More than 40% of HR managers dont see measuring their Human Capital as a priority and a fifth never expect to report on it in their annual report, a recent survey from Personnel Today showed.

With the statutory requirement for listed companies to report on people policies in their OFRs (Operating and Financial Reviews) this year, a lot of companies are anxious about the timely implementation of these regulations and how they can best comply with them. Regardless of legislation companies now understand that people add huge value, but tapping this source of value requires both measurement and management.

There are a number of common stages to all evaluation and measurement exercises:

• What is the scope of the project?

It is important to define the scope of the study. You might want to conduct human capital measurement throughout the whole organization and for all employees, although for most global or even national companies, you're likely to discover that your systems are not identical across locations or units. In that case you might want to review your existing systems and look to work with one nationwide or global system.

• Assess the data sources and information systems

Many organizations have serious concerns about the quality of their existing employee data and are unsure of its suitability for undertaking human capital measurement and reporting. Many HR systems contain a wealth of readily available data, capturing facts about the employees over time, but simply dont have the ability to provide the reports and management information that organizations demand. However, advances in modern HR information systems now enable companies to use their existing HR information more effectively.

To make the most of your HR information for evaluating and measuring your employee value, you need to ask some basic questions:

• What are the software packages or vendors currently used?
• Over what period of time have existing systems been in place?
• Do they differ by geography, by business unit, by division?
• What amount and type of historical employee data is available?
• Have there been any major organizational changes, such as acquisitions, that might affect the consistency, comparability and continuity of data captured?
• Is the measurement initiative enterprise-wide or does it have a specific focus, e.g. key employee segments, line of business, function, geography?
• What other software packages are available that can replace our existing one?

Answering these questions early on will help you to determine your critical elements. You need to assess the feasibility of the measurement study you're contemplating. Unless data is still on paper files, you should feel confident you can move ahead. The amount of historical data is also critical. Experience suggests that a minimum of three years and at most five years of employee data is optimal.

Identify and collect the relevant data

The list below presents examples of sources and the types of data that might be collected to support human capital reporting. There are two caveats. First, depending on the scope and the issue you're trying to address, you'll need to select which data is relevant for your organization. Second, very few organizations, if any, will have all of those data sources and categories available. So you'll need to focus on collecting relevant and reliable data today and identify those areas you will need to capture or harmonize in the future.

Below we describe some sources of HR data and provide examples of data that should be captured:

HR practices and workforce data

HR and workforce data is the 'must have' for human capital reporting. Compiling and analyzing this data will enable the organization to understand the characteristics of its workforce, measure the effectiveness of its people policies and assess the value of its human capital assets. It will provide a fact-based platform for making many essential human capital management decisions.

Data sources: HRIS (e.g. Vizual Business Tools HR.net) to include payroll systems, training and development, performance management & recruitment.

HRIS and payroll data on the workforce:

• Demographics, e.g. age, race, gender.
• Status, e.g. full-time, part-time, fixed term, temporary.
• Job history, e.g. length of service, job title, job level.
• Availability, e.g. sickness days, absence, holidays.
• Compensation, e.g. base salary, bonus, benefits.
• Mobility, e.g. transfers, international assignments.
• Organization and management, e.g. business unit/function/structure.

Complementary workforce data:

• Performance management, e.g. performance ratings, promotions, high-potentials.
• Training and development, e.g. training courses, training assessments.
• Skills and competencies, e.g. skills, languages, assessment centre ratings.
• Education, e.g. academic level, graduate/postgraduate qualifications.
• Pre-employment, e.g. recruitment source, years of prior experience.
• Succession planning, e.g. number of replacements identified.

Perceptual data:

• Employee survey, e.g. satisfaction, engagement, attitudes, intention to quit.
• Exit interviews.
• Executive interviews.