Erik’s note: We’re happy to present this guest post by Chris Lozaga a Research Analyst in SuccessFactors Global Research team

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Typically, we reserve the phrase “too much information” for our coworkers and friends who share just a few too many details with us by the water cooler, but in the world of HR, “too much information” is taking on a whole new meaning. As companies move from paper-based systems to electronic systems, they are inundated with information. Through software, businesses have the ability to measure everything, rather than just a few things tracked on paper and aggregated by hand for analysis. HR professionals can literally be overwhelmed by “too much information.”

I recently led a discussion on our Analytics and Reporting module at a regional User Connect meeting, and gained a lot of insight from our users. In order to extract maximum value from the mountain of available data, the “right” measures have to be carefully selected. Also, it was apparent that at times less can be more – a few really important measures can overshadow all of the others depending upon your business needs at the time. For example, if you are just starting to roll out the software, usage metrics are supremely important, but for a hospital system, measuring competency gaps might be the most critical. With so much data available, how do you choose what to measure and report?

Simple Framework for Choosing the Right Metrics

Because so many measurements are available after switching to a software-based talent management suite, it is critical to have a framework for choosing the right metrics at the right time.

Know your audience. Figure out who else will be looking at the metrics and what matters to them. A CEO and a recruiting manager will probably want to see different sets of metrics.

Have a goal. Before you measure, you should have an idea of why you are measuring. If your goal is to show a link between turnover and on-boarding cost, find the metrics that relate to help tell your story.

Find the greatest lever. It is likely that you will be able to find dozens of measurements that support your goal, but you should focus on the measurements that will have the most impact, give you the most pull. Always highlight the best “levers” to get results. Using dashboards and other heuristics that may be built into your system are a great way to do this.

It takes a bit of brainwork, but is worth the effort. Rich, meaningful data truly highlights the growing importance of HR and HCM within organizations. If you get stuck, ask questions. Managers and executives will likely be enthusiastic if you can start measuring things that matter to them.

This abundance of data is a completely new problem, but a great problem to have. Dr. Jac Fitz-enz, a SuccessFactors Research Thought Leader and the father of HCM metrics, started making the case for measuring human capital three decades ago , when practically no one had the capability or will to do it. Capability is no longer the problem; today, people can barely keep up with the information. Now, the focus is moving to an even higher level, linking these available human capital metrics to business goals, financial performance, and using predictive metrics to plan for the future. Will you be ready?

Cost, talent, or innovation – which of these three challenges will drive Human Capital Management decisions in the future? The answer is easy: all of them. The question of how to address these drivers is a far more strategic and important question. Charles Grantham, co-author of Corporate Agility, recently joined us to speak with our customers about coming challenges that businesses face due to dramatic shifts in how, where and by whom work is done – a major focus of his recent book and the research he and Jim Ware from the Future of Work are doing. In his presentation, he described 9 strategies for addressing the challenges.

After reading this and engaging in discussions with Charlie, it became apparent that we actually help our customers execute on several of these strategies. We do this in a unique way, enabled by our delivery model and the focus of the product suite in terms of what it actually does for people.

For example, many people think of investing in on-demand solutions as an outsourcing strategy – moving administration away from the core business. But a better way to look at our model is to think of it as an INSOURCING strategy, the customer is INSOURCING a best-in-class and ever improving process. Of course, it is very powerful to let someone else do non-strategic activities faster and cheaper for you. But when you truly INSOURCE, you get the best of two worlds: it is someone else’s core business to figure out the best way to do things, and constantly improve it for you, while also being very cost efficient. That cost efficiency is of course a mutual win for INSOURCE providers and customers.

Effective human capital management processes are critical to INSOURCE. Why? Facilitating teamwork and collaboration is critical for innovation. Finding high potentials, developing their skills, and adapting to the new workplace is critical to closing the talent gap. People are the largest variable cost for most businesses (70%), optimizing their performance is critical to reducing costs. The revolution of on-demand software delivery with the SaaS model enables this phenomenon of being able to INSOURCE strategic processes that support your business’s strategy execution.

Imagine you are on the football field – What if 15% of your performance is dependent on the play you select, and 85% of your performance is dependent on your ability to make the play? Where would you invest most of your time, training your team to pass, catch, run, and block, or picking out the right play?

By and large, studies have found execution is the clear driver of company value and financial performance. How much? Well, about 15% of company’s performance is attributable to strategy – the remaining 85% is attributable to execution, as found by Becker and Huselid’s “ High performance Work Systems and Firm Performance.” Joyce, Nohria, Roberson found a similar ratio in “What really works.”

That’s right – Execution of the strategy is 6 times more important than the strategy itself!

How do you execute on a strategy? In a word: People. At the end of the day, it is the employee who makes things happen, who gets results – not machines, strategies, vendor relationships or what have you. People are your real differentiator and now typically make up 70% of a company’s cost (and growing). This is doubly true in today’s knowledge-focused economy. We see today that about 80% of a company’s valuation cannot be explained by the balance sheet, which shows the growing importance of intangibles and people performance to future cash flow. The value of a company is no longer in its factories, IT systems, or physical assets – it is created by the company’s people.

Your company is in fact already on the field, fighting for customers, revenues, and a competitive position. Instead of “picking out the best play”, focus on what will most help you move downfield toward your goals: people performance, 85% of your success depends on it. Goal alignment, individual accountability, and engagement equal strong execution. Build up these strengths and capabilities of your company to help ensure you can make the big plays. So yes, people performance does matter, because their ability to execute is the key factor in creating value and driving results for your company.