By Cathleen O'Connor Schoultz
An effective human resources practitioner needs to be able to help determine which measurements to use and how they matter, and to communicate that in a competitive business environment, Ronald Adler, president-CEO of HR consulting firm Laurdan Associates Inc., said Feb. 15 during a Bloomberg BNA webinar.
It is not just about numbers, but about what to measure, as well as HR analytics—how the results can help management make decisions, Adler told participants in the webinar titled “HR Metrics: Communicating the Value of Human Resources.”
Adler offered some examples of what HR should consider: Should a cash-strapped company spend money on sexual harassment training, and if so, for which employees? What are the risks and costs with either path? Is a company in danger of losing key employees to the competition? How does an employer stand in terms of succession management and what is the depth of the leadership pipeline?
HR metrics would be better termed “business metrics,” Adler said, underscoring that HR should not operate as a “silo,” but must be strategically integrated into all aspects of the business.
HR management is increasingly expected to provide both quantitative and qualitative information about human capital's effect on competitiveness, about how it helps the organization achieve its goals, and about how to assess and manage risks related to human capital, he said.
HR should think of itself as serving and collaborating with an array of “customers,” Adler said, including employees, government auditors, risk managers, senior executives, investors, and credit rating organizations. All of them need metrics from HR but for different reasons, he said.
For example, Adler said, the government auditor needs HR to be able to show that the company is complying with the law. The company's risk manager needs to know about how the company is doing in terms of legal compliance, too, and a host of other areas, he added.
HR's effectiveness will increasingly be measured against both internal and external benchmarks, he said. In terms of external measures, he said, the Society for Human Resource Management has just issued the first ever professional national HR standard—its cost-of-hire standard, Adler said.
There are numerous other standards a company's HR practices can be measured against, he said, including the “Best Places to Work”annual competition. Companies that participate can now rate themselves to see how their “employment brand” compares with that of some of the major players.
By Cathleen O'Connor Schoultz
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