How to Measure the Value of HR: HR Metrics

By Linda Brenner | October 30, 2013

The holy grail of HR seems to be the ability to monetize the value of talent-related investments and efforts. And it's been hard to do in a way that's meaningful enough to catch the attention of the C-suite. Instead, it seems, HR has been preoccupied with costs: cost management, cost reduction, the cost of HR efforts to the organization, etc. But these "HR metrics" (if you can call them that) often take eons to produce, their accuracy is questionable and, most important, they don't mean much. They look at one slice of information, to the exclusion of nearly everything else, and often as a way of comparing apples to oranges.

In many other organizations, the HR metrics are not even about costs. In those companies, in the most general way, HR is measured by the amount of "noise" in the system related to the transactions for which it's most well known.

This while companies are experiencing these trends in other parts of the business:

Intensely competitive and more global business landscape
Greater investments in enterprise-wide systems and process improvements
Embracing of 'smart' technologies to enable the customer experience and the way in which work is done.
Data so complex and accessible that it can predict certain consumer behaviors.

So things around HR are evolving and adding value to the business faster than any part of HR is, in most organizations. In fact, the value of talent to the organization has never been greater than at this moment. Consider these people-related company demands:

The need for more - and more rapid - product and service innovations
The rapidly changing technology landscape
Companies more often differentiating themselves through their IP, patents, brands, and designs.

Yet only very few use data that can help them recognize their return on this investment as it relates to hiring, talent development and employee retention. There are enormous financial implications to talent management, including improved quality of hire, greater productivity and reduced attrition.

What is the best way to assess HR metrics in an organization? How are you doing it in your company? Check back here as we reveal new methods for linking talent investments to financial returns.