It seems obvious that getting better performance in people is going to cascade to better business results, but do our HR practices and metrics really support this?

I am not taking about employee satisfaction or engagement, which are interesting buzzwords more often geared to support efforts to win “best workplace” awards.  What I am taking about are initiatives that translate and target human effort, or productivity, into measurable financial goals that shareholders care about. Wall Street is not much interested in those “best workplace” awards and customers are generally oblivious to such things. While research seems to suggest causation between increased employee engagement and positive business performance, it is telling that very little of this is ever mentioned in annual reports or quarterly filings.

Employee engagement misses the boat precisely because it focuses on employee behaviors and motivation rather than the drivers of performance itself.  Therefore the metrics used to measure employee engagement provide no direct, measurable link to specific business benefits. What is needed is a more rigorous methodology that directly connects companies goals through the commitments made to investors and the ability of employees to do the work required to fulfill those goals. With this methodology come tools to start building the direct link from human performance to business performance using scientific and quantifiable data. That is the core of what I deem the “Audacious Idea”, that by understanding the skills of a single employee or group of employees, you can make a direct link back to the P&L of the quarterly financial numbers.

I will be talking more about the Audacious Idea in subsequent posts, but for now, let’s just call this our shot across the bow. Our end goal is to get corporate leaders to start understanding this link and embrace it as much as they embrace cash flow, EBITA, and earnings per share in their strategic planning.