IN TODAY’S KNOWLEDGE ECONOMY, an organization’s workforce is its most important asset as well as one of its greatest investments. The management of human capital — the sum of a workforce’s skill, knowledge and experience — is particularly important in a challenging economic environment, as companies push to improve top- and bottom-line performance while aggressively managing costs.
Yet in many companies there has been a lack of understanding and visibility into how human capital is managed — a shortage of analytical insights about where investments are made, what form the investments take, their impact, and how best to shift resources and practices. In a survey by Mercer, for example, CFOs reported that their organizations spent 36 percent of revenue on human expenses, but only 16 percent said they had anything more than a moderate understanding of the return on human capital investment. In a similar study of 3,000 senior managers, executives gave their firms low marks when describing the employee-related data they need for decisions. The gap between the data they needed and actual quality of the data they received, leaders said, was more than 50 percentage points.