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Measuring Human Capital

February 25, 2009
by Tim Tolan
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After reviewing hardware and software budgets, CIOs should study the return on their HR dollars

When CIOs were evaluating capital budgets last fall, major decisions were made by weighing the relationship between investments and how those dollars would drive the organization towards its goals. Some of those investment decisions were likely part of a long-term strategic plan, and in many case, a compelling return on investment (ROI). ROI was probably required in order to gain committee or board approval. It's all about the ROI. This is how we make critical capital spending decisions, right?

But there's another ROI that often goes overlooked. How are you measuring the ongoing investment you make each month in your most valuable asset - your people?

As the CIO:

  • Can you measure how your department's human capital investment contributes to overall patient care?

  • Are you tracking measurable data that links your specific IT initiatives to an increase in service levels?

  • How do the stakeholders in your health system view the quality of IT delivery?

Developing and measuring this data, then sharing the metrics with your team, increases overall performance and morale. More importantly, it allows your employees to put an “X” on the real value they bring to the organization. It matters more than you might think. It's amazing how most people respond and take on an increased level of responsibility when they understand the value of their work. It's just human nature.

And in today's economy, the CIOs that will stand out and experience high levels of retention will be the ones that continually invest in staff by teaching. By helping a team member gain new skills and knowledge, you have a greater chance to increase loyalty.

How do you define your team's competitive edge? Providing education to your direct reports and employees at every level will give you an advantage. CIOs that adopt this philosophy and continually invest in their employees will see measurable returns in many areas of service delivery. If you want to realize a greater ROI from your IT staff, measure and track their results against the organization's goals. Publish your metrics on a regular basis, so that your team understands the score. Create a dashboard on your deliverables and publish it. Nothing helps people move forward like knowing where they stand.

Not there yet? No problem. Remember, it really does not matter where you are today - it only matters where you are going.

  • Where are you regarding your department's human capital assets?

  • What are your current employee retention strategies?

  • How do you measure effective retention initiatives?

  • Why did your team members join in the first place?

  • What makes them stay?

  • Why do they leave?

  • How do you develop bench strength?

  • What metrics let your IT staff understand the value of their individual contributions?

  • Are service results/metrics published on a regular basis?

  • What are your “fully loaded” costs to replace a member of your IT team?

  • Do you promote from within?

  • How do you reward excellence for outstanding performance?

  • Do you have a formal plan for training and cross-training?

Investing in your IT team is essential to driving retention. You should develop ways to offer opportunities to enhance employee skills and create a unique culture that is challenging, provides ongoing educational opportunities and rewards for recognition, and finds ways to allow employees to have FUN!

This investment will go a long way in giving you a higher ROI on your human capital and pay long term dividends for the entire organization.

Tim Tolan is senior partner at Sanford Rose Associates Healthcare IT Practice. Tolan can be reached at, or at 843-579-3077, x 301. His blog can be found at
Healthcare Informatics 2009 March;26(3):86