Describe the four common measurement tools for strategic human resource management.

Question

What will be an ideal response?

Answer 1

We discussed four common tools in this chapter: economic value added (EVA), return on investment (ROI), balanced scorecard (BSC), and the HR scorecard.
Economic value added (EVA) is a measure of profits that remain after the cost of capital has been deducted from operating profits.
Return on investment (ROI) is a measure of the financial return we receive because of something that we do to invest in our organization or its people.
The balanced scorecard (BSC) says that measurement of an organization’s success using purely financial measures is not sufficient. The organization also has to take into account nonfinancial measures designed to help the organization compete strategically within its industry. While financial measurement is one of the four perspectives in the organization’s BSC, the BSC also includes customer measures, internal process measures, and learning and growth (or sustainability) measures.
The four dimensions of the HR scorecard are (1) identifying HR deliverables, (2) identifying HR system alignment through use of the high-performance work system, (3) aligning the system with company strategy, and (4) identifying HR efficiency measures.