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Business improvement - Putting a price on talent

New research from Lancaster University Management School UK and Deloitte is attempting to design a model for measuring and improving human capital management. By Anthony Hesketh, Howard McMinn and Harvey Lewis

The staggering volumes of data underpinning business analytics represent a new strategic blank canvas for executives. Recent research attributes this challenge not just to one of the emergence of ‘big data’ or even to its analysis, but to one of understanding how executives can best use analytics to improve business performance. Firms are not short of data, and executives are experiencing continuing challenges relating to the magnitude of data they possess and meaningful insights concerning the performance of their business and the talent that drives it.

Towards an analytical solution for talent

To reach a conclusion on the value of talent, we must look at the question we set ourselves. If we seek to estimate the level at which human resources interventions cause increased financial returns we immediately run into challenges about the veracity of our claims. If, as an alternative, we try to seek the rate of the financial return from our direct investment in talent using easily obtainable financial fundamentals, we may understand less about what causes returns to rise or fall, but we at least have a clear financial line drawn in the sand from where analytical discussions in the boardroom relating to talent can begin.

This is an extract from the Finance & Management Magazine, Issue 220, April 2014.

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