The Value of HR analytics in HR development
The following report will begin by analysing the role that Human Resource (HR) analytics and Human Resource Management Systems (HRIMS) must have in order to assist HR in the shift from being an administrative and compliance based focus to becoming a much more strategically focussed and valued business resource. Towards doing this, we will first take a look at the purpose and benefits of HR metrics and then continue to discuss some common issues associated with using this data to effectively convey HR’s contribution in achieving organisational goals. Details on how HRIMS can support measures will be provided and the impact analytics and metrics have on HR Managers and professionals will also be examined.
The report will then discuss the importance and relevance of incorporating HR metrics into the organisations overall business performance measures and highlight how linking them to the profitability and productivity levels of the business is pivotal for HR to attain the recognition it deserves. Finally, Teachers Mutual Bank (TMB) will be used as a practical example in determining the type of information used to measure the effectiveness of Human Resource Development initiatives. The way measures are linked to the organisation’s business performance will be examined in addition, suggestions on how to improve or furthermore expand on these metrics will be discussed.
Role of HR metrics and HRIMS
In order to become a valued resource in an organisation, and ultimately a strategic partner, Human Resources needs to continue to provide relevant and accurate measures that can successfully demonstrate the effectiveness of its human capital whilst at the same time develop close links with all levels of management (HRM, Nankervis et al, pg. 17). By providing clear and appropriate measures of performance HR will be enabled to furthermore display accountability, value and credibility to senior executive management whilst strengthening the link between HR activities also initiatives and the financial success of the business. Peter Wilson, in AHRI’s white paper ‘people@work/2020’, supports this as he describes a common characteristic among the most admired and successful companies to include ‘transparent people metrics and key performance indicators that rank equitably with their parameters for financial performance’.
According to Nankervis, Compton and Baird (2008, p. 510) the overall purpose of HR measures is to ‘comprehensively account for, and subsequently to persuade management of, the value and contributions of the management of an organisations human resources’. Therefore, when developing effective metrics the main objective should be to determine the most appropriate measures that can establish if HR goals have been met and to what extent. In addition, measures should also establish if money spent on HR programs and initiatives has been worthwhile, and not wasted, as this affects the overall profitability and sustainability of the business.
In addition to justifying and validating HR’s overall effectiveness, particularly through demonstrating the Return of Investment (ROI) from initiatives, metrics also provide other benefits to organisations such as assisting in the strategic decision making process, obtaining managements’ recognition and acceptance of its employees as valuable assets and promote areas where changes to policy or processes may be required (AHRI 2012, p.6.6.)
Common issues/pitfalls with HR metrics
In relation to the future of Human Resource Management, it has been found that ‘to become a truly strategic business partner, the HR department needs to look towards producing meaningful metrics, analytics and eventually sophisticated correlated analysis with predictive modelling…’(AHRI 2012, p.12.6) yet unfortunately this is where many organisations fall short.
Some of the underlying issues associated with HR metrics are...