Human Resources Metrics and Measurement

Introduction

Organizations achieve their objectives, aims, and goals through people. Therefore, they need to get the best out of employees. This concern underlines the need for having a mechanism such as HR metrics that can enable them to measure various human resource aspects. HR metrics are critical for any organization because they form the basis for clarifying crucial information and making vital decisions relating to different talents. This paper investigates three articles to find out the authors’ opinions concerning the usefulness of HR metrics. Based on the information obtained from the City of Saskatoon as an employer, it is found that such metrics may provide data concerning ongoing or annual turnover, HR performance, and employee engagement levels among others.

The Importance or Usefulness of HR Metrics

Albrecht, Gardner, Allred, Winn, and Condie (2016) argue that human resource professionals who understand the concept of operational indicators and financial metrics demonstrate broader and detailed handling of decision-making processes. I agree with this point because the ability to integrate both human-resource-related operational indicators and financial indicators is critical in ensuring that incentive and engagement schemes are within an organization’s financial capabilities. Albrecht et al. (2016) support this perspective by noting that a human resource director who is well versed in discerning the financial implications of human resource management decisions may be viewed as a critical component in an organization that emphasizes proper income reporting and cost control.

According to Iwu, Kapondoro, Twum-Darko, and Lose (2016), one of the most vital organizational metrics entails measuring and quantifying various human resource strategic outcomes relative to key business performance criteria. Considering various functional responsibilities of human resource management in an organization, I agree with this major point. The HR department handles issues related to employees. Functional responsibilities of the HRM include training and development, recruitment and selection, employee conflict resolution, coming up with programs that enhance employee motivation and job satisfaction, and taking an active role in the establishment of a remuneration program. Decisions made about these functional responsibilities of human resources should be supported by data generated from HR metrics. For example, consider a situation where poor organizational performance has been identified as a major impendent to achieving the set goals and objectives. Any need for training and development should be supported by human resource metrics for measuring employees’ performance.

Koenig (2013) argues that human resource metrics have a rich history dating backs to the 1990s. Since then, managers have been focusing on the way to effectively quantify HR deliverables via formulas that can guarantee financial officers and chief executive officers of coherency and clarity when appraising various organizational units and resources. According to Koenig (2013), where employees request changes, which fail to be aligned well with an organization’s overall business goals, objectives, or financial plans, HR metrics help in communicating what can be achieved if such adjustments happen to be executed. In other words, HR officials need to be well equipped with both human resource and financial performance metrics for them to make effective decisions that reflect the overall position and capabilities of an organization. I agree with Koenig’s (2013) points since HR operates within an organization as a component of a system. All components need to operate in harmony to achieve organizational objectives and goals.

An Employer’s Best Practices

The City of Saskatoon is among the renowned employers in Canada. Managers here appreciate the usefulness of information generated from HR in developing plans concerning incentives and performance management. Scholarly and organizational practices suggest that when the metrics are aligned with corporate and business strategies, they may add value to an organization, which is critical in ensuring organizational effectiveness. To this extent, employers should adopt best practices in HR measurements by deploying the appropriate metrics. One of the best practices entails measuring the relationship between HRM and organizational outcomes (Iwu et al., 2016). For example, the City of Saskatoon’s manager identified turnover, retention rates, occupational health, retirement eligibility, and the cost of training of a full-time employee as most significant HRM metrics (Koenig, 2013).

According to this employer, the above metrics are critical in helping to achieve and support the city’s strategic plan. Indeed, as Koenig (2013) asserts, the metrics “give senior management teams a good picture of how the city compares in a competitive marketplace and provide insights on the impact of HR on operations” (p.12). Here, one can appreciate how HR metrics indicate the extent to which an institution manages its human resources relative to other organizations. This city recognizes human resources as important sources of competitive advantage and hence part of the crucial best practices, which increase organizations’ performance in the short and long term.

Conclusion

The noble function of HR within an organization is inspired by the perception that people who work for any organization act as the source of its competitive advantage. Consequently, it is important to use HR metrics to establish the relationship between HR and organizational outcomes. This need arises from the fact that HR tasks, for instance, training and development and the implementation of motivational and retention programs should be consistent with an organization’s goals and objectives. They should also be established in a manner that is consistent with the company’s financial capabilities.

References

Albrecht, C., Gardner, T., Allred, S., Winn, B., & Condie, A. (2016). To sit at the table, you have to know the language: Important financial metrics for HR directors. Strategic HR Review, 15(3), 123-128.

Iwu, C., Kapondoro, L., Twum-Darko, M., & Lose, T. (2016). Strategic human resource metrics: A perspective of the general systems theory. Business Administration and Business Economics, 12(2), 5-24.

Koenig, P. (2013). Saskatchewan’s most wanted -HR metrics. Canadian HR Reporter, 26(18), 11-12.