HR Metric
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HR metric refers to Human Resource Metrics. It provides a number of factors that can be measured to show how HR contributions to the business. HR is now a key role in developing and implementing corporate strategy as well as becoming a high-valued-added part of organization. [1](Lawler, 2003). And HR Metrics provides a measurement and the analytic and data based decision-making capability to influence business strategy with an attempt to make business better decision and transform HR into strategic partners.
1st kind of metrics: Efficiency of the HR functions.
It explains how well the HR is in doing their administrative work. (Boudreau; Lawler & Levenson, 2004). The data can be gathered in database and the multi-company database allows companies to compare the performance of their own HR department with other HR departments in other companies.
The following are some of the examples on efficiency of the HR functions: (Kavanagh & Thite, 2009)[2]
1. Cost per hire: It is the cost associated with a new hire. It is not only important to know how much it cost in hiring, but it is also important to see if the money spent is used to hire right people. (Boudreau; Lawler & Levenson, 2004)
2. Time to fill up the open position: It is the total days to fill up a job opening per each job. The shorter the time, the more efficient of the HR department in finding the replacement for the job
3. HR expense factor: It is the ratio between total company expense and HR expense. It shows if the expenses on HR practices are too much in terms of the whole company expense.
2nd kind of metrics: Effectiveness of the HR functions.
It shows whether the HR practices have a positive effect on the employees or the applicant pool. This is very important for HR because they are regarded as the leader for acquiring, developing and helping to deploy talent. (Boudreau; Lawler & Levenson, 2004)
The following are some of the examples on effectiveness of the HR functions: (Kavanagh & Thite, 2009)
1. Training ROI: It is the total financial gain an organization have from a particular training. It shows the effectiveness of the training program and how much it can benefit to the company after the training.
2. Absent rate: It determines the company is having an absent problem from the employees. It also reflects the effectiveness of the HR policies as well as the company’s own policies. It always goes along with employee satisfaction.
3rd kind of metrics: Developing company’s core competency
It helps to demonstrate the connection between HR practices and the tangible effects on organization’s abilities to gain and sustain their competitive advantages. This approach often treats employees as their human capital instead of the expense. (Boudreau; Lawler & Levenson, 2004)
The following are some of the examples on effectiveness of the HR functions: (Kavanagh & Thite, 2009)
1. Revenue factor: It indicates the effectiveness of company operation with the use of the employees as their human capital.
2. Defects rate: It indicates the number of defects products in the operation. The lower the defect rate, the more effective the HR practices in developing companies core competency in terms of reducing cost.
- ^ Lawler, E.E. & Mohrman, S.A. (2003a). Creating a Strategic Human Resources Organization: An assessment of Trends and New Directions. Standford: Standford University Press
- ^ Kavanagh, M.J. & Thite, M. (2009). Human Resource Information Systems: Basics, Applications, and Future Directions. Thousand Oaks: Saga Publications, Inc.