The value of reporting and analysis of HR performance in various areas aims to improve the organization's function and internal temperature.
[1] HR's challenge is to provide business leaders with actionable information that helps them make decisions about investments, marketing strategies, and new products.
(Boudreau; Lawler & Levenson, 2004)[3] The following are some of the examples on effectiveness of the HR functions: (Kavanagh & Thite, 2009)[2] Metrics help develop core competency by demonstrating the connection between HR practices and the tangible effects on an organization's ability to gain and sustain competitive advantage.
The lower the defect rate, the more effective the HR practices in developing companies' core competency in terms of reducing cost.
Some HR groups no longer only assess their effectiveness and efficiency and the contribution to the company, but also how those practices can positively affect the human capital (employees) in the organization.
"Based on corporate culture, organizational values and strategic business goals and objectives, human capital measures indicate the health of the organization.
"[4](Lockwood, 2006) Key Performance Indicators (KPIs) are used to measure human capital outcomes, such as talent management, employee engagement and high performance, illustrates the firm's business, financial and strategic goals, and promotes partnership with senior management for organizational success.
At the same time, when determining strategic KPIs, it is essential to consider who designs human capital measures and how they are created.
); Increasing manager acceptance through training programs and concrete action plans; Working with HR to simplify metric and automate data collection.
Many of the important decisions made by executives affect the business and the bottom line; therefore, in order to convince executive leaders that organizations are benefiting from their people or on the contrary, losing money and wasting resources, HR will need to provide palpable evidence.
For the most part, HR professionals in many companies probably don't need to purchase additional software to create valid metrics.