Ultimate Performance: Measuring Human Resources at Work

Three Decision Maker Perspectives

Financial management as a decision science has developed a number of frameworks to support these various perspectives in the way most appropriate to each. If left to sift through reams of low level accounting figures, none of these decision makers would get very far. However no single metric or decision framework around a metric could ever be used to serve all decision makers when it comes to financial analysis. This multiple viewpoint and decision support requirement aspect is another important point of comparison between the science of financial analysis, and the emerging science of decision support in HCM.

Consider a large diversified public company and three different decision makers who are engaged in choosing among alternative actions based, to some extent, on financial information. The first decision maker is external to the organization and is deciding whether or not to purchase shares of common stock in the company. As a sophisticated investor, this individual is interested in a variety of important measures related to the financial stability of the company he is interested in investing in. There are literally dozens of metrics that this investor could examine, both at their current values and in the form of trends over time. Many of these metrics would involve ratios of asset and debt figures from the firm’s balance sheet and profit and loss statement (the well known “quick ratio” would be a good example). These fairly simple ratios ...