“People are the most important asset”
HR measurement systems rarely reflect a logical theory regarding how human factors translate into strategic outcomes. For the most part, the management of people retains a focus on administrative efficiency, traditional and disconnected functional initiatives, and measurements that focus on activities rather than strategic outcomes. There are literally thousands of cost- based and ratio-based measures available to researchers and managers (e.g., cost per hire, trainee, recruit, employee; number of HR employees per total employees, etc.). To date, metrics theory and SHRM theory have not connected, to the detriment of both. While a complete inventory of SHRM measures is not feasible today.
HR metrics adding value to the organisation.
Metrics support SHRM in at least two ways.
1. Testing SHRM theories and propositions requires developing or finding measures of key variables.
2. Effect that metrics may have on the strategy and decision-making process.
Possible uses of HR metrics include persuasion, fashion-setting and decision support.
-“Persuasion” involves influencing receivers of HR information in ways that benefit the senders of that information.
-“Fashion-setting” involves convincing others that under this theory, metrics have value in this framework if they signal that HR practices are “progressive” in emulating fashion setters or are frequently emulated by others.
-“Decision-support” suggests that HR metrics create value to the degree that they improve more decisions, that the decision improvements have significant value, and that the cost of the metrics does not offset this value practices are innovative and based on the latest thinking.
The choice of HR metrics will affect the strategy-making process.
“Metrics are not neutral. The choice of metrics conveys values, priorities and a strategic framework”