Human capital analytics is the deployment of real business intelligence, which opens up a great opportunity for organisations, and for the HR function, Penny de Valk, chief executive of the Institute of Leadership & Management, told the Human Capital Forum/Logica seminar on 23 September.

Human resources managers are often still just measuring activities, and when budgets are tight, things get slashed, she said. ‘If they are not demonstrating value, budgets are vulnerable,’ she warned. ‘Human capital analytics will enable the function to be able to demonstrate value.’

‘Even the Ulrich model has been hijacked by accountants. It has become a stick to beat the HR function: “Improve your cost efficiency”,’ she added. ‘It’s a difficult transition, because it means looking at the organisation through a different lens: about optimising organisational performance.

‘Even though we have had a primarily services and information-based economy for the past 15-20 years, there is still a real concern that most managers are not able to manage the notion of human capital as an asset, understanding its value. That is still a skill that is wanting in most business leaders. ‘

The HR function should be able to demonstrate ROI from people initiatives, she said. With data, ‘it’s better to go narrow and deep, based around key needs of the business. And then, don’t leave it there – use the data to improve business performance.’