Reasons to Measure HR Accounting KPI

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HR management is a very hot trend. However, it requires sufficient investments. BSC is widely used to optimize HR performance and align HR goals with company strategy. Check additional information about hr accounting KPI.

Human resource management is a very hot trend these days. However, that is not just a fashionable thing, but a necessity for every huge company. It is well known that investments in human resources are the most efficient in the long term. Recent economic crisis proved that human resources can save a company from a complete failure. People work for the company they offer unexpected ideas and solutions to problems. That's why investment in personnel will surely come back in revenue. It goes without saying that efficiency of human resource department must be constantly measured. The reason is that human resource department does not earn money. Just to the contrary it spends money generated by other departments to manage personnel and organize efficient work. If HR department fails to achieve that it will cause severe losses for the entire company. That's why use of performance evaluation tools is a must for every huge company with a separate HR department. Moreover, alongside with performance evaluation top management of the company should check HR goals in terms of compliance with the general strategy of a company. If HR department pursues short-term goals it may fail in the long term. That's why it is imperative to use an effective performance evaluation system that also works in the field of operational management and puts strategy into action. Balanced Scorecard is perhaps the best tool to be used for these purposes.

The primary goals of human resource departments are to hire, educate and retain personnel, as well as create suitable working conditions and set a friendly working environment/organization climate. At a first glance some of the chart key performance indicators quite weird. One may think that organization climate more employee satisfaction has no impact on company performance and financial results. It's not a secret that every commercial organization aims at making money. So, what organization climate has to do with revenue increase? Statistics show that satisfied employees working in a friendly environment have the most satisfied customers. What does a customer satisfaction mean for a company? A satisfied customer is usually a regular customer, which means an additional income of the company.

The other category of indicators covers expenses related to HR activity. For example, the company spends a certain amount of money to hire an employee and educate him or her. Is such an employee leave the company within several months the company will most certainly suffer losses, as such an employee has earned less than the amount spent to hire and educate him/her. Thus average hiring cost per employee is one of the most important indicators HR scorecard. Other indicators in a personnel turnover rate, the higher turnover rate, employee lateness, cost of non productive hours, average employee sickness rate etc. Of course, choice of key performance indicators in HR depends on HR goals, strategies, current and potential problems and weaknesses etc. As already said above it is very important that HR goals comply with company strategy, mission and values. Only in such a way HR scorecard will be an effective part of company Balanced Scorecard.

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