Explore the research conducted as part of this programme of work
Browse a selection of research reports, white papers and commentaries on human capital analytics from leading organisations in the field.
2015 Talent Shortage Survey (Manpower, 2015)
A global survey of 41,700 hiring managers in 42 countries highlighting where talent shortages are most severe, what companies are or are not doing to close talent shortages as well as perceived business impact of talent shortages.
While experiencing one of the lowest talent shortages worldwide, 1 in 7 UK hiring managers report experiencing difficulty filling vacancies.
A consistent trend across all geographies is a greater challenge filling frontline and technical vacancies than back office and managerial vacancies.
Across the survey, 54% or around 1 in 2 report talent shortages having a medium to high impact on meeting client needs yet only 20% or 1 in 5 report their company is revising its people practices such as more training and development for existing staff, and only 5% or 1 in 20 report redesigning existing work procedures to manage talent gaps.
for more information, visit the Manpower website
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Where is the workforce in corporate reporting? (NAPF, 2015)
This paper describes increasing pressure from investors and their clients for more open reporting of a company’s human capital.
Workforce composition is cited as one of four fundamental metrics companies should report on, including the numbers or proportions of permanent, temporary and contingent labour in addition to the mix of ages at different levels of seniority.
Such disclosures are seen as providing investors with an insight into whether succession planning is operating appropriately, provide a better understanding of the fundamentals of the employment model and allow judgements to be made about its appropriateness and sustainability.
While a 2014 NAPF survey showed 3 in 5 members citing composition and diversity of the board as an important factor in investment decisions, Bloomberg data indicates that in 2014 only around 1 in 9 or 11% of FTSE 100 companies shared data on the broader composition of their workforce.
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Linking human capital to business performance (Human Management Capital Institute)
This paper critiques typical metrics such as revenue or profit per full time employee (FTE) as inadequate. Using these traditional metrics, companies are failing to show how human capital along with other capitals are driving or destroying value.
The fundamental metric is Total Cost of Workforce (TCOW). How well a company is managing its human capital costs can be tracked through TCOW as a percentage of revenue and profit. Return on human capital investment (HCI) can be calculated as net operating profit (NOP) relative to TCOW.
Shifts in TCOW relative to market conditions and business models are shown to be related to the productivity, growth and share price performance of 22,000 companies tracked between 1996 and 2011.
Companies showing a higher return on HCI and more effective management of TCOW achieved a 4% compound annual growth rate (CAGR) in share price between 1996 and 2011 compared to a -1.1% CAGR for companies showing a lower return on HCI.
Read the full report here.
Retaining employees - How much does money matter (Gallup, 2016)
This online article argues for a more rounded approach to reward and recognition including the factors that drive the engagement of employees as well as the positive evaluations employees form of themselves.
It cites Forbes showing that, while the average US salary increase in 2014 was around 3%, the boost in pay received by workers leaving for a new position elsewhere was between 10 and 20%.
It also compares the percentage of employees from their research who would leave for a raise of 20%. While 54% of disengaged employees state they would leave, 37% of engaged employees said they would.
The article goes on to argue that focusing on employee well-being through more holistic wellness programmes can help organisations manage their salary and retention strategy with employees 59% less likely to look for a job with another organisation.
Reinventing performance management (Harvard Business Review, 2015)
Marcus Buckingham and Ashley Goodall, Harvard Business Review, 2015
This article describes a rethink of performance management at Deloitte. It cites wider research showing that 58% of executives surveyed did not see their performance management processes as driving either employee engagement or higher performance, and a Journal of Applied Psychology paper showing that only 21% of the variation in performance ratings due to actual differences in performance.
The redesign aimed at shifting the conversation to who are high performers and what do we need to do to lift performance.
It focused on four statements asked of the team leader:
- given what I know of this person’s performance, and if it were my money, I would award this person the highest possible compensation increase and bonus [measures overall performance and unique value to the organisation]
- given what I know of this person’s performance, I would always want him or her on my team [measures ability to work well with others]
- this person is at risk for low performance [identifies problems that might harm the customer or the team]
- this person is ready for promotion today [measures potential].
The hidden value of organisational health - and how to capture it (McKinsey, 2014)
This article describes research into 37 management practices and how these can be articulated in the form of four recipes for value creation.
One of these recipes, Execution Edge, was proposed as most relevant for organisations and situations in which continuous improvement, increases in productivity and the elimination of waste are important. Characteristics of this recipe include knowledge sharing, employee involvement, creative and entrepreneurial drive, bottom-up innovation and talent development.
This recipe places a heavy emphasis on sharing knowledge across employees and work sites to foster innovation and, paradoxically, standardisation. Knowledge sharing helps to manage the trade-offs between the top-down need for network wide consistency and bottom-up encouragement of employees. Without it, the best ideas might not get disseminated across different units of an organisation.
This article does not advocate a one size fits all approach but rather recommends identifying the recipe that best meets a business need.
The value of training (IBM, 2014)
This survey explores whether employees are getting the training they need to perform their jobs effectively. In the best performing companies, 84% of employees responded positively to this question while only 16% responded positively among the worst performing organisations. New employees who receive training for their jobs report a 42% higher intention to stay than new employees who do not receive training for their jobs.
The survey suggests that the amount of training required to increase achievement of objectives may only be marginal. An increase of 4% to 6% of project budgets spent on training IT project team members was associated with an increase from 40% to 70% plus in the likelihood of project objectives being met.
The data showed 78% of executives versus 53% of individual contributors feel employees get the training they need pointing to a need for a more data driven approach to identifying skills gaps, in meeting training needs and in ensuring that training is aligned to business need and maximises the return to the organisation.
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Demystifing organisational design: understanding the 'Three Critical Elements' (BCG, 2010)
Boston Consulting Group, 2010
This short paper describes three critical elements to organisational design:
Structures and more specifically P&L accountabilities and functional reporting lines. One of the tests offered by the authors is whether the structure has more than eight layers of management and a manager has less than seven spans of control. If it does, the paper suggest this is likely to be an inefficient structure.
Individual Capabilities where the authors see organisations making two mistakes: redesigning the organisation around a small number of key executives and/or staffing based on the capabilities for the old and not the new organisational design. As a consequence of these mistakes, companies often neglect to factor in training, hiring, career paths and job rotations – i.e. the people processes needed to support the new organisational design.
Roles & Collaboration for which the authors outline four aspects of an executive’s charter critical to this element of organisational design: individual and shared responsibilities for the completion of tasks; key performance indicators for measuring the achievement of accountabilities; decision rights necessary to meet the accountabilities; desired leadership behaviours for the role.
For more information, visit the Boston Consulting Group website.
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The Leadership Gap - what you need, and still don't have, when it comes to leadership talent (Centre for Creative Leadership, 2015)
Centre for Creative Leadership, 2015
This research looks at 20 leadership capabilities for today and the future across businesses, government agencies, nonprofits and educational organisations.
The research based on three questions in identifying health of leadership capabilities:
- Who do we have?
- What do they need to do?
- Are they equipped to do it?
Findings show that organisations are on track for five skills/competencies and generally hold reserves another four. Gaps identified in six competencies/skills and results suggest that organisations are overinvesting in five skills/competencies.
The paper recommends a focus on nine competencies where current capability and future need show significant gaps: change management, inspiring commitment, leading employees, taking the initiative, building collaborative relationships, strategic perspective, strategic planning, participative management and being a quick learner.
Read the full article here.
Why diversity matters (McKinsey, 2015)
This research shows that companies in the top quartile for gender or racial and ethnic diversity are more likely to have financial returns above their national industry medians. Companies in the bottom quartile in these dimensions are statistically less likely to achieve above-average returns.
The article argues that more diverse companies are better able to win top talent and improve their customer orientation, employee satisfaction, and decision making, leading to a virtuous cycle of increasing returns. This in turn suggests that other kinds of diversity—for example, in age, sexual orientation, and experience (such as a global mind-set and cultural fluency)—are also likely to bring some level of competitive advantage for companies that can attract and retain such diverse talent.
While the UK ranks above other countries such as Brazil and US for the diversity of its senior leadership teams, 78 percent of UK companies have senior-leadership teams that fail to reflect the demographic composition of the country’s labour force and population.
The quest for workforce capability - create a global skills supply (Deloitte, 2014)
This global survey of organisations shows the extent to which organisations are addressing workforce capability challenges.
Data shows the UK to be one of the geographies where the gap between urgency of workforce capability challenges and readiness to address those challenges is the largest (ranking third of 24 countries in terms of gap between readiness and urgency on the Deloitte Capability Grid).
Of the organisations surveyed, 75% recognised workforce capability as an urgent challenges while only 15% reported being ready to address that challenge.
Three reasons are given for the capability gap:
- The belief that gaps can be filled by hiring the right person despite shortages in qualified applicants
- The failure to recognise the time required to build key technical skills and knowledge
- Out of date and unfit for purpose learning and development philosophies and programmes
This research advocates that organisations adopt a supply chain approach to addressing workforce capability.
Breakthrough Performance in the New Work Environment (CEB, 2013)
Research on 1,500 senior executives reported a 20% compound increase required in employee performance levels in coming years.
To avoid persisting with the more-for-less approach, the research proposes a new performance model which combines individual task performance with a new component of network performance to give the Enterprise Contributor model of employee performance.
Research using this model shows that organisations able to tap into enterprise contribution showed a 10% increase in profitability compared to the 5% achieved by organisations labouring under the older individual task performance model. Managers and leaders need to enable and strengthen three key behaviours across employees:
- Connect with networks through which employees can access resources, know-how and decision-makers
- Consume effectively what employees need from those networks
- Contribute to share resources, insight and know-how and sustain the value in networks
What's the Hard Return on Employee Wellness Programs? (Harvard Business Review, 2010)
Leonard L. Berry, Ann M. Mirabito and William B. Baun – Harvard Business Review, 2010
This article examines financial and data across 10 organisations on the economic return of wellness programmes deployed by companies to manage health risks to employees and to boost employee engagement.
It outlines a wellness programme dashboard driven by metrics on:
- Utilisation – number of employee involved
- Penetration – number of employees participating in at least one wellness activity
- Depth – percentage of employees who are light versus heavy users of the programme
- Sustainability – number of employees who continue to engage in a risk reducing behaviour
- Satisfaction – with the scope, relevance, quality and accessibility of the programme
- Health-risk status – low, medium and high proportions of employees
- Medical care and pharmaceutical costs (e.g. claims)
- Disability costs
- Workers compensation costs
- Safety – incident frequency and days lost through incidents
- Productivity including absenteeism
- Trust in management
- Voluntary turnover
- Recommendation of organisation as an employer
Agility: It rhymes with stability (McKinsey, 2015)
This article defines agility as a speed to act supported by the stability of an enduring backbone to the organisation in the form of structures and belief systems. It cites research by Columbia University that found that agile companies increased their net income by 5% annually.
People processes such as performance management are cited as a key factor in distinguishing agile from less agile organisations.
The article cites one company where the sales leaders, rewarded by top-line numbers, tended to inflate inventory needs while logistics managers, judged by waste-minimisation, significantly reduced that figure when they could. The supply chain therefore often exceeded its targets, but salespeople frequently ran out of stock and key customers were alienated.
To solve this problem, the company built a few common KPIs (sales-forecast accuracy and customer satisfaction) so that all functions had some stake in business outcomes and a framework for frequent shared performance and target reviews between functions.
Why management matters for productivity (McKinsey, 2014)
This is article explores management practices and performance of more than 4,000 medium sized manufacturing operations in Europe, the US and Asia.
Companies were rated on 18 management practices organised around shop floor operations, performance management and people management. Stronger scores on management practices were associated with measures of labour productivity, sales growth and return on capital employed.
A one point improvement in management practice score on a scale from 1 to 5 was associated with the same increase in output as a 25 percent increase in the labour force or a 65 percent increase in invested capital.
The authors state: “… the majority of firms are making no attempt to compare their own management behaviour with accepted practices or even with that of other firms in their sector. As a consequence, many organizations are probably missing out on an opportunity for significant improvement because they simply do not recognize that their own management practices are so poor..."
Unlocking the Hidden Wealth of Organisations (Cass Business School, 2013)
Cass Business School, 2013
This research explores 8 messages from case study organisations:
- Context. The interpretation of intellectual capital reports requires an understanding of the contexts in which the reporting organisation operates.
- Value creation. Explicitly managing brand value focuses the attention of stakeholders on the ways in which the organisation creates value.
- Risk. The reporting of Corporate Social Responsibility (CSR) or intellectual capital (IC) exposes to public gaze both the strengths and weaknesses of the organisation.
- Innovation. CSR and IC reporting is a company-wide way of thinking that promotes innovation and creativity. Systems must be in place to manage, reward and capitalise on such behaviours.
- Communication. The management of intangibles creates a potent channel for communicating with stakeholders and for motivating staff.
- Objectives. To secure the active participation of staff, the organisation’s mission should be expressed in terms of explicit knowledge goals.
- Performance. The effective management of intangibles builds on past performance by causing employees to think about improvements and innovations that will address and deliver sound performance in the future.
Discover expert opinion of how HR analytics and the reporting of human capital is changing the world of work
Find out how other businesses are using people measures to improve their organisations through these case studies