Human resources have always been considered one of the most significant assets of any company. In accordance with recent studies, the efficacy level of any small or large business depends a lot upon the way the human capital is managed. It is reported that about 80% of business owners believe that effective human resource management is critical for the success and better performance of their organizations. They also report that efficient measurement is a necessity when it comes to the delivery of proper human capital management. That is why experts claim that adequate and reasonable policy of HR measurement makes it possible for business managers to gather consistent and trustworthy data about their personnel and its influence upon the productivity of a company. As a result, this allows developing an adequate program of measuring HR metrics, which will ensure that all the measurement activities are relevant with the company’s strategies in general. With that said, it becomes clear that HR function notably affects the overall business performance and a company’s competitive capacity depends a lot upon the way its owners manage the most important and influential asset – employees.
As far as the process of HR measurement has serious impact upon the performance of any organization, it seems vital to view this procedure from six significant perspectives, namely retention and recruiting processes, accountability and rewards, collegial administration, reasonable and thought-out application of the available resources, proper human resource service technologies and integrity of communications. Apart from this, it is worth mentioning that any human resource strategy should be consistent with all short – and long-term business objectives and goals a company has initially set.
When developing HR metrics, managers of any company should check if these indicators have a positive effect upon its performance and ensure a smart productivity evaluation, which, in its turn, contributes to the improvement of customer satisfaction and profitability. To make the evaluation system more effective, all HR metrics are generally classified into three basic groups, namely real-time, historical and forward-oriented. This classification is required to provide a better insight into the overall development of your business. That is why the human resource department can make use both of the available historical data and current indicators of a company’s success. HR metrics incorporated into the system of balanced scorecard can facilitate the measurement process by making the readability and accessibility of human resource data more comprehensible and well-structured.