The value of the HR asset can be calculated and an increasing number of organisations are putting the HR assets onto the balance sheet, although currently only as a balance sheet note, but it is still used and reported on. In the valuation of our company the HR assets explains the gap between book value and market capitalisation, and that gap is made up of human capital and other intellectual capital.
This places the focus on increasing the value of our people and to do this we need to define the structures and positions correctly incorporating a performance management system that empowers the employees; letting them produce the outcomes using initiative and innovation. This will progressively increase the competence and therefore increase productivity i.e. an increase in HR asset value.
To be in a position to allow the organisation to place the HR on the balance sheet (Note) the organisation must have a clear strategic direction/focus, be outcome focussed and the key HR programs must be integrated:
- Strategic Planning – current and future capability and performance frameworks;
- Structure Management;
- Role design (size) and position evaluation – a precise form of the old outdated “job” evaluation e.g. point-factor
- Employee Management; management of an incumbent’s performance achieved against the performance set in the role description
- Performance Management system;
- The performance measurement envelope – target, high stretch and danger
- Performance achievement management – predictive modelling and performance reward calculations
- Recruitment and Assessment – acquiring and matching people against role design;
- Learning and development based on competency gap
- Strategic Reporting including HR asset value as a “balance sheet” note.
Maxumise is a consulting company with over 20 year history of Assisting Organisations Improve their Performance through the better management of resources, particularly human resources.
Maxumise provides a Human Capital Management methodology as well as the HCM software system “HRmonise” to support the outcome-based methodology ensuring integration of the business and human asset management. Human Capital Management is critical in the proper management of the business assets and becomes the driver of performance and change throughout the organisation. www.maxumise.com or contact: firstname.lastname@example.org
Maxumise licences the methodology and access to HRmonise for qualifying parties.