Quantifying HRM:The New Strategic Decision Maker

Published by MBA Skool Team, Published on February 05, 2016

Human Resource Managers have come a long way since the dark ages, from being only human ‘liabilities’ managers to human ‘resource’ managers to people managers to strategic business partners. They have been constantly rebranding themselves from reactive functions to pro-active functions. With the advent of technology and analytical tools, HR Managers have not only been able to quantify their contributions, but also project their achievements of translating investments into profits, and hence instead of asking for a seat at the table, they now own the table, make strategic decisions with the board and are highly valued for their two – fold abilities: being able to analyse data to make predictions and being excellently intuitive in decision making since they are also sensitive to the psychology of the average employee.

Another contributor to this trend is the outsourcing of transactional HR work in light of which, many leaders of the function have been able to focus on their strategic goals and taken a first step toward quantifying and reporting HR costs and performance. So, in other words, industries have started looking at the bright side of aligning human resources with business strategies by focusing on data driven talent strategies.

Image: pixabay

The Insatiable Scope:

However it’s been a hard struggle for many businesses since it’s so difficult to actually measure the business value of HR approaches. Agree or not, it is difficult to quantify the ROI of training and screening techniques that would yield the best performing recruits or say, target-setting approach that will best motivate performance; all these have been met with imprecise answers more or less. This whole thing we are talking about, the one tool that is going to transform the way HRM is perceived, is called “HR Analytics” or “Human Capital Analytics” or previously known as “HR Metrics”, although the latter was not as closely related to business strategies. HR Analytics helps organizations measure the effect of HR policies on the organizational efficiency and output and furthermore influences business strategy. It assesses the risk beforehand and helps with ways to tackle it. A business strategy aligned with its human capital investment remains unshaken in the face of adversity.

Human Resource Analytics Framework:

There are several factors that affect the Human Resource Analytics of a particular industry or organization. Keeping them in mind, a framework is presented with three broad categories as above. The first one (Product/Services/Market/Technology) covers the broader aspects of business that the organization is into; the second one (Social/Cultural/Legal Compliances) covers the environmental aspects outside the field of business; and the third one (Organizational Structure/Administration/Financial Health/Organizational Culture) covers the environment within the organization. The factors are self – explanatory and each one impacts data analysis in a different way.

There is another important aspect of any HR Analytics Framework – the various capabilities of an organization that can be measured. Here are some such capabilities vital to the organization functioning:


Statistics related to workforce management and talent acquisition

Financial ratios

Measuring the relations between people and their productivity

People Values

Measuring the perceived and actual values of employees and their consequent affects

Engaged vs. Disengaged

Measuring people’s engagement in order to come up with effective engagement programs

Efficiency of the HR function

Measuring efficiency of not only HR functions, but also HR systems

People processes effectiveness

For ex: Grievance management, recruitment processes dealing with interviewee experience, etc. processes, to reduce waste

ROI on exceptional initiatives and programs

Calculating the investment on such programs held once in a while for certain reasons and the turnaround from the same

How Can “Lagging – Behind” Businesses Implement This?

Many businesses are lagging behind in this aspect – inconsistent, inaccessible or poor quality of data, or lack of standardization of HR data analysis, or analytical knowledge & experience skill gaps, or financial issues, or not being able to target correct analytical opportunities, etc. – whatever be the case, it is high time they catch up in the race or they shall forever stay in the ancient past of HR practices. They must:

1. Focus on business priorities and strategies from HR perspectives as well. This will include bringing the HR leaders on board in decision making and providing autonomy to HR professionals in the organization.

2. Companies must go beyond traditional HR solutions and use data extensively to drive business decisions. For instance, Google did a study to examine whether good managers matter—and, if so, how—within Google’s specific culture .

3. Establish a routine with “people strategy” staff joining business reviews to identify priorities for analysis. This practice helps conduct HR issues related problem-solving discussions and to have action plans ready.

This article has been authored by Oaskanta Mishra from SIMS Pune

The articles in this section have been submitted by our Authors. They have been reviewed & uploaded by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

If you are interested in writing articles for us, Submit Here

Share this Page on:
Facebook ShareTweetShare on Linkedin