I have to admit to an initial feeling of déjà vu when UKCES and Investors in People (IiP) first spoke to me about chairing the Valuing your Talent (VyT) programme. After all, there have been several attempts over the years to identify a suite of human capital metrics that could be applied to every organisation – none of which achieved their ultimate objectives.
But what rapidly became clear to me was that the VyT initiative was different to many of these earlier attempts in two important ways.
First, UKCES and IiP wanted the project to be driven by a partnership comprising the CIPD, CIMA, the Chartered Management Institute, Lancaster University Management School and the RSA. This is a partnership that mirrors the professional stakeholder groups which need to engage in dialogue if the value of human capital is ever going to be meaningfully measured – HR, finance, and wider organisational leadership.
Second, UKCES and IiP intended to give this a non-prescriptive brief: find the best way for an organisation to assess the value created by its people. In other words, there was no attempt to predetermine the outcome of the project, simply find the best way forward.
In my opinion, the partnership has succeeded so far.
For me, the most exciting outcome of the VyT programme is that the partnership has identified a common language that HR and finance can share to describe the process of value creation.
I believe this will be key to the sustained success of the VyT framework, as the more that HR and finance can share terminology and measures, the greater the quality of insights we will be able to share with the wider leadership team. In short, it’s a unique opportunity for cross-functional collaboration.
Another important feature of the VyT framework is that the measures that populate it are ‘indicative’ rather than ‘prescriptive’. For example, it recommends that organisational productivity outcomes and the costs of recruitment and retention activities are key measures, but does not impose a formula for their calculation. Rather, it leaves it up to individual organisations to create metrics that reflect both their own strategic priorities and what the report politely refers to as “the maturity of [the HR team’s] analytical techniques”.
This latter point reflects the findings of a recent survey by Deloitte which found that 80% of the UK business and HR leaders surveyed felt their teams lacked the data analytics skills they needed. However, I think the VyT framework creates an exciting opportunity for HR to engage in cross-functional dialogue and collaboration with a discipline where analytical skills are more highly developed.
The final key area where I think the VyT framework succeeds is that it is designed to harness both ‘hard’ and ‘soft’ organisational data. In a service-led organisation like mine, McDonald’s, an important part of our value creation process is emotional rather than functional: how our customers ‘feel’ about the service they receive. Being able to include these ‘softer’ emotional factors within the framework is, therefore, important.
If you thought VyT sounded all too familiar, I would encourage you to take a closer look at the partnership’s conclusions online.
If the HR community gets behind it, I believe it could be one of the most important innovations the discipline has ever developed.
David Fairhurst is chief people officer, Europe, at McDonald’s