“If you can measure it, you can manage it.”
Measurement has its roots way back in history, primarily as a way to manage food stocks. Just think of the quipus which enabled the Incas to manage their food administration in the 15th century. In 1831, the profession of accountant was recognised for the first time (Bankruptcy Act 1831 in Great Britain). In this period, a rather radical way of thinking prevailed - work versus capital. On the one hand there was work (humans) of lesser importance as there was plenty of labour available and workers were easily replaced. On the other, capital was of crucial importance which only consisted of investment goods - machinery and raw materials.
It lasted until the 1930s - 1960s before a system of keeping accounts was recognised by the state, but it was still based on the dichotomy between humans and capital. It gradually became clear that machines were not the only major production factor. What was needed was innovation, an asset that could no longer only be provided by the purchase of new machinery. In an environment where an increasingly daring innovative need prevailed, humans were suddenly regarded as the main means of competition. So investment in human capital was the message.
As this human capital could not be included in any accounting system, the measurement of staff indicators was developed and is even now in the process of overtaking other factors. In contrast to industry and production, human capital was often seen as “untouchable” and very complex to measure. Measuring staff indicators requires the collection of quantitative and qualitative information, analysing and comparing this data, followed by drawing up a report on the information acquired. Companies need to find the appropriate technologies that offer an overall solution to HR management. Nowadays, internet-based tools have been developed which provide organisations with updated information with regard to staff performance, identifying those processes that have an impact on company results, highlighting policy priorities or identifying problem areas.
Measuring human capital is currently a process that can be managed like any other process in the organisation, with results that are tangible and understandable, and which offer a sustainable competitive advantage for the organisation.