainingandharnessingthebesttalentinamoreholisticandstrategicmanner.Tobesuccessfulinallthis,companiesneedtomeasurethevaluethatemployeesbringtotheorganization,e