is so important
because it reminds us that human capital has value when it drives business results. This
doesn’t mean that human capital performance will always, or even often, have a direct
influence on bottom line measures of financial performance. Using the Balanced Scorecard
terminology, human capital is a leading indicator. Its influence on financials is indirect via its
influence on the strategy drivers in the organization. This indirect line of sight poses a
challenge for measuring human capital performance. It means that organizations have to
focus on more than the levels of human capital. They also have to focus on the relationship
between human capital and the drivers of firm financial performance.