Chapter 14
The Importance of Evaluating HRM
• HR managers need to be able to talk about the contribution and value of HR
activities in the numbers language of business
“If we implement this safety program, we will reduce lost-time
injuries and accidents by 50%, saving $500,000 annually”
• Measurement of the HR function is critical for improving both the credibility
and the effectiveness of HR.
If you cannot measure contribution, you cannot manage it or
improve it.
What gets measured gets managed and improved
• Instead of saying:
“100 people attended the training course” they should say “the
training courses resulted in a 15% improvement in customer
satisfaction.”
Resistance
• Lack of integration of HRIS with each other and with operational systems
(finance, sale, etc…)
• Some HR managers argue HR activities cannot be measured because
outcomes such as employee attitudes or managerial productivity are
impossible to calibrate meaningfully or precisely
• Even though measuring is expensive, it is less expensive that continuing with
an ineffective program
9 Reasons for Measuring HRM effectiveness:
1. Labour costs are most often a firm’s largest controllable cost
2. Employee performance makes differences to group and organizational
performance. Good performance can be rewarded objectively.
3. Organizations have legal responsibilities to ensure compliance with
employment laws
4. Evaluations are needed to determine which HR practices are effective (and not
fad) – emotional intelligence
5. Measuring and benchmarking HR activities will result in continuous
improvements. Performance gaps can be identified and eliminated
6. Audits will bring HR closer to the line functions of the organization. The
practices must demonstrate that they enhance competitive advantages
7. Data will be available to support resource allocations
8. Investors want this information.. For every $6 of market value, only $1 appears
on the balance sheet. $1 tangible assets buildings, equipment, cash. $5
intangible assets Employee commitment, brand equity
9. HR managers are more likely to be welcomed at the boardroom table, and to
influence organizational strategy, if they use measures to demonstrate the
contribution of their function. Areas HRM departments can be Evaluated
5Cs compliance, client satisfaction, culture management, cost control & contribution
Compliance
- HR is being asked to ensure not only that the organization complies with laws but
also that it is ethical.
o Development of a code of conduct, protection for whistleblowers and
redesign of orientation and training programs to include curriculum on
ethics
Client Satisfaction
- Predict financial performance, on a lagged basis
o If an employee’s morale drops, management can expect to see customer
satisfaction levels drop in six months
- External stakeholders candidates for positions, suppliers of HR services such
as technology and government regulators
- Internal stakeholders employees grouped by occupation, union leaders,
managers
o Managers are turning to client of stakeholder perceptions of the HR
department for input about the effectiveness of HR performance
Advantages of Measuring Client Satisfaction:
- Reminds HR department that it is a service that must deal with the
expectations of clients
- Surveying clients about their unmet needs increases the credibility of the
HR function
- Initiating and managing change by surveying stakeholders before, during
and after a change program increases the possibility that the HR
department will understand the clients’ perceptions; identify resistance to
change and overcome such resistance; and prove that the change
program meets its goals.
Methods for Measuring Client Satisfaction:
- Informal feedback
- Surveys
- Critical incident method – clients are asked to describe a situation in
which the HR department provided assistance that was particularly
useful, the consequences of this help and why it was seen as helpful
Problems with Measuring Client Satisfaction:
- High expectations of clients
- Conflicting expectations of stakeholders
- Professional affiliations – line managers worried about how quickly job is
filled, HR manager more worried about a valid selection test Culture Management
- Management carefully monitor cultural programs (empowerment) through attitude
surveys of employees.
- The results of these surveys can then be linked to the objective results of the
department
- The assumption underlying the cultural management model is that HR practices
can have a positive influence on employee attitudes, which in turn influence
employee performance
- Most frequently measure attitudes in organizations are job satisfaction and
commitment
o Surveys measure attitudes towards supervisors, colleagues, pay,
promotions and the work itself
- Organizations use different terms when measuring employee attitudes:
o Satisfaction
o Motivation
o Commitment
o Advocacy
o Engagement
Say – consistently talks about the organization to co-workers,
potential employees and customers.
Stay – has an intense desire to be a member of the organization
Strive – exerts extra effort and engages in behaviours that
contribute to organizational success
Cost Control
- Labour expenses/costs: compensation, t
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