Taking the measure of human capital - From the President

HR Magazine, Jan, 2003 by Susan Meisinger

Competitive advantage. Organizations seek it. Customers drawn to it. It's the difference between winning and losing in the world of business.

Once upon a time, companies gained a competitive advantage by inventing new products or production systems. Later, organizations focused on organizational structure and processes to give themselves the competitive edge.

Today almost all organizations have "been there, done that" and can find information, technology and "how-to's" for just about any business initiative. So researchers, consultants and business gurus are now focusing on a "new" competitive advantage that promises infinite possibilities: people.

Attracting, retaining and developing great people is sometimes the only way our organizations can keep up with the competition across the street or around the globe. Research has shown that highly educated, knowledgeable workers--the most in-demand--are the hardest to find and the easiest to lose. They expect top salaries, good benefits, a flexible workplace and the opportunity to advance in their careers.

Providing a top-notch workforce with these benefits can translate into a more productive workforce, improved products and services, better customer relations and a healthier bottom line. And yet, many organizations still don't place human capital management at the top of their list of priorities where it belongs. Why not?

The reason is simple. In spite of relatively new tools such as bench-marking, metrics, the balanced scorecard and human capital assessment, it is tough to attach solid numbers to the value of human capital. But developing that body of knowledge is where HR must step in.

The business environment today requires that HR professionals be adept at knowing, understanding and speaking the language of business. With that in mind, SHRM will focus in 2003 on creating information for our members about measuring human capital.

This information not only will help HR professionals do just that, it will help HR professionals establish their credibility in organizations. And that's what SHRM is all about: serving the HR professional and advancing the HR profession.

In the meantime, we don't have to reinvent the wheel to give HR a seat at the table." But we do have to identify and equip ourselves with the skill set required to evaluate the HR functions that have previously eluded measurement. Only then will we be successful in assisting our organizations to develop a world-class workforce that meets the needs of the modern-day consumer, and be able to effectively communicate HR's value to senior management.

That will be the real competitive advantage.