Introduction To HR Measurement

"What bedevils action is 'initiative-itis' – multiple initiatives, often conflicting, rarely completed. In the face of this confusion, line managers are bemused and employees cynical."

Lynda Gratton
Professor of Organizational Behaviour
London Business School

Summary

1.   HR functions commonly lack confidence in the contribution they make to the business.

2.   The most confident are those that can demonstrate the value they contribute, using measures that assess not only the delivery of essential services to business units but also alignment with strategic business goals.

3.   Off-the-shelf measures are no more than a placebo. Metrics should be tailored to the organization's goals. People measures need to be fully integrated with financial and other non-financial business measures such as budget reviews, customer satisfaction statistics, and sales and revenue data.

4.   The acid test of effective measurement is the process by which it is translated into actionable policies and plans.

5.   However, new operating and financial reporting regulations mean that there is a growing tension between measures that meet this internally focused proprietorial agenda and the requirements for external reporting frameworks that are regulation-driven and, by necessity, transparent.

Introduction

This work forms part of an ongoing research programme at Business Intelligence examining the nature and agenda of 'strategic' human resource management.

The issue for us was kick-started by the research we conducted for HR Shared Services: Achieving the Business Benefits.1 That report focused on the operational implications of delivering essential HR services at business unit level. Consultants and practitioners claimed that shared service provision would 'free up' group HR functions to play the strategic role they had long aspired to. The same justification was used for the adoption of outsourcing and on-line HR service delivery to employees.

The following comment, by Andrew Muras, vice president of Metavec, represents a generally-held view:

"In most companies, HR was still considered an overhead. There was recognition that a good deal of the focus in HR was focused on transactions. The business started to realize they needed HR to play a different role, and I'm not even sure they knew it was HR at the time. The direction that HR was not spending enough time with the business because they were doing things that were necessary, but reactive – my pay cheque isn't right or my benefits aren't right. A shared services initiative changes all that."

Comments like these beg a number of questions. If businesses have started to realize they need HR to play a different – non-transactional – role, what is this role? Are group HR functions confident they can fulfil this role? If they are, is this confidence based on anything other than hot air? To put it another way, are HR functions aspiring to play a strategic role at the top table fully equipped to do so? Is the race to get there hobbled by a tactical mindset or staff more used to handling transactional relationships?

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