Should Human Capital be fully capitalized on the Balance Sheet?

Book value accounts for about 20% of a company’s market value today. The rest – 80% – is down to immaterial ‘assets’. This makes valuing companies very difficult indeed. There are many good reasons why book value always will be lower than market value. However one way to close this gap – and thereby makingContinue reading “Should Human Capital be fully capitalized on the Balance Sheet?”

ROI is a dangerous tool – here is how to use it

ROI (Return On Investment) has become the tool which HR increasingly use to show that they are adding value to the company’s bottom line. And rightly so. HR has the potential to create a lot of value to a company – also Shareholder Value. And this value  should be shown and highlighted. ROI is aContinue reading “ROI is a dangerous tool – here is how to use it”

Wrong assumptions lead to bad decisions

Human Capital is the ‘hard’ side of Human Resources. It is about making strategic decisions, measuring the impact and basing decisions upon ‘objective’ and measureable data. One of the most important things for a Human Capital Manager is therefore to get quality data. Without that you cannot make good decisions. Daryl Morey writes on HBR’sContinue reading “Wrong assumptions lead to bad decisions”

HR due diligence just got a lot harder

 M&A due diligence is important. Very important. Dependent on which study you read, 60%-85% of all mergers and take-overs do not deliver the financial and/or strategic benefit it was expected. The due diligence process is supposed to assess if the deal makes strategic and financial sense AND if the two companies together can execute theContinue reading “HR due diligence just got a lot harder”

Does job satisfaction lead to increased productivity?

Job Satisfaction is one of the most researched concepts in Industrial Psychology and in HR in general. And one of the most robust findings about it is that it correlates highly with productivity. To which degree varies quite a lot. A large meta-survey by Judge et al. suggests that the correlation is about 0.3, butContinue reading “Does job satisfaction lead to increased productivity?”

Five popular myths about Talent Management

To produce a value-added Talent Management program you need to understand – and avoid the pitfalls of – five popular myths about talents: 1) Talents are easy to identify. Talent are rarely in the position they ought to be in or in a position which reflects their potential. Identifying an organization’s talents require a rigorousContinue reading “Five popular myths about Talent Management”

3 reasons why not to measure retrospectively

It is tempting to measure retrospectively – but try to stay away from it. You may have just held a course or completed a successful leadership training program. Or you are finding that your talent management program is being well received. Now you want to show that it added value to the business by measuringContinue reading “3 reasons why not to measure retrospectively”

Do you really know how to measure Engagement?

You want to increase productivity, lower employee turnover and absenteeism and make your company attractive so you can attract the best talent. Fine. This you can measure with ease. Then you decide that you want to improve on the results and you need to find out what should be improved. How do you decide whatContinue reading “Do you really know how to measure Engagement?”

Human Capital in Financial Statements

Looking through financial statements today it is clear that there is a huge gap between what companies say are their most important asset – people – and what they report in their financial statement – tangible assets, products etc. Financial regulators – such as SEC and FSA – as well as stock exchanges are notContinue reading “Human Capital in Financial Statements”

Measuring HR is a mean – not an end!

I was speaking with an executive HR person the other day. He told me that one of the things he measured – and which was a KPI for him – was the response rate for the semi-annual employee satisfaction survey. His target was 90%. At the time when I spoke with him the response rateContinue reading “Measuring HR is a mean – not an end!”

True vs. false cost savings

When an HR executive is making a business proposal and includes a ROI calculation,  it is important to highlight which cost savings are true (real) and which are – lets call them – false cost savings. A potential cost saving must be realised and the released resources put to better use before it can beContinue reading “True vs. false cost savings”

Talent Management processes are still not good enough

I have just read a research bulletin from Bersin & Associates from 2009. They conclude in a survey that 40% of companies have talent management processes at ‘a novice stage’, 40% at ‘an intermediate stage’ and 5% at ‘an advanced stage’ with 15% not having any talent management processes at all. Bersin & Associates prefersContinue reading “Talent Management processes are still not good enough”

The War For Talent – McKinsey article 13 years on

I have just re-read the classic McKinsey article from 1998 called ‘The War For Talent’ (The McKinsey Quarterly, 1998, number 3). It is a great article and I will recommend you all to read or re-read it.  It is great for many reasons. Firstly, it was the article that coined the now famous phrase ‘warContinue reading “The War For Talent – McKinsey article 13 years on”

Shareholder value from a great talent management program

Every organization relies on a small cluster of talent in order to be able to execute its strategy and meet its goals. These employees – or talents – account for a disproportionate share of revenue and profits. They are the backbone of the organization and the company should do whatever they can to nurture andContinue reading “Shareholder value from a great talent management program”

Evidence-Based HR

Looking through books, research and blogs about evidence-based HR, it is clear that a few are very keen on the concept and lots of people are very skeptical about it. Let me say straight away that I think it is a great approach to HR. Evidence-based HR is essentially an approach which rely on hard-coreContinue reading “Evidence-Based HR”

Should contractors be part of the Talent Management program?

Human Capital Institute (HCI) has produced an interesting report/survey on the issue of contractors in talent management initiatives (see here for report). They conclude that procurement and selection of contract talent (CT) should be centralized in HR and the strategy around CT should be aligned with the general Talent Management Program. The background for theContinue reading “Should contractors be part of the Talent Management program?”

Leadership in bad times – lessons for HR

I was reading a study of group behavior of baboons (which we humans share 99% of our gen-material with). The study was looking into how often the males in the group was looking at the Alpha-Male (the leader) for clues as to how to act. The average was once every 30 seconds. The interesting thingContinue reading “Leadership in bad times – lessons for HR”

Stress – do something about it

Stress is a big thing: It is a personal tragedy for the individual concerned and it cost a lot for the organizations as well as the society. Companies – and HR – must therefore be more proactive when it comes to combating workplace stress. If you ask people in Denmark if they feel stressed 41%Continue reading “Stress – do something about it”

Activity Based Costing in HR

When confronted with the question “what is the total cost of your HR?” most CEO’s and HR directors come up short. They will either look at the HR budget and say it represents the total costs or they will tell you that they don’t really know. Why does it matter? Well, by understanding the trueContinue reading “Activity Based Costing in HR”

A vision for HR

I was recently asked an interesting question by a friend about how the world looked like if my overall vision for HR was fulfilled. How, did he ask, would he be able to see the difference between now and the desired future. My overall vision for HR is that I want HR to be totallyContinue reading “A vision for HR”

The business case for diversity is strong

Companies who are implementing diversity management strategies are sometimes accused of doing it just because it is perceived to be the right thing to do or that such a soft and fluffy thing is costly . Now research show that the latter is certainly not true. A vast amount of research show that  companies whichContinue reading “The business case for diversity is strong”

Welcome to my blog on Human Capital Management

Welcome to my blog about Human Capital Management – something I am passionate about. What is Human Capital? Other words could be; “The strategic framework for HR”, “The business focused HR”, “Putting value on people and competencies” or simply “Strategic HR”. I don’t really care about what it is called or what the right definitionContinue reading “Welcome to my blog on Human Capital Management”