CAHRS - Strategic HRM Measurement in the 21st Cent

WORKINGPAPERSERIESStrategicHRMMeasurementinthe21stCentury:FromJustifyingHRtoStrategicTalentLeadershipJohnW.BoudreauPeterM.RamstadWorkingPaper02-15CAHRS/CornellUniversity187IvesHallIthaca,NY14853-3901USATel.607255-9358:FromJustifyingHRtoStrategicTalentLeadershipProfessorJohnW.BoudreauDepartmentofHumanResourceStudies,ILRSchoolDirector,CenterforAdvancedHumanResourceStudies(CAHRS)CornellUniversity187IvesHallIthaca,NewYork14853-3901:607-255-9358Voice-mail:607-255-7785F:[e-mail],StrategyandFinancePersonnelDecisionsInternational45South7thStreet,Suite#2000Minneapolis,MN55402Phone:[phone]Fax:(612)[e-mail]14,2002“Talentship,”anditsimplicationsforthefutureofstrategicHRmeasurement.Usingthisframework,wereviewleadingmeasurementapproaches,describetheircontributions,andidentifythesignificantopportunitiesforimprovementinfutureHRmeasurementsystems.Chaptertoappearintheforthcoming:HRMinthe21stCentury,MarshallGoldsmith,RobertP.Gandossy&MarcS.Efron(eds.).NewYork:JohnWileyCopyright©2002JohnBoudreauandPeterM.Ramstad(PDI)CommentsWelcome.STATEMENTOFCONFIDENTIALITYThismanuscriptisunpublishedcopyrightedworkcontainingtradesecretandotherproprietaryinformationofJohnW.BoudreauandPeterM.Ramstad.ThiscopyhasbeenprovidedonthebasisofstrictconfidentialityandtheexpressunderstandingthatitmaynotbereproducedwithoutexpresspermissionfromBoudreauandRamstad.StrategicHRMMeasurementinthe21stCenturyCAHRSWP02-15Page4“Noteverythingthatcanbecountedcounts,andnoteverythingthatcountscanbecounted.”IntroductionThebeginningofthe21stcenturyrevealsboththepromiseandthecurseofhumanresourcemanagement(HRM)measurement.Firstthegoodnews.Theaccountingandmanagementprofessionsrecognizethattraditionalcorporatemeasurementsystemsmustbeenhancedtoaccountforintangiblesinaknowledge-basedeconomy(BrookingsInstitute2000).Greatercorporateaccountabilityforhumanandintellectualcapitalisnowaconstantdrumbeat(e.g.,Boudreau&Ramstad,1999).Conceptssuchas“knowledge,intellect,creativity,innovation,capabilities,commitment,”andeven“fun”havebecomepartofthelanguageofbusiness,instrategy,finance,operationsandmarketing.Peopleissuesare“atthetable,”andbeingatthetablemeansansweringtoughquestionsfromshareholders,investmentanalysts,communities,employmentcandidatesandemployees,suchas:•“Isdecreasingcost-per-hiregood,orarewetappingpoolsofless-desirableapplicantswhoareeasiertoattract?”•“Ifouremployeescomplete40hoursoftrainingperyear,arewebuildingessentialcapabilitiesorjustfillingseatsinclasses?”•“Dowehavethetalentneededtosucceed?”Organizationsmustincreasinglydemonstrate,withdata,thattheirhumanresourcestrategiessignificantlyenhancecompetitiveadvantage,notsimplythattheyareefficientor“best-in-class”.Thisunprecedentedattentiontohumancapitalhasbeenmatchedbyanexplosionofhumancapitaldataandmeasurementapproaches.HRinformationsystemsacceleratethetrend,continuallyloweringthecostandincreasingthespeedofdatastorageanddelivery.Itisnowquitefeasibletoobtainhundredsofhumancapitalmeasuresinaneyeblink,andtoconductequallydizzying“cuts”andtrends.IndividualmanagerscanchoosetoexamineeverythingfromStrategicHRMMeasurementinthe21stCenturyCAHRSWP02-15Page5headcounttothenumberofresumesreceived,toturnovertoemployeeattitudesbrokendownbydivision,time,regionordiversitycategory,andtocustomizetheinformationinanywaytheywish,often24hoursadaythroughawebportal.Asonemanagerjokinglyremarkedtous,“Ourfuturedatasystemscananalyzeemployeesatisfactionbyeyecolorifwewanted…butwhywouldanyonewantto?”Whichbringsustothepotentialbadnews.TheexplosionofmeasurementtechnologiesandHRMdataposesasignificantrisk.Informationoverload,naivetéandunmetexpectationscouldstiflethe21stcenturyevolutionoftheHRMprofessionbeforeitbegins.Thisdilemmaisnotintractable,butitisobviouslynotsolvedbydevelopingmoremeasures.Theproblemismorefundamental.ThisnextevolutionarystageforHRistodevelopatruedecisionsciencefortalent,builtontoday’sHRMprofessionalpractices(Boudreau&Ramstad,inpress;2002).InthischapterwesuggesttheimplicationsofsuchadecisionscienceforHRmeasures.MeasuresMustSupport“Talentship,”aDecisionScienceforTalentThereareatleastthreemarkets