1. Making HR Measurement Strategic

This book will help you better understand how to analyze, measure, and account for investments in people. However, although data and analysis are important to investing in people, they are really just a means to an end. The ultimate purpose of an investment framework is to improve decisions about those investments. Decisions about talent, human capital, and organizational effectiveness are increasingly central to the strategic success of virtually all organizations.

According to 2010 research from the Hay Group, businesses listed in Fortune magazine as the world’s most admired companies invest in people and see them as assets to be developed, not simply as costs to be cut. Consider how the three most admired companies in 64 industries—firms like UPS, Disney, McDonald’s, and Marriott International—managed their people during the Great Recession, compared to their less-admired peers. Those companies were less likely to have laid off any employees (10 percent versus 23 percent, respectively). By even greater margins, they were less likely to have frozen hiring or pay, and by a giant margin (21 points), they were more likely to have invested the money and the effort to brand themselves as employers, not just as marketers to customers. They treat their people as assets, not expenses. Perhaps the most important lesson from the 2010 World’s Most Admired companies is that they did not launch their enlightened human capital philosophies when the recession hit; they’d been following them for years. Once a recession starts, it’s too late. “Champions know what their most valuable asset is, and they give it the investment it deserves—through good times and bad” (p. 82).¹