Human Resource Management and HR Metrics
Human resource management is a word used to describe a system for management of resources in an institution. This is done with help of special and skilled personnel known as the human resource managers (Armstrong & Taylor, 2014). The main objective of human resource management is to maximize the productivity of a company by increasing or optimizing the effectiveness of employees. This is enhanced by creating a favorable working environment thus increasing their productivity (Mukherjee, 2016). The basic mission of human resources will always be to obtain, improve, and preserve talent; bring into line the personnel with the business; and be an outstanding contributor to the business. Human resource managers ensures that the organization focuses on productivity by focusing on employee optimism and productivity. With the help of human resource managers, activities such as hiring of employees, maintaining talented employees and firing of lazy employees are made possible so as to increase effectiveness among employees (Marchington, Wilkinson, Donnelly & Kynighou, 2016). Also, there are human resource policies put into place to assist in human resource management. Human resource metrics are pointers that allow human resource to track and ration performance on diverse aspects and foresee the future of an organization.
There are several key human resource metrics. They include; turnover of employees, cost per hire, total revenue per employee, performance and potential etc. most of these human resource metrics relate to one another either directly or indirectly.
Relationship between key HR metrics
Human resources metrics can fall under many categories. Based on several aspects, the following are the categories; based on revenue, based on absenteeism, recruitment, learning and development, retention and many more. Based on recruitment, the following HR resources relate in several ways.
Time to hire is a key human resource metric. It involves a duration from point of announcement of a vacant position in the organization and a candidate agreeing and signing the job contract (Bratton & Gold, 2017). This is a good way to ration effectiveness of the enlistment process and provides comprehension into the difficult of satisfying a certain job spot. It helps the organization to know the cost of hiring new employees and determine the scope and payment methods.
Cost per hire- this focuses on the amount it will cost the organization to employ new workers. It helps the organization to create a reasonable budget and know what amount to dedicate to the hiring of new employees (Brewster & Hegewisch, 2017). These HR metrics relate in that the organization will need to plan and know the appropriate time for hire based on the cost of hiring and the amount the organization is willing to offer.
Based on absenteeism and attendance
Rate of absence- this is keeping track of employees’ attendance. The managers are able to know the percentage of employees who showed up for work and those who did not during a given period of time. It also benchmarks over time. This means that the rates can differ from month to month. As the manager, you will need to maintain low levels of attendance. Growing absence rates could indicate poor working environments, conflicts or work related stress. Working overtime may lead to absenteeism. Other cases such as sickness also lead to employee absenteeism.
Too much overtime working especially for lengthy periods of time drives may employees to absenteeism. It may also lead to many employees showing late for work. The most effective ways to measure absenteeism is by evaluating the rates in different departments (Chelladurai & Kerwin, 2017). Normal absenteeism rates will range from 1-2% as employees may not show up for work because of several valid reasons. It is in no doubt that overtime is closely related to absenteeism which will affect the organizations productivity over time. Appropriate actions need to be taken so as to reduce absenteeism.
Employee productivity index is also related to absenteeism as employee attendance rate will play a great part in determining his or her productivity. Nowadays, it is not about how many hours you’ve worked but it’s about how much you have achieved. This is how productivity is measured. Poor productivity rates will lead to disappointments to both the organizations and employees and will increase the rate of absenteeism.
Based on learning and development.
Training and experience is the most crucial thing in any employees’ career. Organizations may offer different training sessions as it is an investment to their developing personnel. These training sessions will incur a development cost which will need to be included in the organizations budget (Kavanagh & Johnson, 2017). It is mandatory for organizations to offer training sessions to their employees so as to increase productivity. Work experience is also a factor to be considered in training. This is because experienced trainers are more knowledgeable than others and will offer more.
Training effectiveness is also a HR metric that organizations need to look at. Since most companies invest a lot of resources in training their employees, they will need to measure or assess and find out if the training sessions are effective or not. Various methods are used including setting training goals, asking employees what they have learnt throughout the training sessions (Reiche, Stahl, Mendenhall & Oddou, 2016). Day long training sessions are expensive and inadequate. Organizations seek to invest in continued learning as this combines both learning and working. This ensures higher training effectiveness and is cheap in the long run. This will increase productivity and in the future may be the organization will make good profit.
Based on employee retention.
Retention is literally retaining your employees. Various factors will lead to retention and turnover of employees. These include talent, potential and productivity. Other factors such as employee happiness play a vital role (Akter, Wamba, Gunasekaran, Dubey & Childe, 2016). A happy employee is an indicator that he or she is contented and loves doing his or her job. These kind of employees have no problem working overtime when they need to. Unhappy staff will not enjoy working extra hours as they perceive it as torture. Unhappiness among employees is a big indicator that the working conditions are poor and stressful. Turnover, or basically employees quitting their jobs, is also another HR metric and when this happens, most of the employees don’t come back. Turnover can be voluntary or involuntary. Voluntary turnover is where employees quit as a result of their will and not due to poor treatment or poor working conditions (Stone, Deadrick, Lukaszewski & Johnson, R. (2015). On the other hand, involuntary turnover is when employees quit jobs due to poor treatment or bad work conditions. If talented employees quit their jobs, this is a threat to the organization as they are productive and will make the organization to go through great losses. High turnover rates will help the managers identify a potential problem. Employees not fit for the organization are allowed to leave. Turnover tracking enables tracking of high potential employees and low potential employees. This helps the organizations in determining what action to take.
Retention per manager is also a HR metric related to turnover as the relationship between managers and employees will determine their productivity (Collings, Wood & Szamosi, 2018). Harsh and managers who don not respect their employees will lead to high turnover rates while respectful and convincing managers will increase productivity in the employees thus overall organization productivity. It is therefore noted that employee happiness is related to employee turnover.
Based on revenue.
The above metric shows the effectiveness of the body as a whole. The revenue per employee metric is an indicator of the quality of hired employees (Handfield, Cousins, Lawson, & Petersen, 2015). It is common that employees with the highest pay are the most productive and are highly valued. This metric indicates which employees are low performers, non-performing, developing potentials or top talents. Based on employee potential, sponsors can be attracted or are more pleased with the company’s progress.
Billable hours per employee- Employee engagement will determine how many hours he or she has worked for that day. In some organizations, employees are paid according to how many hours they have accomplished. The more time one works, the higher the income and the higher the organization's productivity.
Engagement rating- engagement is a virtue that all employees need to embrace since it plays an important role in employee performance and productivity. Engagement brings along pride for what you do as you enjoy taking part in it. Employees who are more engaged perform well and perceive stress as a normal encounter and not as a problem. This will prompt them to work more hours and give their all, thus widening their pay (Armstrong & Taylor, 2014). It is noted that these three HR metrics relate and may affect the organization if not put into consideration.
Recommendations on staffing policy to enhance organizational performance.
Engage people – engaging people in various sections, e.g., decision making makes them more passionate about their work. It also makes them offer their best performance and are more committed to their work. It also builds trust as employees can know what their managers are working on and see that they care about them. Engagement also makes sure that each employee is using his preferred skills according to his area of specialty thus improving organizational performance.
Employ appropriate leadership style –. Managers are the leaders in the organizations, and most people look up to them. Some are even role models to their employees hence need to display proper leadership skills .it is no doubt that how you lead your people plays a significant part in their performance (Van Dooren & Van de Walle, 2016). Democratic leadership styles tend to motivate employees as they are involved it also establish levels of respect between high-level employees and low-level employees. Transformational leadership also helps improve employee morale as they are excited and encouraged. Other styles such as dictatorship may lead to high level of turnovers as the employees lack confidence and the working environment is not conducive.
Offer training sessions to employees- training of employees is a vital thing as they provide a chance to add knowledge to what they already know. Training helps improve employees’ confidence as it is a chance to learn new things and enhance their experience. Organization prefers continued learning as it is more productive and cheaper in the long run.
Strategic planning- planning plays a vital role in accomplishing organizations goals as it offers the flow of events. A clear plan ensures that every employee knows what to do and what is expected of him or her (Ferraris, Santoro & Dezi, 2017). Organizations with clear plans tend to perform better than those without as they can manage their resources well and take appropriate actions if thing do not go to plan
Set clear goals and objectives- setting achievable goals will help improve organizational performance as the goals are realistic. It does not pressurize the employees as they know the goals are achievable. It also acts as motivation as the organization has an objective and everyone is working towards that objective.
Giving rewards to hardworking employees- such platforms make employees work harder as they see that their effort is significantly recognized and that they are valued. The also feel proud of their achievements and make them even work harder (Hyland, Lee & Mills, 2015). This also challenges other employees to work harder for them to be rewarded too. It also creates healthy competition among the employees since they all compete for the reward. This leads to improved organizational performance and productivity.
Offer motivational, guidance and counseling sessions – it is a fact of life that we all need advice at one time or the other (Braojos, Benitez & Llorens-Montes, 2017). Offering these sessions creates an emotional connection between the employees as they have a platform where they can share their problems. This helps finish any emotional struggles within them and fully concentrate on their job. It also builds trust among employees thus improve general organization performance.
Encourage teamwork. - Teamwork is a requirement in any organization as the goals cannot be achieved without teamwork. Teamwork also promotes unity and as the sayings go, two heads are better than one. Teamwork minimizes errors hence improved organizational performance.
Proper communication- communication is the backbone of every organization. Without communication, nothing can be achieved. Clear communication removes ambiguity thus reducing the error margin (Wu, Straub & Liang, 2015). Communication also improves interactivity, teamwork and clarity. This, in turn, enhances the organization performance.
For any organization to thrive in the world of business, it requires proper management especially on utilizing resources. Employees play a vital role in organizational performance and productivity and are the most critical resource. Proper management will ensure that all resources are accounted and everyone knows their role in the organization.
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