Leolingham2000
Management Consultant
Asif Hussain
Hr Consulting
Ravi BS
Hr Leader

Hi All members
Can any body share views/material related to HR contribution to the organization. As HR Department is a support department not generating revenue, in other word it is a cost centre.
No doubt HR function performing important role in an organization but how we can justify contribution of HR function in the organization.I want to know how we can calculate HR activities in terms of cost
ASIF,

HERE IS A COLLAGE OF IDEAS / CONCEPTS ON THE SUBJECT

OF HRM CONTRIBUTIONS TO THE ORGANIZATION.

HRM may be perceived as a cost centre.

GET A COPY OF CORPORATE PLAN, WHICH OUTLINES THE

COMPANY'S

-VISION

-MISSION

-CORPORATE OBJECTIVES

-CORPORATE STRATEGIES

ETC ETC

and ALIGN YOUR HR GOALS/OBJECTIVES

WITH THE CORPORATE GOALS/OBJECTIVES.

YOU WILL BE SEEN AS A DYNAMIC WINNER.

================================================

Assess how well human resources management is linked to COMPANY mission

accomplishment;

< Explore the role played by the HR staff in THE COMPANY strategic planning;

< Determine how the HR staff work with line managers to carry out COMPANY

strategic goals; and

< Identify best practices aligning HRM with the COMPANY strategic plan and goals.

================================================== ===============

Human resources management alignment means to integrate decisions about people with

decisions about the results an organization is trying to obtain.

Successful align human resources management with COMPANY mission mean

integrating HRM into the company planning process, emphasizing HR

activities that support mission goals, and building strong HR/management relationships.

In addition to being a vital contributor to company mission accomplishment, HRM

alignment is the ultimate level of HRM accountability, as demonstrated in the

Hierarchy of Accountability. While HRM accountability must begin with basic legal

compliance, it ultimately encompasses all four levels of the pyramid, including demonstrating

how HRM supports achievement of the COMPANY strategic goals.

1. Legal Compliance

2. Efficient HR Processes

3. Effective HRM Programs

4. Alignment with Strategic Goals of the Organization

==================================================

TYPES OF HR PERFORMANCE CONTRIBUTION

The types of HR performance contribution to the organization

are :

1.*money measures, which includes minimizing expenditures , improving rate of

return.

2.*Time measures express performances against work schedules.

3.*measures of effect include attainment of a standard, changes in behavior,

level of service etc.

4.*Reaction indicates how others judge the functions and hence therefore less

objective measure. Reaction can be measured by peer assessments, performance ratings by internal or external clients or customers or the analysis of comments, and complaints.

================================================== =====

EVALUATION CRITERIA

The effectiveness of HRM CONTRIBUTION can be measured by reference to:

Organizational effectiveness ‑ but it may not be possible to separate HR and organizational effectiveness, which will be affected by external events, and this approach does not provide a base for decisions about HR policy and practice;

goals ‑ this is a plausible method, if good measures of goal attainment can be used

and if allowance is made for unanticipated events.

Specified quantified measures ‑ labour costs, turnover and productivity have high credibility but may be difficult to interpret and can be affected by non­ HRM factors.

stakehoIder perspective ‑ this uses the subjective views of key interest groups, eg the

board’s, on personnel effectiveness, and is probably the most satisfactory method.

================================================== ======

Employee behaviour criteria

Employee behaviour criteria include:

*employee retention [ recruitment cost saving contribution ]

* turnover rates reduction [ recruitment cost saving contribution ]

* absenteeism rate reduction [ wage cost saving contribution ]

*frequency/ severity rate of accidents reduction [ cost saving contribution ]

*time lost through disputes reduction [ wages cost saving contribution ]



*number of references to industrial tribunals on unfair dismissal, equal opporrunity~ equal pay, harassment, racial discrimination issues etc and the outcome of

such references reduction [ recruitment cost saving contribution ]

================================================== ==

Service‑level criteria

Service level criteria include:

*average time to fill vacancies reduction [ cost savings contribution]

*time to respond to applicants reduction [ cost savings contribution]

*ratio of acceptance to offers made increament reduction [ cost savings contribution]

*cost of advertisements per reply/ engagement reduction [ cost savings contribution]

* training hours/days per employee [ productivity improvement contribution ]

* cost of induction training per employee [ productivity improvement contribution ]

* benefits per employee reduction [ cost savings contribution]

*measurable improvements in productivity as a direct result of training [ productivity improvement contribution]

*measurable improvements in individual and organizational performance as direct result of the operation of performance‑related pay and performan management schemes; [productivity improvement contribution]

*ratio of HR department expenses to total operating expenses reduction [ cost savings contribution]

----------------------------------------------------------------------------------------------------

Achievement of specified goals

This approach involves measuring achievements against agreed objectives ‑ it could be the final outcome or a measure of progress towards a goal as indicated by the extent to which specified 'milestones' have been reached.

*Organizing special sales training for the launch of a new product [ contribution to new sales goals]

*Recruiting urgent workers for production program [ contribution to production goal ]

================================================== =================

USER REACTION MEASURES

Areas in which the quality of services/contribution provided by the HRM function

Can be assessed include:

*understanding of strategic business imperatives;

*anticipation of business and management needs;

*ability to function as a 'business partner' in the team;

*quality of advice given in terms of its relevance to the problem or issue, the clarity

. on with which the advice is given, the practicality of the recommen­dations.

*the quality of the back‑up advice and services offered to implement recommenda­tions,

the extent to which ultimately the proposals worked;

*speed of response to requests for advice or services;

*promptness in dealing with grievances and appeals;

*help to managers in identifying and meeting training needs;

*extent to which training and development programmes meet company/individuals

needs.

*delivery of advice and services that make a significant impact on improving the quality and performance of staff;

*development of programs and processes that address short‑ and long‑term business needs that are ‘owned ‘ by the line managers, and that produce the anticipated impact

on motivation, commitment and performance.

================================================== =

HRM in general can make significant contributions,

through

-effective recruitment / selection

-effective induction / orientation

-effective compensation packaging

-effective rewards system

-effective training / development

etc etc

1. Output Goals

Goal attainment: Achievement of main objectives .

--------------------------------------------------------------------------

Outputs‑quantity: Productivity (number or value of sales, services­

sometimes per unit or cost of labor); profits, revenues

-------------------------------------------------------------------------------------------

Outputs‑quality: Reliability (e.g., rejects, returns); reputation (customer

satisfaction, expert ratings); institutional standards

(e.g., approval by quality assurance body)

================================================

2. Internal System State

Efficiency and costs : Efficiency measures (e.g., output value + cost with

constant quality); wastage; costs per unit of output

---------------------------------------------------------------------------------------

Human outcomes: Quality of work life (satisfaction with pay, working

conditions); work effort and commitment (low

absenteeism, turnover); employee health and safety;

motivation; organizational image; citizenship behavior

-------------------------------------------------------------------------------------------------

Consensus/conflict:Goal and procedural consensus; cohesion (mutual

attraction and identification with work group and

organization); cooperation within and between units;

conflict behavior (work stoppages, protests, flights)

------------------------------------------------------------------------------------

Work and information flows:Work coordination (smooth flow of products,

Information between units; few delays and snags);

adequacy and quality of information, multidirectional flows

------------------------------------------------------------------------------------------

Interpersonal relations: Trust; moderation of status differences (reduced

prominence of status symbols and executive perks);

openness, honesty of interpersonal communication,

acceptance of diverse backgrounds and orientations

--------------------------------------------------------------------------------------------



Employee involvement: Empowerment; participation in decision making

-------------------------------------------------------------------------------------------------

Fits : Alignment of internal system, components, subcomponents, and

Features.

--------------------------------------------------------------------------------------

3. System Resources and Adaptation

Resources‑quantity: Size (employees, physical, financial, capital assets);

resource flows (sales, budget allocations)

----------------------------------------------------------------------------------------

Resources‑quality: Human capital (training, experience of work force);

staff reputation; knowledge base; desirability of clients

(e.g., college selectivity)

--------------------------------------------------------------------------------------------

Adaptation: Ability to cope with external change and uncertainty;

crisis management capabilities

------------------------------------------------------------------------------------------

Proactiveness: Impact on environment‑clients (e.g., demand), competitors, suppliers, regulators; entrepreneurialism

Innovativeness: Technological and administrative innovation; implementation of new techniques and ideas

Legitimacy : Support by community and by public agencies or regulators; complianre with legal, professional, regulatory standards

Competitive position : standing compared to competitors (e.g., market share); reputation for leadership in industry or sector

Fit : Alignment of internal system with environment

===============================================

HR CONTRIBUTIONS TO THE ORGANIZATION

Reducing absenteeism as combined calculation [ savings contribution]

Reducing Absenteeism rate per employee [ productivity contribution ]

Reducing Cost per hire [ savings contribution ]

Total COST reduction in hiring [ savings contributions ]

Increasing Human capital ROI [ productivity contribution ]

Reduction of HR EXPENSE as TOTAL EXPENSE [ profit contribution ]

Decreasing HR cost as percentage of revenue [ profit contribution ]

Decreasing labor cost as percentage of revenue [ profit contribution]

Increasing profit per employee by maintaining staff level [ profit contribution ]

Increasing revenue per employee by maintaining staff level [ profit / productivity contribution]

Reducing the time to fill staff [ cost savings contribution]

Reducing total health care costs per employee [ cost savings contribution ]

Reducing the training costs per employee [ cost savings contribution ]

Keeping the total training costs in line with budget [ profit contribution ]

Reducing the staff turnover [ cost savings contribution ]

Reducing the total turnover costs [ cost savings contribution]

Reducing vacancy cost [ cost saving contribution ]

Reducing the workers' compensation per employee [ cost savings contribution ]

Reducing the workers' compensation incident rates [ cost savings contribution ]

Reducing the workers' compensation severity rate [ cost savings contribution ]

ETC ETC ETC

================================================

REGARDS

LEO LINGHAM
Hi,
HR is measured by standard metrics by Business for long. An illustrative list is:
1. Attrition in the Organisation
2. Employee Satisfaction Index
3. Cycle Time Reduction in Recruitment
4. Enabling identification of Resources for Key Positions
Regards
Ravi.B.S.
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