Aligning Human Resources and Business Strategy, 2nd Edition

Chapter 4

Measuring the Impact of Strategic HRM

The only HR actions which have value in any organization are those which contribute to the achievement of its goals.

(Phelps, 1998)

For many Human Resource practitioners, it's an act of faith that people management is a key factor in determining profitability and HR practitioners are under pressure to prove that value is being added by HR activities. Implementing effective people management and knowing which approaches are working is difficult enough; assessing how much effective people management impacts on the bottom line is even more difficult. Even during talent shortages, the great debate about how to measure human capital and what to measure rumbles on, somewhat inconclusively.

Amongst investors ...