INTRODUCTION: MEASURING HUMANRESOURCE EFFECTIVENESS AND IMPACT

Arthur K. Yeung, Guest Editor

This special issue represents the collectivewisdom of approximately 100 participantswho attended the “HR Measurement Sympo-sium” in late 1995. Sponsored by the Cali-fornia Strategic Human Resource Partner-ship, a human resources (HR) consortiumconsisting of top HR executives of 30 leadingcompanies in Northern California, the sym-posium was designed to share and shapeemerging thinking in the area of HR measure-ment. With Dave Ulrich and I acting ascochairs of the symposium, four academicthought leaders and six corporate speakerswere invited to present their ideas and work inthe one-and-a-half day conference. The pre-senters in the symposium were:

• AT&T Tapas Sen

• Champion Steve GardinerInternational

• Cornell University John Boudreau

• Eastman Kodak Bob Berman

• Merck Jim Higgins

• Motorola Dick Wintermantel

• Saratoga Institute Jac Fitz-enz

• Sears Rick Quinn

• Stanford University Jeffrey Pfeffer

• University Dave Ulrichof Michigan

In reflecting on the key learnings of thesymposium, there are five key insights that de-rive from the presentations and discussion:

Traditional HR Measures Are Inadequateand Perhaps Misleading

While traditional HR measures are easy to de-velop and convenient for collecting data, theyare not very useful for two reasons. First, theytend to reward and reinforce HR professionalsfor activities (e.g., number of training pro-grams, number of new hires), not business im-pact. Second, they provide historical/lag data(e.g., turnover, absenteeism, employee mor-ale), not predictive information on which lineexecutives can act. As a result, there is a gen-eral consensus that traditional HR measuresneed to be modified and/or discarded.

New HR Measures Need to Be Developedwithin a Framework

If HR measures are intended to measure busi-ness impact and to stimulate change for busi-ness improvement, a fundamental question is:How can HR add value to business success?Unless HR professionals are crystal clearabout how and why they can impact businessperformance (Boudreau & Ramstad), it is hardto develop the appropriate HR measures todemonstrate their value added and to engageother managers to behave based on those mea-sures. In the symposium it was found thatmany companies such as AT&T, Sears, andEastman Kodak have begun to build their HRmeasures based on the balanced scorecardprinciple (Yeung & Berman; Ulrich). Other

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companies such as Motorola have developedtheir HR measures based on their HR mission(Wintermantel & Mattimore). Regardless ofthe framework being used, however, the keycriteria remain the same: (1) the frameworkmust be credible, both intellectually and em-pirically; and (2) it needs to be widely accept-ed by both HR and line communities.

HR Measures Are Not Onlyfor HR Professionals

As the quality of people management alwaysdepends on the leadership process of linemanagers, new HR measures should also holdline managers, in addition to HR profession-als, accountable. While HR professionals areresponsible for designing strategically alignedHR practices, the ultimate responsibility ofpeople management resides on managers.Many companies, such as Motorola, GE,AT&T, and Sears, have explicitly assessed andrewarded line managers based on their effec-tiveness in people management (Ulrich).

Utilization of HR MeasuresIs of Ultimate Importance

While many companies have devoted extensivetime to developing the “right” measures and tocollecting quantities of data on employee sat-isfaction, turnover, absenteeism, customersatisfaction, productivity, etc., they are weak inutilizing the data in two ways. First, companiesdo not follow through an action learning cyclethat includes measures development, datacapturing, feedback/communication, chang-ing activities/practices, and business improve-ment. Very often, data that are collected areneither widely shared within the organization,nor are they broken down to the appropriatelevel for action planning. As a result, data leadto little action, impact, and consequence. Nat-urally, employees become frustrated and arenot interested in participating in future datacollection efforts. Second, companies are notable to integrate and combine different data-bases in a meaningful way (Boudreau & Ram-stad). For instance, companies often do notassess the relationships between employee

satisfaction, customer satisfaction, and finan-cial outcomes. As a result, they have no ideawhich issues are critical to their employee per-formance and which are not.

Measurement Is Subject to Politics

As measurement affects performance ratings,prestige, power, and resource allocation of itsusers (at both functional and individual lev-els), it is not simply a technical or rational con-cern. Companies should expect strong resistance and influence from related stake-holders (e.g., HR professionals, line man-agers, employees, unions, customers) in de-veloping measurement that advances thestakeholder’s own interests. Jeffrey Pfeffer inthis special issue argues that measurement isdisadvantageous for HR professionals, as it isa game that accounting and finance peoplecan play much better than HR professionals.

While not all presenters in the symposiumwere able to prepare an article for this specialissue, the five articles included here representa wide spectrum of ideas discussed in the con-ference.

• Dave Ulrich’s article provides an excel-lent overview on various approaches thatcompanies can use to measure their HReffectiveness and impact.

• Using Eastman Kodak as a case study,Yeung and Berman illustrate how a com-pany develops its HR measures based onthe balanced scorecard principle.

• Wintermantel and Mattimore’s articleties the evolution of HR measures to thechanging HR mission.

• Drawing from the historical develop-ment of financial and marketing mea-sures, Boudreau and Ramstad suggestthree specific ways to articulate and de-velop the appropriate HR measures.

• Last but not least, Pfeffer’s article offersa unique perspective in sensitizing thereaders to the pitfalls involved in HRmeasurement.

Finally, I am pleased to have this opportu-nity to acknowledge the sponsorship of the

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California Strategic Human Resource Part-nership in organizing the “HR MeasurementSymposium,” the intellectual leadership ofDave Ulrich in designing the symposium, and

the generosity of Quantum Corporation inhosting the event. Without their sponsorshipand contribution, this special issue could nothave become a reality.

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