How can you measure the value people bring to an organisation? It’s a question that business and HR leaders have been grappling with for years, and the race to find a solution is heating up.
Could the answer be found in the concept of ‘organisational maturity’? That’s the big idea behind the Maturity Institute and its Organisation Maturity Rating (OMR), developed in collaboration with a Standard & Poor’s financial ratings firm. “[It is] based on our desire to demonstrate how human capital links to value and risk to a C-suite and investor audience,” explains MI founder Stuart Woollard.
The OMR itself is, as reported in July 2014’s issue of HR magazine, based on 10 pillars of maturity, from the organisation’s view of its human capital (cost or value-adding?) to the integration of the business and people strategy (is HR strategy informing the overall business strategy, or merely supporting it?).
Former Dell UK & Ireland HR director Caroline Grant describes it as “a holistic approach, which tries to equate to more strategic business metrics as well as operational HR metrics”. “It’s about time people started talking in a more considered way about how the people piece integrates into the business piece,” she adds.
So far it’s relatively simple, but the next step for the OMR is to engage with the investor and finance community. Working with City-based research and think tank Long Finance, the Maturity Institute is releasing an organisational maturity index, which will attempt to rate the UK’s largest 150 publicly listed firms. “It essentially involves gathering evidence, including from the company itself, around OMR key indicators, allowing us to gauge each one and then generate an overall OMR,” Woollard explains.
Corporate reporting and engaging with the investor community could be a key way for HR to gain influence, Maturity Institute board member and HR consultant Faith Jenner points out.
“In order to be influential HR needs to be able to make a case in language business understands, and that’s usually tied into the annual, quarterly or corporate reporting,” she says. “Indices of organisational maturity are valid just like a balance sheet.”
To best be able to add value in the corporate reporting space, she advises HR directors to develop a good relationship with their peers in finance, so that “finance will collaborate with [you] to produce date, rather than just audit HR’s data”.
Woollard adds that he has been excited by the positive response from the financial services and investment sectors, which are beginning to recognise the value human capital insights could bring. “For asset managers in particular, we are being asked to provide much deeper and comparative OMR analysis for specific industry sectors and companies in which they already hold stock or are viewing as an investment target,” he says. “This could be the most important development of all, as what becomes important to investors often drives the actions and behaviours of companies.”
The question now is whether HR leaders are willing and able to engage with corporate reporting and investor relations. It’s a subject HR magazine will be covering over the coming months, so watch this space.