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Strategic Management

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Measuring HR Effectiveness

HR’s effectiveness can no longer be measured according to non-specific, non-quantifiable, "soft" assessments. Instead HR must be able to unequivocally demonstrate the effectiveness with which it is executing its various roles and the degree to which it is meeting the needs of its clients.

This discussion leads us to a critical—and foundational—distinction between "effectiveness" and "efficiency." Effectiveness is the degree to which carefully established (and, in our case, strategically aligned) goals are met. Efficiency, however, is a ratio of "outputs" to "inputs." Another way of putting it is that efficiency is "doing things right," while effectiveness is "doing the right things."

It’s quite possible, therefore, that HR professionals can be effective without being efficient, or that they can be efficient without being effective. HR measures help to ensure that we will achieve efficiency as well as effectiveness.

There are a variety of HR measurement tools with which HR professionals need to be familiar.

HR Audits

The HR audit is the primary tool that many HR departments utilize in an effort to assess their own effectiveness and efficiency. Whether conducted in-house or by an outside vendor, HR audits have a number of purposes and produce a variety of results. Ultimately, however, the overall purpose is to ascertain how well the HR department—through all of its various functional areas—has aligned itself with the organization’s strategic objectives.

More specifically, HR audits will scrutinize and draw conclusions relative to

  • The degree to which the organization complies with legal requirements
  • The degree to which HR services are "user friendly"
  • Grievances, their causes, and their impact
  • The degree to which the organization complies with I-9 requirements
  • The degree to which core competencies have been identified and defined
  • The degree to which recruiting, selection, and retention processes reflect the organization’s core competencies
  • The degree to which the organization achieves the ways it has chosen to position itself in the marketplace with respect to compensation and benefits (lead, lag, or match)
  • The usefulness, appropriateness, and effectiveness of the employee handbook
  • The degree to which existing OD initiatives, including training programs, meet the company’s current and emerging human capital needs
  • The degree to which the organization’s safety program complies with federal, state, and local guidelines, and the degree to which it supports the company’s objectives.

Other HR Measurement Techniques

There are a variety of other measurement techniques with which HR professional need to be familiar.

  • Return on investment (ROI)
  • Cost-benefit analysis
  • Break-even analysis


Oftentimes, ascertaining the effectiveness and efficiency of HR practices is best accomplished through research. Research, in simple and decidedly "unacademic" terms, refers to finding answer to questions. In practice, research is a bit more involved.

Research can be either "primary" or "secondary." Primary research involves collecting data first-hand, from the original source from which it emanates. Secondary research, conversely, involves collecting information "second-hand"—meaning not directly from the original source of the data. Secondary research assimilates data that has already been collected by others, and thus allows those secondary researchers to "stand on the shoulders" of those who conducted the primary research.

One type of primary research with which HR professionals need to be familiar is the scientific method. The scientific method is a systematic approach of testing hypotheses and using the knowledge generated to strengthen the degree to which HR can support the overall objectives of the organization.

The five steps in the scientific method are as follows:

  1. Question, and observe. Formulate a question that addresses the problem you want to study and to solve.
  2. Develop a hypothesis. A hypothesis is an "educated guess" about the outcomes that you think the research will produce.
  3. Design a method: This is the step where you’ll outline the specific steps that you’ll take while conducting the experiment (your research).
  4. Collect your data, which are the unexamined results of your research.
  5. Analyze your data and reach a conclusion. State why you think the experiment (your research) turned out the way it did and ascertain whether the results supported your initial hypothesis.

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