A research project claims to have come up with the definitive measurements for assessing the value of HR to an organisation.
The project involved 40 HR professionals from companies including GKN, Hewlett-Packard and Glaxo Wellcome.
The study, by international management consultancy The Concours Group, defines five measurement categories – internal operations, strategic alignment of HR with the business, employee capabilities, organisational capabilities and organisational learning/adaptability.
“Measuring the business impact of HR is universally appealing but there is almost no evidence that anyone has managed to do this effectively,” said Europe managing director John Cooper.
The tool will “enable HR directors to become more knowledgeable business leaders, earning the confidence of the CEO and their seat at the top table”, he said.
The five categories should be built into an “analytic process” rather than a “standard HR scorecard”, the researchers conclude.
Examples of the criteria for internal operations include the cost of HR relative to the total company expenses, the cost of filling a vacancy, HR staff per employee, the cost per day of classroom training, time to fill key vacancies and cost of benefits per employee.
The project also recommends preparing separate HR reports for different audiences.