When you sit down to evaluate your organizations performance, what measures come to mind?Chances are, you first think about your balance sheet measures: how much revenue did we generate last quarter, how much was our growth in sales and profits or what gains did we make in our market share? Next, you may think about the costs: equipment, material, travel and so on. Or perhaps it is your customer measures that come up for consideration: have complaints increased, are they repurchasing our products? These key performance indicators (KPIs) are important and you consider them on a weekly, monthly and quarterly basis.What is often missing from this list is an area that accounts for one of your largest expenses and perhaps creates the most value: your people, or what many now call “Human Capital”. People are one of the most important indicators of an organizations ability to create and sustain value: they come up with the ideas for new innovations, they delight your customers, and they produce your products. In spite of this, many organizations have difficulty demonstrating how spending on people and people programs produce a return on investment.Human Capital Measurement (HCM) bridges this gap by helping organizations focus on people measures, to better understand and predict how employees contribute to their success. It allows companies to quantify how employees are impacted by programs such as training and development, recognition and work-life balance. It also assesses how employees react to organizational changes such as mergers or major restructuring. Most importantly, it can provide the same level of rigor that other areas of your business apply to evaluate their investments.Hewitt Associates has developed a leadership position in the use of Human Capital Measurement. Our Best Employers research supports a growing amount of evidence connecting effective people management with long-term organizational performance. Similarly, we have a number of HCM approaches that we have applied to help organizations sharpen their people investment strategies. In this issue of HQ, we give you some insight into our approach to HCM and describe several specific client situations where this approach has helped them achieve their strategic goals and realize tangible results. Our philosophy toward HCM is to align the approach to your specific situation. We illustrate a wide range of approaches that describe how people scorecards and key organizational performance metrics are developed, optimal people behaviors identified and predictive models framed.HCM can appear daunting and complex but our consultants can work with you from wherever you are starting and to whatever level of sophistication you desire, to help you understand and realize the value of your human capital. HCM is fun, challenging and a leading-edge work. It provides our consultants with a feeling of success and it produces great value for our clients.Mick BennettManaging Director, Asia PacificHewitt Associates LLCThe average human life span has risen dramatically from a life expectancy of 40 in the early 1900s to 75 years at the turn of the millennium. The human race has learned what factors need to be monitored to increase longevity: a balanced diet, regular exercise, monitoring key measures such as blood pressure, cholesterol, etc. Identifying, monitoring and acting on the right measures has doubled the human life span in one century.Company life expectancy has not fared as well. In the late 1920s and 1930s the average company life span was over 60 years. Now the average life span of companies is 12-一五 years. So many companies will “die” in their teens and only a handful will survive into the next century.To complicate the situation, the world as a marketplace is shrinking and competitors straddle the globe. A new service offering is duplicated within hours, a product launch sees competitors reply on the shop shelves within days and a technical breakthrough is copied within weeks. The sourcing of raw material and talent spans the globe. So does the supply. Along with these changes, the days of a lone entrepreneur who performed all functions single-handedly or with a couple of apprentices are long gone. Today, world-class factories that house non-stop assembly lines work with hundreds of employees. Products, processes and technology are easily available or duplicated. So why do some companies survive and others fail in a short period of time?The companys workforce has emerged as a key asset and is often described as the only competitive advantage that a company possesses. Employee behavior, the knowledge and experience they bring, together with their commitment to the organization are key drivers for sustainability and growth.Squeezing savings in the supply chain, ensuring higher capacity utilization at the shop floor, continuously upgrading the product and delighting customers with efficient service models are all efforts