The Importance of HR Metrics in Business Efficiency

Introduction

Before the advent of Human Resource Metrics or HR metrics, human resource management in the context of improving business efficiency relied on inadequate estimates and unreliable tracking systems. Changes in the hiring, firing, and training of personnel were adjustments that were made based on a macro view of business operations. However, the emergence of management information systems created a deeper appreciation of the impact of HR metrics on business efficiency. An overview of three articles conclusively revealed the value of the appropriate use of HR metrics, with the assumption that HR practitioners possess the skills to align the said tool with the company’s overall strategy.

Analyzing the Claims Made in the Three Articles

The first article entitled “Strategic Human Resource Metrics: A Perspective of the General Systems Theory” by C.G. Iwu, L.K. Kapondoro, M. Twum-Darko, and T. Lose, demonstrated the effectiveness of strategic human resource metrics in interpreting the link between attitude-based HR outcomes and performance criteria. The authors utilized the general systems model as the study’s primary theoretical framework. At the end, the members of the research team argued that one of the appropriate uses of a company’s HR metrics is to leverage the data in order to provide predictive results (Iwu et al., 2016). This is an acceptable claim based on a general understanding of HRM and strategic management principles because the way employees value specific behavioral outcomes has a direct impact on the organization’s overall efficiency and productivity.

The second article, entitled “Saskatchewan’s Most Wanted – HR Metrics” by P. Koenig, discussed the importance of HR metrics from the point of view of eight Canadian senior executives. Areva Resources Canada’s Bruce Walls provided a generalized discussion on the importance of aligning HR metrics to the company’s strategic plan. West Wind Aviation’s Diane Stefanco, pinpointed key HR metrics, such as employee engagement ratings, retention, and turnover rates (Koenig, 2013). PotashCorp’s Lee Knafelc, expounded on the value of HR metrics in terms of attracting and retaining qualified workers. Canada Federated Co-operatives’ Scott Banda, discussed the importance of using HR metrics in driving organizational change.

Saskatchewan Institute of Applied Science and Technology’s Larry Rosia highlighted the need to integrate HR metrics within the company’s overall strategic plan. Saskatoon’s city manager, Murray Totland, focused the discussion on his favorite HR metrics that includes retention and turnover rates. Saskatchewan Teachers Federation’s Gwen Dueck, pointed out the value of using reliable data derived from HR metrics in order to attract and retain effective employees. The author’s claim simply reflected the statements that were made by the executives that she interviewed. There is no problem in concurring with their claims because they simply reiterated the ideas espoused by other HR practitioners with regard to the importance of HR metrics.

The third article entitled “To Sit at the Table, You Have to Know the Language: Important Financial Metrics for HR Directors” by C. Albrecht, T. Gardner, S. Allred, B. Winn, and A. Condie described how to use both the financial metrics and HR metrics in order to achieve cost-efficiency. The authors claimed that the appropriate use of both sets of data, in alignment with the firm’s strategic direction, resulted in strengthening the group’s decision-making capabilities (Albrecht et al., 2016). It is important to agree with this claim because it points to a pragmatic approach that others can emulate. The authors revealed how an innovative reading of financial ratios and metrics could help business leaders uncover critical insights regarding the effectiveness and profitability of their respective organizations.

Identifying the Actual Employer Best Practice In Each Article

The first two articles share common ground when it comes to the way the proponents of the study espoused the need to develop a pragmatic approach in utilizing HR metrics. However, both articles did not provide a practical formulation describing how to use the insights they uncovered in the course of the learning process. Therefore, the article did not provide an example of an actual employer best practice that the organization utilized to achieve specific strategic HRM-related goals. As a result, there was no substantial claim that was made.

It is only in the third article that one can find a substantial claim on how to use HR metrics for the purpose of achieving business efficiency. In fact, the pragmatic use of financial metrics for the purpose of identifying weaknesses in human resource management is an example of an actual employer best practice that was mentioned in the article. As a consequence, one can find a useful assertion on the value of HR metrics. This discovery on how to use financial data in order to generate a new set of HR metrics is a good framework that HR practitioners can use to construct an employee performance evaluation system based on information gleaned from HR metrics.

Conclusion

The authors of the three articles underscored the value of HR metrics when aligned with the company’s long-term strategic direction. However, only one article specifically articulated an example of an actual employer’s best practices. The third article that was analyzed earlier described the practical use of financial metrics in order to identify weaknesses in the human resource aspect of the business operations. The rest of the articles offered only general statements or theoretical frameworks supporting the claim that business leaders are going to benefit from the strategic use of the organization’s HR metrics.

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.G, Kapondoro, L.K., Twum-Darko, M., & Lose T. (2016). Strategic human resource metrics: A perspective of the general systems theory. Acta Universitatis Danubius, 12(2), 5-24.

Koenig, P. (2013). Saskatchewan’s most wanted – HR metrics. Canadian HR Reporter, 26(18), 11-13.