The “Why?” of measuring human capital investment is a relatively straightforward question. Without some form of measurement, there is no means to assess the performance or benefit.
The “What?” can be more complex and less clear when the investment objectives are broader conceptually or operationally, such as to increase employee engagement. Even a more specific objective, such as retention, can have greater variance or impact when examined further: retention of skilled staff is critically important for success, while retention of poor performers can drain resources.
But it is the “How?” that creates the most challenge. Capital Analytics’ comprehensive research methodology incorporates the science of observational statistics, the interdisciplinary field of human performance improvement and the analysis of human capital investment. Much like a clinical drug trial, this approach establishes a test group, gathering data from people who have received a particular intervention (such as training), and a control group, creating a baseline of people who have not been trained. Most often, data for the analysis can be mined from the organization’s own systems. From examination of this data, a variety of factors can be isolated, analyzed and assessed for impact.
The Science Behind the Methodology
Capital Analytics’ science draws on statistical techniques — primarily General Linear Models — designed to measure the strength and direction of complex, interdependent factors. General Linear Modeling is regarded as a “best-in-class” approach that has been used in observational statistics. By treating a corporate initiative as an observational study, Capital Analytics is able to leverage the best mathematical models and techniques, complemented by business insight and solid strategy, to determine the effect of individual factors on a particular business metric. Typically, effects are reported when there is a 95% certainty of their impact.
Capital Analytics then analyzes the results to identify the link between the human capital activity and financial metrics, which can then be connected to business strategies, division initiatives and bottom-line profits. Through this analysis, management knows exactly how well their human capital activities are supporting the corporate mission.
The tools of a scientist; the perspective of an executive.