As my colleague Alison Hjul outlines in an article this week, Standard Chartered has spent a significant amount of effort establishing who its high potential and high performing employees are. That work feeds multiple parts of its people management activities, including succession planning, and also helps shape its retention analysis. As Whitaker points out, analyzing employee turnover isn’t just about looking at how much turnover there is – it’s also about the quality of people leaving.

Many of the operational metrics that HR functions have traditionally relied upon in the past lack this kind of perspective. Take ‘days to hire’, long a mainstay of recruitment reporting. Sure, the time it takes to filter CVs, interview candidates and offer jobs matters, particularly in highly-competitive markets where skills are in short supply – I met one mid-sized law firm a few years ago that invested in a top-of-the-range recruiting system simply because it needed to beat its peers to identifying and nabbing the top law school graduates. But just how excited do we really expect a board of directors to get when HR reports that it’s shaved two days off its average recruitment time and is now in the top quartile of similar-sized benchmarked businesses (per region/industry)?

Webster Buchanan Research has been arguing the case for more business-centric metrics in people management for far longer than I care to remember, and at times it feels as if we’re giving HR the short end of the stick. But the fact of the matter is that these arguments apply to pretty much every business discipline. The finance department came under pressure throughout the 1990s to do more for business than churn out impenetrable monthly management accounts three weeks after period end – and in most cases, it responded. Likewise customer service functions around the world are still searching for ways to better measure the performance of call centre agents. The sector long ago recognized that traditional metrics such as call volume and duration encourage agents to terminate calls early, when it’s often better in the long term to spend more time with high-value customers to resolve their problems and perhaps upsell them to other products.

In fact, everywhere you turn you run into measurement challenges. Webster Buchanan will shortly be publishing the results of an in-depth research project we carried out in the UK banking and insurance sectors, looking at performance management. One of the senior customer service managers we spoke to in a large financial institution is worried that its performance metrics are too arbitrary, and that it’s upping staffing levels to hit targets that don’t necessarily matter. “We might have a service level of answering 80% of calls in 20 seconds – but in practice, probably nothing happens to the overall sales performance until you get to 40 seconds or 50 seconds,” he says. “By falsely attaching too much significance to the wrong tolerances, you can waste resources.”

There are no easy answers to this kind of challenge, of course – but not trying really isn’t an option in customer service, HR or anywhere else. As Whitaker points out, Standard Chartered’s approach calls for “research-based, analytical skills, but the average HR person doesn’t think that way”. Going forward, however, average HR mindsets are going to have to shift.

Earlier this week, I found myself sitting between two high-flying professionals in the technology sector. One was basking in the pleasure of a glowing annual review, accompanied by a positively red hot pay rise and bonus. The other had just quit his job after nine years, bored by a lack of stimulation and a little bit miffed about a pay structure that owes more to personnel procedures than true performance.

Anyone who’s done a long stint in a larger organization will know how easy it is for your pay to get out of kilter with market rates. Unless a large chunk of your compensation comes from performance-related bonuses or commission – or you keep on getting promoted – company-wide salary caps tend to work against high-performers, under-rewarding them compared to the compensation they’d command on the free market.

In fact, many pay policies effectively incentivize employees to keep on switching employers – or, at the very least, stoke the slow-burning resentment and cynicism that make so many company lifers such a joy to work with. Yes, there’s more to work than the paycheck, and moving jobs is risky. And yes, a good pay rise is usually only a temporary morale booster. But you can’t escape the fact that poor pay is a humdinger of a negative.

What rocks the boat of my satisfied friend – actually, ‘smug’ may be a better description to describe her over the last week – is working for a company with a slightly different perspective on life. Her employer, who she joined a year ago, is in a sufficiently sexy part of the tech space to get away with offering only minimal salary uplifts to new recruits (and in some cases, even pay cuts). But managers aren’t held hostage to the original salary allocation. If you’re good, your pay will scale up at vast multiples of the inflation rate when it comes to your annual review – and if you happen to be promoted at the same time, it’ll skyrocket. In some respects, your early months and years are an extended probation period: risk to the company is minimized through a modest salary structure, but as you prove your value, you get the reward.

If you can get away with offering a lower entry-level salary – and there are creative ways of doing so – that’s an interesting philosophy. Is it better to pay a middle-ranking high-performer $150,000 from day one, and up it 10 percent to $165,000 at their next review – or pay them $110k to begin with and slap a 50 percent rise on the table one year on? Which approach says ‘We’ve looked at what you’ve done, and you’re a stellar performer?’

The downside, of course, is what expectations this approach sets for future reviews. Check back here in a year and I’ll let you know.

As high-speed internet access becomes commonplace and organizations start to take a more flexible approach to flexible working practices, the idea of people working from home – or anywhere else they care to choose – is no longer sniffed at. After all, as we point out in a ‘Perspectives’ article this week on Webster Buchanan’s Human Capital Insider, office space is one of the mostly poorly utilized assets in business.

Nowhere is this shift in attitude more apparent than Silicon Valley. During the first internet boom of the late 90s, property owners couldn’t convert their buildings into ‘cube’ farms fast enough to meet the explosion in demand for office space. Now, in a second internet growth spurt that’s characterized by moderation, low-level investment and tight control over expenses, it’s all about minimizing overheads by slashing workplace costs. Why should entrepreneurs rent out office space when they can work from their tax-deductible second bedrooms?

Sunday’s edition of the San Francisco Chronicle carried a front-page article pointing out just how far the home-working revolution is spreading. Sit down in any of the popular coffeehouses in the city and it’s a good bet that the person next to you will be hammering away on a laptop, mobile phone at hand, trying to build the next Google. It’s a little different from when I was first helping set up Webster Buchanan – for one thing, they all seem to be able to type with more than two fingers – but the principle is the same. The only real issue is the ethical/financial/metabolic equation – how many cups of coffee should you buy per day to justify using up the coffeehouse’s electricity and real estate; how many can you afford; and how high a caffeine buzz can you cope with?

Where this all gets particularly interesting, of course, is when established companies start to introduce their own flexible working practices for knowledge workers, allowing employees to work hours that suit their own schedules and encouraging them to do so from home at least a couple of days a week. The organizational, cultural and management challenges typically take center-stage in this kind of transition, but there are a lot of practical issues as well, from working out who foots the bill for laptops and connectivity to getting insurance and liability policies sorted out. Now, to guarantee maximum employee creativity and productivity, it looks like you’ll need to throw a caffeine allowance into the mix. Such is the price of progress.