The Hindu Business Line : Driving an analytic understanding of HR

Just about every aspect of work at a corporate office is tied to performance: so we have performance-linked incentives, bonuses and promotions. In an attempt to develop each department as a profit centre, companies have put in place systems that track the performance of each employees.

While it is easy to quantify the productivity of most departments whether marketing, sales or manufacturing, what of HR? It would seem impossible to measure the effectiveness of HR. After all, can cold numbers be applied to a function that is all about dialogue between individuals?

The traditional image of HR is, however, slowly giving way for the development of an analytic understanding of HR. HR Metrics are quantitative measures that provide information about human capital.

HR, a value generation centre

According to Dr Steve McElfresh, Principal and Founder, HR Futures, the real opportunity in implementing HR metrics is to have HR become a value generation centre. And, how does one achieve that?

According to him, most of the unique value of a company is attached to its people. One has to create a workforce that is better than the competition.

In a globalised world, there is little that separates one company from the next, whether it is the goods and services being sold or the technology, marketing and sales that go into producing and selling it. Even intellectual property (IP) runs the risk of being replicated. But unique people and unique people motivation cannot be replicated.

The US-based HR Futures undertakes “people engineering” initiatives such as planning and implementing HR programmes, conducting workforce diagnostics, improving employee communications and providing executive advising to CEOs and executives to extend their grasp and increase their impact.

“The metrics programme is focussed on where our unique human value lies,” he says.

But the measure, that was first pioneered in the seventies, remains under-utilised.

The implementation of the concept, he says, is widespread but not deep. But why?

According to him, “HR metrics has not been part of the core knowledge of organisations. But more than that, it runs against the traditional style of HR — of warmth and grace.”

That is where workshops and seminars, such as that organised by SHRM India (Strategic Human Resource Management), are important. Interaction with experts can itself lead to a better understanding of the subject. HR practitioners could also read up on metrics in a number of publications besides the Internet. SHRM India is a wholly-owned subsidiary of the Society for Human Resource Management, the world’s largest HR association.

Distinguishing the exceptional

According to him, some organisations are able to engage their employees in a way that brings them economic benefit. In such companies, employees put in a discretionary effort which distinguishes exceptional companies from the ordinary ones, he says.

Among companies that have gained from the effective implementation of this policy, he lists HP and Capital One in North America. Small and mid-sized companies have also shown a growing interest in the concept. In India, IT companies and MNCs tend to be more analytics-driven, he says.

According to him, Indian companies are ready to take the next big step in HR. “The industry is open and the people have the fundamental skills to do such work if helped out. The economic growth opportunity is huge,” he says. An official from SHRM points out that HR professionals in India seem to have little time to spare for best practices such as HR metrics, caught up as they are with recruitment and retaining people.