Best Practices: A Blueprint for

Human Capital Management Strategy

 Measuring and Managing Human Capital Intelligence

Table of Contents

Introduction: The HR Revolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Moving from HR Management to Human Capital Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

A Single View: Making Human Capital Management Successful . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Case Study: U.S. Census Bureau . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

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The HR Revolution—Measuring

and Managing Human Capital

Intelligence was written by Betty

Silver, SAS Global Strategist for

Human Capital Management and

Blanche Shelton, SAS Government

Strategist and Analyst for Human

Capital Management.

Copyright © 2003 by SAS Institute

Inc., Cary, NC,. All rights reserved.

Credit must be given to the

publisher. Otherwise, no part of

this publication may be repro-

duced without prior permission of

the publisher.
 Measuring and Managing Human Capital Intelligence

The HR Revolution—Measuring and Managing Human

Capital Intelligence
One of the greatest ironies of the Internet age is that, far from replacing people, as some
feared it would, widespread use of advanced technology has confirmed that human talent is
truly an organization’s greatest asset. Organizations can gain a real advantage by applying
Internet technology to the measurement and management of its talent needs — the human
capital of the organization.

Government organizations are no exception. Reforms such as 1993’s Government Perfor-

mance Results Act and Clinger-Cohen have taken government to new levels of efficiency
and accountability. The President’s Management Agenda has laid out five governmentwide
initiatives of utmost importance, including the strategic management of human capital. Gen-
eral Accounting Office (GAO) reports estimate that 31 percent of the federal work force will
be eligible to retire by 2006, but a recent study calculates that about half that number actu-
ally will retire. While this revised figure may not appear overwhelming, it represents a major
challenge for federal workforce planning.

Over the past 12 months, the Office of Management and Budget (OMB) has ordered each
major agency to conduct a workforce analysis. As part of the President’s Management Agen-
da, OMB and the Office of Personnel Management (OPM) issued a scorecard to rate agencies
in their strategic management of human capital. OPM also ordered agencies to develop
human resources accountability systems to track the effectiveness of HR offices and devel-
oped a survey to measure employees’ satisfaction with workforce management at their
agency. So, where does all of this leave government?

Government HR professionals can plan effective human capital strategies by comparing and
measuring best practices. Strategies are only as good or effective as the information available.
Without the right information, measuring or predicting how employees or the organization will
be affected is merely hit or miss. Traditionally, organizations were not designed to manage
knowledge assets; they were designed to manage physical assets.

This changing model of human resource management — human capital management —

requires re-engineering the management of human capital through analytics and measurements.
For HR to play a genuine role in developing and managing human capital, it has to mea-
sure intangibles, identify unusual patterns in data through technologies such as data
mining, anticipate future needs by understanding correlations between measures and
take action.

Moving from HR Management to Human Capital Management

Traditional human resource information systems (HRIS), enterprise resource planning
(ERP) systems and legacy systems automate transactions, supply employee and manager
self-service functions, automate work flow and enhance task-driven routines formerly per-
formed by HR departments. This information is fed into standard and customized reports.
The new vision of human capital management introduces a new role for HR — that of strate-
gic asset management. Just as financial management, supplier management and customer
management are critical to the well-being of an organization, human capital management is
no longer a tactical process; rather, it needs data-driven expertise.

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Measuring and Managing Human Capital Intelligence

Historically, individual employees and managers called upon HR to satisfy requests. Requests
from individual employees were typically about tracking and processing personal information,
such as compensation, benefits and retirement data. Managers required HR to provide infor-
mation on recruitment, training and termination.

Today, HR management requires a holistic focus, one that links human capital strategies to
the overall goals of the organization. Looking to do more with less, HR managers need to
build business cases and support them with the appropriate measures that should drive
human capital management.

Unlike traditional transaction-based HR, today’s human capital management system should:

• Support organizational goals by providing the information to acquire, maintain, develop and
retain the right employees.

• Align people, processes and technology around common goals.

• Measure the strategic value of human capital investments.

• Anticipate, forecast and predict human capital changes.

• Learn from best practices by leveraging benchmark data.

A Single View: Making Human Capital Management Successful

As the function of HR evolves within government, agencies will expect HR to document its
benefit to the bottom line by demonstrating the ability to:

• Attract, retain and motivate the best employees.

• Partner with managers to understand their needs, then develop a sound strategy that supports
organizational goals.

• Act as thought leaders and strategic advisers, delivering a plan based on real knowledge,
not guesswork.

• Plan for changing market conditions instead of merely reacting to them.

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Government can meet the challenges of human capital management with a comprehensive
HR analytical system. The right system creates a roadmap for deploying HR strategy through
predefined and user-defined objectives and associated metrics within a strategy framework.
A human capital solution should be agile enough to access and consolidate information from
wherever it exists and deliver quantifiable results that decision makers can act on. This frame-
work is designed to measure the value of human capital assets and organizational effectiveness
through HR-specific analysis and reporting so that organizational intelligence can be channeled
through a single source. Adopting a new model of human resource management will aid in the
development of good workforce plans, which can help agencies retain their employees or
recruit new ones to make up for employees lost to retirement and attrition.

A carefully considered HR analytical system should be able to:

• Support organizational goals by providing the information necessary to hire, develop and
retain the right employees.

• Align people, processes and technology around common goals, helping users understand
how progress on key performance indicators impacts organization-level objectives.

• Provide a validated central data warehouse function that draws information from multiple
systems and platforms into a multidimensional foundation for analysis.

• Enable HR professionals to gauge the organization’s progress against industry best practices.

• Provide a clear picture of cause-and-effect relationships among key performance indicators

by acknowledging that human capital is shaped by a multitude of inter-related factors.

• Support predefined and ad hoc analysis, forecasting and modeling to quantify human capital
assets and support fast, strategic decision-making.

• Provide on-demand access to expert counsel to help turn information into knowledge
agencies can act on.

Such a system empowers HR departments to make the most of traditional HR information

and other nontraditional information necessary to benefit organizational objectives. Through
this process, HR professionals can quantify the bottom-line impact of the HR process. Key
to this effort is the ability to mine data in order to explore potential problem areas and dis-
cover unusual patterns in information. In addition, this analytical system allows managers
to model employee behaviors, such as turnover or performance abilities, to determine and
meet workforce planning needs proactively. The ability to model behavior also allows HR
managers to predict changes in human capital resources — not only within a single organi-
zation but across the changing face of government. Once these predictions are made, true
measurement in the form of an HR scorecard will allow managers to identify and quantify
appropriate organizational strategies.

After implementing such an analytical system, HR professionals can:

• Deliver needed information into the hands of the decision makers.

• Easily accommodate changes in the organizational structure.

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Measuring and Managing Human Capital Intelligence

• Connect HR to the organization by building business cases and supporting them with metrics.

• Make comparisons and differentiate, not copy.

• Anticipate changes and build models to accommodate those changes.

For example, as America’s pre-eminent collector and provider of timely, relevant and quality
data, the U.S. Census Bureau recognizes the importance of HR management as an integral
part of the organization’s overall goals and mission.

Case Study: U.S. Census Bureau

Since the first population count in 1790, the U.S. Census Bureau has been charged with pro-
viding the best mix of timeliness, relevance, quality and cost of all the data it collects and the
services it provides. With responsibilities of this magnitude, Census employees understand
that the ability to leverage their own internal data, much like the data they collect on citizens,
is highly valuable and important to achieving organizational goals.

Internally, the Census Bureau has volumes of data on each of its 10,000 employees. In the
past, when a manager needed personnel information to analyze his staff or to make a busi-
ness decision, the manager called the Human Resources Division for a specific report or
analysis. The Census HR Division discovered that it could not address a large amount of
additional reporting needs and keep track of all the reports with its legacy system. The division
was overloaded fielding numerous inquires and manually writing reports.

“We are constantly inundated with requests for personnel information and reports from a
variety of internal and external sources,” said Tom Gramlich, assistant personnel officer at
the Census Bureau. “We needed a fast, efficient way to get our HR data to our managers
and reduce the burden on the HR staff.”

Using SAS Human Capital Management – a solution that allows organizations to mea-
sure and manage HR information in an accurate, integrated way – the bureau began the
process of alleviating its data burden. Accessing the bureau’s database with SAS Human
Capital Management has given these HR analysts the ability to do ad hoc queries and
create reports from their desktops – reducing manual reporting. Now, they are able to
analyze their personnel data at both a summarized and detailed level, giving them a more
accurate picture of the work force.

“Now, reports take a matter of minutes, not a matter of days – the reporting and graphic capa-
bilities have unlimited uses,” said Gramlich. Future plans include Web-enabling the bureau’s HR
data and making it available on managers’ desktops. “We want to give our managers access to
the personnel data that is important to them and make it available when needed.”

Census is making great strides toward meeting and exceeding workforce initiatives and the
President’s Management Agenda. In fact, in September 2002 Secretary of Commerce Don
Evans presented the Census HR Division with a gold medal for “exceptional and creative
contribution toward the automation of HR programs.” The medals are the highest awards
granted by the U.S. Department of Commerce. They recognize leadership, personal and pro-
fessional excellence, scientific/engineering achievement, organizational development,
customer service, administrative/technical support and heroism.

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 Measuring and Managing Human Capital Intelligence

Summary
HR professionals need a clear picture of how human capital management initiatives support
and add value to the organization’s mission. To successfully serve the country, the government
needs to focus on activities that add the greatest value to the recruitment and retention of
qualified employees. That requires the ability to easily explore, analyze and present integrat-
ed information specific to HR while incorporating information from outside the HR function.
HR departments need the technology to make rapid business decisions supported by quantifi-
able, accurate information. And they need the ability to supply the information whenever and
wherever it is needed — without relying on the IT department. By recognizing the value of
human assets and empowering HR to manage it effectively and efficiently, government can
come one step closer to fulfilling its mandate to be citizen-centric and results-oriented.

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