The Knowledge Exchange / Business Analytics / Top three myths about evaluating human capital

Top three myths about evaluating human capital

Gene Pease, CEO of Capital Analytics

Discussion about measurement and evaluation abounds in learning and HR circles, and there’s a wide variety of viewpoints on how to go about understanding the impact of human capital initiatives. Here are three common myths about evaluating human capital and how to overcome them.

1. You don’t need to engage with stakeholders outside of learning and talent development. In fact, you can get good enough information with your own team and systems.
Training and HR departments are used to going at it alone—rolling out initiatives within a set budget and using surveys to evaluate how employees perceive the quality and effectiveness of initiatives. The employee insights that come from surveys are only part of the picture. Further, survey findings don’t give you the hard data that c-suite executives need to make decisions about strategy and budget allocations.

By engaging stakeholders from around the organization, your initiatives will benefit from the support of organizational context and can be aligned with high-level business strategy. When it comes time to evaluate, the stakeholders will help you determine the right metrics. And by having their buy-in to the evaluation design, you get results that are credible and based on a logical framework. Ultimately, you gain c-suite support by engaging with your counterparts in disparate divisions.

2. You can’t quantify soft skill development. Sure, we need things like leadership development and mentoring, but you can’t prove an impact on profitability.
Consider this question: if soft skill development doesn’t impact profitability, why do business leaders continue to fund it? Conventional wisdom knows the importance of soft skill development. At the same time, it’s one of the first places leaders look to make cuts when budgets are tight. Soft skill development is thought of as a long-term investment, which makes it easier to put on hold when short-term profits are threatened.

The fact is, soft skills can be quantified, and their impact can be traced to the bottom line. Thought leaders John Boudreau, Tom Davenport, and Michael Echols have offered proof that the intangibles are no longer unmeasurable. If you doubt whether myth #2 is really a myth, take some time to explore their websites.

Measuring soft skills requires several key components: stakeholder buy-in, aligning the initiative with business goals, disparate data sources from around the organization, analysis using multivariate statistics and a healthy dose of creative problem solving. Leading organizations are well-versed in measuring their investments in human capital and using their findings to make improvements.

3. Getting to ROI on human capital investments is simply too hard, and we don’t have the right data to do it.
We’ll agree with you that it’s hard work, but getting to ROI of human capital investments is very doable for the vast majority of organizations. Your company is already collecting all of the data you need—it’s up to you to engage the right stakeholders and find the data sources. In most cases, there’s no need to start tracking additional metrics. When it seems that important data is missing, consider creative alternatives. For example, when individual performance metrics are not tracked, consider performance at the facility level and compare to training saturation rates. Ask your stakeholders to help identify metrics—chances are they’re tracking things you aren’t even aware of and can tell you what they expect from their people as the result of a human capital initiative.

All three of these myths have one thing in common: they arise from a lack of stakeholder alignment around human capital initiatives. Today’s trailblazers are breaking down traditional silos and engaging their colleagues from other fields to align strategies and ensure they’re supporting one another. Isn’t it time you did the same?

Gene Pease is cofounder and CEO of Capital Analytics, a consultancy revolutionizing the way companies evaluate their investments in people. He is the co-author of Human Capital Analytics: How to Harness the Potential of Your Organization’s Greatest Asset (John Wiley & Sons, 2013).

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