Hr Practices: Difficulties in Measuring the Contribution of Hr to an Organization

Name: Archit Anand

Roll No: MJAN15CMM005

Difficulties in measuring the contribution of HR to an organization

Does Human Resource Management make any difference in a firm’s performance? This is the question which firms face when they decide that they need a Human Resource Management in their firm. Over the time it has been proved that a competent HRM makes a huge difference in the performance of a firm and is sometimes the difference between two competing firms. Now the other question which pops up is that how do we measure this difference which an HRM creates? Firms have now come up with processes which measure the effectiveness of HRM and how is HRM impacting the profits of a company.

There are a lot of parameters on which a firm can measure the contribution of HRM to an organization. Few of them have been specified here:

• Productivity
• People
• Process
• ROI
• Ratio of total employees to HR professionals
• Ratio of total money spent on HR functions to total sale and other general functions.
• Performance against plan

While measuring the contribution through the above parameters organizations face a lot of problems.

1. Evaluation Cost: With every additional step or stage in the process of designing an HR activity or strategy and implementing them can increase the cost of the activity. HR which is already working on a thin budget has to then look at cost cutting measures and they find it difficult to allocate resources for the measurement and evaluation. So it is always better to look at the cost of evaluation when compared to perceived value derived from the process. Sometimes the evaluation is not worth the cost incurred.

1. Lack of commitment from the top management: There should always be a strong commitment from the top level management when it comes to evaluating HRM. But they sometimes fail to recognize the HR functions and the potential contribution HR makes to the organization and this results in their lack of commitment. They do not see ways in which HR influences performances and they do not understand the goals of HRM. This is mostly due to very few top level managers have experience in HR.

1. Lack of evaluation knowledge: A major stumbling block is the lack of knowledge of processes to evaluate the contribution of HR to an organization. Very few HR managers know how to measure the success of their programs. There are very few research papers which can be found the topic of evaluation of success of programs in HR and hence it is proved that there is a knowledge gap.

1. Attention to evaluation in process design: The design, development and implementation of HR programs do not always follow the logical steps, making the process of evaluating them even more difficult. Evaluation should be added as one more step in the program design to make it convenient.

1. Fear of evaluation: In some cases, the HR evaluation can show unfavourable results for those who designed the program itself. All the HR programs will not be positive, particularly when the reactions are obtained, hence this fear should be removed from HR personal and they should learn to take up criticism. Steps to overcome this issue can be that the evaluation process be outsourced to an agency.

1. Lack of standards: Lack of standards is a big obstacle in measuring the success of HR programs. In all the other fields like Accounting, Manufacturing, Engineering, quality control and others there are standard which have to be followed but this is not the case in HR activities as there are no strict standards which one has to adhere to. This obstacle can be minimized as more and more organizations are now making a structure for HR programs and activities.

These are the challenges an organization faces while evaluating the contribution of HR and there is study being done over these issues and in future if organizations plan to evaluate at each stage and create a structure for HR activities then evaluation process will become a lot easier.