Estimate the Value of Your Human Capital Management

When you present the costs and benefits of a new project, the worst mistake you can make is to leave out or minimize the value people contribute to your organization. When we measure the financial impact your people have on your organization, we link it to business KPIs, OKRs, or other metrics. For example, when the improvement affects revenue, we most often cite the improvement as revenue per employee. It's a big deal when you can move that number. However, getting there means you must rely on your estimates and your logic, and it helps to have your feet on solid ground when your CXOs ask where you got your numbers. Most of us are reasonably good when we estimate things, except large numbers or things that trigger our hidden biases, but we can learn to do better. Estimating Is a Learned Skill We can learn to become better estimators. In his book, How to Measure Anything: Finding the Value of "INTANGIBLES" in Business, Douglas W Hubbard teaches us that even if you don't know the exact values of a question, you still know something. Some values would be impossible or very unlikely. It helps to think of the answer as a range of probable values. Try this experiment. Gather a group of people together and ask them for only a Yes or No answer: Do you know how far the International Space Station is from Earth in miles? Exclude anyone who answers Yes. Ask the group what the farthest distance would be. When they can agree with 80% confidence on the outside limit, write that number down. Ask the group what the closest distance would be. When they can agree with 80% confidence on the inside limit, write that number down. Then say, "We agree with 80% confidence that the distance from the Earth to the Space Station is between the two numbers." When all agree, look up the answer.

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