Approaches to HR Measurement

Session 3

IMT

5/20/2012

Measurement In Human Resource Management

What to Measure?
o o o o o

Measure outcomes not activity Begin with efficiency measures

Develop metrics geared towards your organizations goals and strategies

Establish metrics to monitor key HR practices proven to grow human capital Use metrics that will encourage change and help us make better decisions about human capital

IMT

Measurement In Human Resource Management

What to Measure?
For HR-measurement, demonstrating the link between HRM strategy and organizational performance requires the measurement of some set variables.

IMT

Measurement In Human Resource Management

Getting Started
o o Assess your data Build your metrics

Create meaningful measures

IMT

Measurement In Human Resource Management

Assessing Your Data

o o What do you already track? Where should you focus?

What metrics would be useful?

IMT

Measurement In Human Resource Management

Data Integrity
o o o Quality of data is critical Garbage in.garbage out So.. o Check the math o Watch out for zeros o Compare results to each other o Conduct a sanity test

IMT

Measurement In Human Resource Management

Approaches to evaluating HR strategy

o Once the data have been collected, the emphasis shifts to evaluation the ways in which the data are used and analyzed to interpret the HRM-organizational link. o There are a number of ways of evaluating HRM practices and the HRM system:
o Statistical evaluation o Financial evaluation o System evaluation

IMT

Measurement In Human Resource Management

Statistical evaluation of the HR strategy

o Includes basic descriptive indices as well as statistics that allow us to make statements about the relationship or correlation between HR practices and outcome variables.

IMT

Measurement In Human Resource Management

Financial evaluation of the HR strategy

o The basic approach is to calculate the cost of a HR intervention, such as training or an employee participation arrangement, and to determine the benefit in monetary terms or results such as improved productivity or a reduction in absenteeism, accidents and grievances. o To calculate the ROI of an HR intervention program, the manager calculates the total costs and benefits of the program using the following formula ROI = Net benefits Intervention costs

IMT

Measurement In Human Resource Management

Evaluating HR management systems: HRM auditing

o Generally accepted elements of HRM audit practice:
o Independence from the subject being audited o Technical work in the form of a systematic gathering and analysis of data

o An evaluation of HR activities, policies and systems based on the evidence

o A clearly defined object of the process o Action in response to audit findings

IMT

Measurement In Human Resource Management

Benefits of a HR audit

IMT

Measurement In Human Resource Management

Evaluating HR management systems: HRM Benchmarking

o Benchmarking involves managers and non-managers learning and adopting so-called best practices by comparing their HRM practices with those of other (more successful) organizations. It serves a number of purposes:
o Organizations can gauge their own practices against those in excellent organizations and can get an idea of how they compare
o Managers can learn from other organizations about effective HR strategies o Benchmarking can help to create and initiate the need for change.

IMT

Measurement In Human Resource Management

The benchmarking process

IMT

Measurement In Human Resource Management

Building Your Measures

o Determine your measures o Select benchmarks for comparison

o similar services
o same size o similar organizational structure o similar budget o Compare your results

IMT

Measurement In Human Resource Management