Trends and their impact on Human Сapital measurement

The world of work is changing and the way that human capital is managed, measured and reported on by organisations must also evolve. The global outlook for organisations is one influenced by volatility, uncertainty and increasingly complex relationships with marketplaces and customers.

The importance of Human Capital

Global economic activity is subdued, and competitive advantage is becoming even harder to secure for multinational organisations as its nature is fundamentally shifting. How organisations appreciate the value of their human capital (the knowledge, skills and abilities of the workforce) is also changing.

The importance of human capital to organisation, communities and wider society cannot be underestimated.

It is one of the most important determinants of long-term economic success and must be leveraged in combination with other economic resources over the short, medium and long term to deliver value

Businesses are under considerable pressure from economic, social and competitive factors to improve their business models and build more innovation, agility and resilience into their strategies and practice.

Against this backdrop, many fail to make good use of a vital resource in economies driven by knowledge: human capital.

Work trends: How the world of work is evolving

Recent research highlights the trends which are believed to be influencing how human capital management will evolve in the future. Academic and business literature considers a variety of forces which have the potential to drive considerable change in the workplace, and it is in this context that organisations must now operate by maximising the value it generates through the knowledge and skills of its workforce. If they don’t, it is unlikely that organisations and wider economies will flourish and grow.

Global organisations are investing in the capability to meet the needs of the future trends.

Using the expertise of professional service firms, they are exploring these issues in detail and are adapting their business models to fit their future requirements.

The predictions of professional service firms which advise some of the world’s biggest organisations map closely to the trends:

  1. Utilisation of technology.
  2. Workforce diversity.
  3. Globalisation.
  4. Industrial change.
  5. Individualism.
  6. Social responsibility.
  7. Quality of education.
  8. Diversity of employment relationships.

Trend 1: Utilisation of technology

Prediction

  • Steady growth in jobs that require degree qualification.
  • Demand-led business models grow in prominence.
  • Normalisation of 24/7 ‘always on’ services.
  • Continual organisation change.

Impact on Human Capital management and measurement

  • Management of knowledge capital and individual human capital as opposed to units of human resource.
  • Ever increasing availability of customer and employee data requiring sophisticated analytics.
  • Technology use for ‘always on’ working will require specific employee knowledge and capability, including autonomy and self-motivation.

Trend 2: Workforce diversity

Prediction

  • Growing competition for entry-level jobs.
  • Growing demand for flexible working arrangements as working patterns evolve.
  • Increased diversity of thought and opportunities for knowledge-sharing.

Impact on Human Capital management and measurement

  • Increased requirements on organisations to provide data as to how human capital is developing and improving.
  • Greater need for communication technologies to link individuals to share knowledge and skills and generate organisation knowledge capital.

Trend 3: Globalisation

Prediction

  • Integration of talent management techniques from local scale to global scale with regards to culture and corporate management.
  • Offshoring of jobs for efficiency savings and to alleviate local skills shortages.
  • Mass movements of people due to increased political, social and environmental instability.

Impact on Human Capital management and measurement

  • People management and HR processes will become more project based – human capital utilisation will focus on the delivery of discrete projects via matrix-based collaborative working.
  • Measures of culture on global scale will be required to steer human capital development towards strategy-based priorities.

Trend 4: Industrial change

Prediction

  • Steady growth in the proportion of jobs that require degree-level or professional skills.
  • Evolution of business operating models to provide demand-led services, matching customers with (often independent) contractors.
  • Normalisation of 24/7 services, and remote working to become standard practice.
  • Ongoing organisational change, as the business responds to the repercussions of the changing external context.

Impact on Human Capital management and measurement

  • Knowledge capital has more value, beyond individual human capital, as organisations look to capture the skills and expertise of individuals in organisational systems, processes and policies.
  • Workforce skills and knowledge will require continuous development and investment through strategically aligned learning and development practices.
  • Evolving performance management drivers needed to tap into the intrinsic motivators of individuals, particularly beyond task- or process-oriented performance measurement.

Trend 5: Individualism

Prediction

  • Demand for better work–life balance with a pattern that suits workers’ individual circumstances.
  • High-skilled employees expressing their personal ambitions, rather than negotiating working conditions via traditional collective channels, such as trade unions.
  • Both customers and employees expect systems to flex to meet their needs.

Impact on Human Capital management and measurement

  • Human capital management that is more aligned to the needs of individuals, including their development requirements, through improved flexible working arrangements.
  • Human capital development opportunities will be a requirement for knowledge workers entering the organisation, and will become a fundamental part of the knowledge business brand.

Trend 6: Social responsibility

Prediction

  • Greater alignment between society and business agendas, with sustainable business models becoming the norm.
  • Pressure to introduce technologies for a more efficient use of resources, such as with reducing carbon footprint through smart working initiatives.
  • Core focus on managing reputation and building trust to attract both customers and talent.

Impact on Human Capital management and measurement

  • Human capital measures and reporting will point towards the greater social good of the organisation, and be used to demonstrate the materiality of human capital to the organisation.
  • Resource efficiency will drive greater emphasis on management techniques that drive long-term thinking and awareness of resource issues and opportunities for resource reduction.

Trend 7: Quality of education

Prediction

  • Improvement of educational standards worldwide, stimulated by governments seeking to boost their competitive position in the global marketplace.
  • Greater onus on continued individual development, lifelong learning, retraining and multiskilling.
  • Rise in accessible educational opportunities, open universities and peer-to-peer learning.

Impact on Human Capital management and measurement

  • Overqualified individuals with high human capital may need their expectations to be managed as to the scope and potential of their role.
  • Alternative forms of employment may also need to be designed.
  • Human capital development through mentoring schemes and other forms of workplace support to help new employees integrate into the organisation and role.

Trend 8: Diversity of employment relationships

Prediction

  • Diversity of working patterns, as well as the types of employment contracts, driven by the changing needs of organisations in when and how they want to provide services, as well as by the evolving expectations of individuals about the ways of working.
  • Two-tiered workforce, with the traditional core comprising permanent staff, complemented by a large group of contractors and freelancers.
  • Fragmentation of organisations into smaller units, representing collaborative networks of contingent workers.

Impact on Human Capital management and measurement

  • Customer service data will drive employment demand, and matching of human capital to customers will require data and measurement of value created.
  • More transparent collection and reporting of human capital data with regards to diversity, measuring aspects of thought diversity as well as protected characteristics; increasing emphasis on the development of diverse talent pools against varied employment types.

To understand exactly how organisations can operate in this changing environment and make the most of the valuable human capital they have access to, we must look to their business models.

These models represent how organisations approach markets, customers, competitors, technology, values and behaviours, and are an important indication of exactly how strong or weak an organisation and its strategy may be.

Human Capital Leverage

Самое большое профессиональное открытие этого года, это, конечно, открытие Human Capital Leverage. В чем суть «рычага человеческого капитала»? Формула его проста: Human Capital Leverage = 1п. / + 25% / +

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The business model

An organisation’s business model sits at the heart of its business strategy, and at the centre of the business model sits people.

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