Human Resources Metrics: Connecting Human Resource Management with the Bottom Line

by Jay Schleifer

To be seen as a key asset, HR departments must generate results that complement the overall business strategy and report them in metrics that other executives understand.

Human resources metrics have become a requirement for every modern HR department to show the organizational value of money and time spent on human resources management training and activities. For human resources metrics to be effective, though, they must be the right metrics and aligned with business objectives, say two HR management experts who recently led a BLR audio conference.

Ronald Adler, president and CEO of human resources management consulting firm, Laurdan Associates, Inc., says that, in measuring human resources management results, HR professionals should use the language of the organization. For example, if the organization uses cost-per-mile as a measurement, human resources professionals should do the same when they report the effectiveness of their programs.

Deborah Saks, president of 1 Source Consulting, says that human resources metrics are key to HR management's new leadership role, a role that casts the HR manager as a business professional, leader, and general manager as well as a human resources expert/visionary.

-- In the role of business professional, human resources managers must approach business problems as an executive in any other part of the business would. This role includes critical thinking, root-cause analysis, and fact-based decision making as keys to measuring return on investment. This requires the HR manager to be able to dissect balance sheets and annual reports and use them to construct metrics that provide insight into organizational performance.

-- In the role of leader, human resources professionals must ensure that their competencies are comparable to peer-level executives, according to Saks.

-- In the role of general manager, the human resources department must be run like a business, Saks said. The department must be efficient (as shown by internal measurements like employee turnover and healthcare costs per employee), effective (return on investment), and seen as constant