May 2007 – The silent monitor

On a shelf by my desk I have a small rectangular block of wood painted on four sides – black, white, yellow and blue. The block is a replica of what Robert Owen, the 19th century textile entrepreneur and social reformer called a “silent monitor”.

Originally the silent monitor was used to remind the spinning mule operators in Owen’s New Lanark factories about their behaviour. If people were working well and diligently then the monitor was turned to its white side indicating “super excellence”.

The yellow side pointed to reasonably good behaviour, the blue side, a “moderate state of morals” and the black side “excessive naughtiness.”

It should be pointed out that many of Owen’s workers were young children and teenagers although, unlike other mill owners at the time, he did introduce lower age restrictions and schooling for the workers.

The wooden block in my office changes colour all the time. It is moved by my teenage son to reflect his assessment of my parenting at various junctures. It works too. When the black side is showing it reminds me that we need to work on our relationship. Just now it is white so I must be doing something right.

I much prefer this kind of signalling – which is revised constantly – to the idea of an annual appraisal that goes in to too much unnecessary detail. The silent monitor provides honest and up-to-the-minute, if subjective, feedback. It reflects the kind of monitoring, consciously or otherwise, that each of us makes of our bosses and colleagues every day.

It’s rather like a ship’s compass because it tells you when you are heading off course. Some web site forums have similar moderating systems where penalty points are awarded against transgressors but those are often abused .

Everyone needs some kind of performance indicator, however crude. Playwrites and actors take heed of critical reviews and audience enthusiasm. Increasingly shareholders are seeking similar reviews in annual reports.

Unfortunately there remains no co-ordinated approach to the use of metrics in corporate reporting in spite of the appearance of the new business reviews in the UK.

In the US, where much of the early academic work on human capital theory was undertaken, it is arguable that the reporting of metrics is even less sophisticated than it is in the UK.

The second edition of Reporting on Human Capital, What the Fortune 100 tells Wall Street About Human Capital Management*, published by Creelman Research in association with the Results-Based Leadership Group, has assessed the human capital reporting output of America’s biggest companies.

For the Fortune 50 it counts the words devoted to a series of important employee-related practices within annual reports and corporate responsibility reports, another favourite repository for human capital statements.

*Reporting on Human Capital, What the Fortune 100 tells Wall Street About Human Capital Management, price $1,500, contact www.creelmanresearch.com.