Over the past two decades, countless academics, researchers and thought leaders have tried to prove the value of human capital.  None have succeeded in developing a definitive, iron-clad quantitative model.

But I ask the simple question WHY?  WHY is this an important question to answer?  What is the VALUE in the answer?   And what could we do DIFFERENTLY or BETTER if we did develop such a model?

When building talent management strategies for companies, I spend about 1/3 of my time working with business leaders, CEO’s, CFO’s, General Managers responsible for P&L, as well as line managers with a handful of direct reports.  I’ve worked with over a hundred companies over the past 3 years and never once have I met a business leader who needed quantitative proof of the value of human capital.  They know it. They get it. They live it.

In fact, business leaders understand at an even more fundamental level than many HR practitioners the importance of talent.  I have countless stories of business leaders who rattle off during the course of an interview the financial impact of human capital to their business.  Here a few:

• The VP of Operations for a large manufacturer who quoted the exact dollar amount of lost revenue due to the inability to fill a plant maintenance worker position

• The head of engineering for high tech company who cites talent issues as the reason for a delayed product launch

• The GM of a well-known US retailer who fires off the opportunity cost (framed in terms of revenue and profit) of high turnover

It is undisputed by business that engaged talent with the right skills, competencies, and knowledge in the right job leads to higher levels of business results. 

Let’s stop battling windmills and choose a more worthy opponent.  Let’s instead take on the following:

• What business measures do business leaders care about?

• How do talent attributes (skills, competencies, performance ratings, potential, source of hire, experience, engagement, learning agility, etc.) correlate with these measures?

• And finally, how can HR and the business jointly take ACTION to influence these attributes and drive higher levels of business results?

These questions CAN be answered, are starting to be answered by leading HR organizations, and drive significant value into the business.