Spring is in the air — spring training, that is. In just a few days, Major League Baseball teams will start reporting to camp to prepare for the 2006 season. Most of them have wrapped up their off-season wheeling and dealing, and at this point, a few ball clubs look dominant — at least on paper. That doesn’t mean they’re a lock to make the World Series (right, New York Yankees?). An assemblage of all-stars can be beaten by a team of underdogs if the latter has better chemistry. Payrolls don’t win games, teams do.
The same holds true for deals in the corporate world. Numbers are important, but as Rob Garver finds in our cover story, “Merge Right,” deals based solely on numerical targets may fail to add real value. Ultimately, people drive the numbers, not the other way around. Human-capital management — long overlooked in the deal-making process — is essential to ensuring that the right people are in the right place to achieve the numbers.
That said, you wouldn’t put a .220 hitter at lead-off if there were a .320 hitter available. As Craig Schneider reports in “The New Human-Capital Metrics,” there’s an effort under way to quantify the value of employees in the form of human-capital metrics. Companies are still a long way off from really tying people measures to the strategic goals of the company, but that hasn’t stopped them from trying. And some, like Valero Energy Corp., are making good progress.
In this second issue of CFO Human Capital, we follow these and other efforts by CFOs to help build better workforces via an analytic, disciplined approach. So get out those scorecards and play ball!
Joseph McCafferty, Editor, CFO Human Capital