```The Changing role of Human Resource Management:
What is Strategic Partner?
●Apply logic and good business sense; this means
applying a systematic and consistent approach to
●Address real and tangible issues that relates to
●
As Peter Drucker puts it: "If you want it, measure it; but if you
can’t measure it, forget it!" Thus use financial measurement for
HR, since it is a typical measurement that is applicable to every
function.
Developing a business case for HR
1. Principles of Need Recognition
Every HR activity should be based on a need to solve problems or lead
to intended results.
2. List of Problems or Intended Results
HR should first compile a list of the problems or intended
results. Then, it should use the "Peeling the Onion"
Example:
Someone in your company gives this statement: "Our communication
is lousy!".
Raise questions to clarify the meaning of "communication" and "lousy."
Find out if the situation has any financial impact by asking: "When the
communication is lousy, what happens?" The answers will provide
evidence on this situation.
3. Get the Evidence
When you find hard evidence, ask the following questions:
●How do you measure it?
●What is it now? What is the current situation?
●What would you like it to be?
●What is the value of the difference?
●What is the total value over time? (3 to 5 years)
4. Formulate the Impact
When measuring the impact, we use the "back of the envelope"
economics
Example:
Problem: "Low Sales Productivity"
How do you measure it? Calls per hour
What is it now? 15 calls per hour
What would you like it to be? 20 calls per hour
What is the value of the difference?
5 calls x total headcount (200) x average profit per call (Rs.
10,000) x total hours per week (30 hours)
= Rs 300,000,000/week
= Rs 1,200,000,000/month
What is the value over time? (3 to 5 years)
= Rs. 43,200,000,000,000 (for 3 years)
= Rs. 72,000,000,000,000 (for 5 years)
HR measures - Examples
Here are several examples of HR measures that provides financial
analysis:
Productivity Ratio
●Absenteeism Ratio/Cost
●Employee Turnover Cost:
●Recruitment Cost
●Replacement Cost
●Training Cost