The use of HR metrics is becoming increasingly common. However, some organizations may be hesitant to adopt using a standard set of metrics for measuring HR performance because of the fear of increased costs; organizations understand that money and resources are required for implementing standard metrics because it takes time to develop and implement the measurement system and train employees. Some organizations may not be able to build a business case for these costs in the short term unless using the metrics is associated with lower costs in the long run.
To find out whether there are differences between organizations that do and do not use HR metrics with regard to the total cost of their HR function, we examined data from APQC’s Open Standards Benchmarking in the HR organization. Two hundred sixty-three participants answered whether they use standard HR metrics for measuring HR performance and also provided data on the total cost of their HR function per business entity employee.
The results show that the median cost of the HR function per business entity employee for organizations that use HR metrics is $1,757; for organizations that do not use HR metrics, their cost is $1,839 (Figure 1). The difference in costs between the two groups is $82 per business entity employee. These costs can be significant depending on the headcount of an organization.
Does your organization use HR metrics for measuring performance? If so, are you realizing any benefits? Let me know in your comments below.