| Globalisation has forced many firms to capitalise on | | | | investment on human capital and continually question |
| lower labour costs which pushed HR function to a | | | | whether the HR department should continue to |
| critical juncture to be both business partners and | | | | expand if there is no clear connection between HR |
| business-driven as opposed to its traditional | | | | activities and the overall results of its organisation. |
| administrative role. In current market conditions, | | | | Hence, unless shareholders can see HR programmes |
| stakeholders want clear, solid comparative data and | | | | as a return to their firm's cost of capital, shareholders |
| evidence-based explanations of how people are | | | | are likely to cut their budget on HR planning |
| creating value for their organisation. Thus, HR | | | | programmes. Ultimately, no matter how innovative, |
| professionals are under increasing pressure to | | | | farsighted and workable the HR programmes that are |
| measure the Return on Investment (ROI) of HR and | | | | introduced, HR professionals will have to continuously |
| working diligently to try to tangibly demonstrate the | | | | perform the HR functions in a measurable and |
| value that human capital add to their organisation. | | | | accountable way to become bottom-line valid to the |
| Employment-related costs are the single largest | | | | business. |
| expense for most businesses and hence, the | | | | The ability to link HR functions to business impact and |
| effectiveness of the HR function can influence the | | | | delivering proven value and real ROI which are drawn |
| overall success or failure of the organisation. The HR | | | | from good metrics will help HR professionals make |
| functions are transformed to become a more strategic | | | | effective business decisions based on facts and |
| role that is capable of assisting firms to reduce their | | | | figures, which reduces ambiguities and uncertainties. |
| cost base without compromising the firm's strategic | | | | Therefore, any HR function, large or small, centralised |
| positioning. | | | | or decentralised, should establish relevant HR metrics |
| Benchmarking measures that compares cost and | | | | as a measurement and evaluation tool that are linked |
| other efficiency-based performance outcomes | | | | to the organisation's objective. This will ensure that HR |
| associated with the activities of HR function are often | | | | programmes are continuously and systematically |
| counter-productive since performance should be | | | | improved and realigned towards providing a |
| relative to a firm's own strategy rather than on other | | | | demonstrable solution and tangible benefits. |
| organisations' HR efficiency. Therefore, HR | | | | The current business environment and business |
| professionals must be careful not to focus primarily on | | | | objectives will continue to evolve and HR metrics will |
| cost reduction as this may result in HR being managed | | | | enable HR professionals to explain what they are |
| as a commodity, rather than as a strategic asset. | | | | tracking to the key stakeholders and how HR |
| Generally, HR metrics are simply measurement tools | | | | functions are aligned to the business strategies. In the |
| to track change over time. In most organisations, there | | | | longer term, if HR professionals want to continue to |
| is a persistent trend of accountability to show how | | | | become a strategic business partner, they would have |
| each function supports and contributes to its | | | | to find ways to create relevant metrics, analytics and |
| organisation and thus, metrics are the key for HR to | | | | effective reporting that allow for better decision |
| become more visible in the organisation. In addition, | | | | making about people. |
| shareholders expect an adequate return on their | | | | |