Human Resource Metrics Analysis - University Course

The assignment investigates the essential role of financial skills in human resource management by evaluating how HR professionals can effectively communicate with senior management regarding program funding. It discusses both benefits and limitations of conducting a cost-benefit analysis, highlighting its significance in operational and strategic contexts. Furthermore, it explains the synergistic relationship between HR Scorecards and cost-benefit analysis within strategic planning. Lastly, it identifies key organizational costs that are critical for HR professionals to understand and manage, including ROI, fixed and variable costs, and sunk costs.

Running head: HUMAN RESOURCE METRICS
Human resource metrics
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1HUMAN RESOURCE METRICS
Table of Contents
Question 1 – Requirement of financial competency for HR professionals................................2
Question 2 – Limitations and benefits of conducting cost – benefit analysis............................2
Question 3 – HR Scorecard and cost benefit analysis in strategic planning..............................3
Question 4 – Organizational benefits and costs that are critical for HR professionals..............3
Reference....................................................................................................................................4

2HUMAN RESOURCE METRICS
Question 1 – Requirement of financial competency for HR professionals
While the HR Manager will ask for funds from the senior management he must have
knowledge regarding the potential benefits and expected costs required for the program and
present the estimates to the senior management. However, without proper knowledge of
finance the HR is required to familiarize himself with the accounting and finance concepts,
particularly for capital budgeting process. Further, as the procedures require the HR managers
to analyse in terms of benefits and costs, he must acquire some knowledge of finance for
improving his financial literacy otherwise, he will be at the distinct place for competitive
disadvantage (Becker, Huselid & Ulrich, 2001).
Question 2 – Limitations and benefits of conducting cost – benefit analysis
Benefits – cost benefit analysis can be strategic or operational. The operational one helps to
improve the activities that are already performed by the company. Further, through cost
benefit analysis the company can minimize its expenses associated with recruitment and can
compare the benefits of outsourcing as against in-house arrangement (Boardman et al., 2017).
On the other hand, the strategic one that is derived from the operational goals and strategies
of the company mainly focuses on the issues related to improvement of strategic focus of the
employees.
Limitations - under the cost-benefit analysis all the benefits and costs shall be recognized and
quantified appropriately. Further, it involves subjectivity while quantifying, estimating and
identifying various benefits and costs. However, as some benefits and costs like employee
satisfaction and increase in number of employees are non-monetary by nature they are
required to be assigned subjectively for evaluating total costs.

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Question 3 – HR Scorecard and cost benefit analysis in strategic planning
Cost benefit analysis is the microcosm for the HR Scorecard framework. Under
strategic planning the HR Scorecard assists in recognizing most appropriate deliverables and
doables which in turn, will be the focus for the process of cost benefit analysis. Further, the
strategic cost benefit analysis generated from strategic planning of the company focuses on
the issues like how the strategic focus of the employees can be improved. The answer for this
question can be identified from the key questions derived from the HR Scorecard. Therefore,
it is rightly said that the HR Scorecard and cost benefit analysis under the strategic planning
complement each other (Kavanagh and Johnson, 2017).
Question 4 – Organizational benefits and costs that are critical for HR professionals
Various costs that are critical for the HR professionals are –
 ROI – it is three step processes and used for evaluating the total benefits and total
costs that are associated with the investments and thereafter the benefits are
computed after deducting the costs. The ROI is calculated through – (i) identifying
the potential costs (ii) identifying the potential benefits and (iii) calculating ROI
through appropriate index (Lo, Macky & Pio, 2015).
 Fixed and variable costs – this is important for the HR professional to have thorough
knowledge of fixed as well as variable costs as it will assist them to analyse which
cost is to be discarded or which costs are to be minimised.
 Sunk costs – the HR manager is required to have knowledge on this as this will help
them to analyse the costs which will not be recovered and will not be considered.

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Reference
Becker, B., Huselid, M. A., & Ulrich, D. (2001). The HR scorecard: Linking people, strategy,
and performance. Boston, MA: Harvard Business School Press.
Boardman, A.E., Greenberg, D.H., Vining, A.R. and Weimer, D.L., 2017. Cost-benefit
analysis: concepts and practice. Cambridge University Press.
Kavanagh, M.J. and Johnson, R.D. eds., 2017. Human resource information systems: Basics,
applications, and future directions. Sage Publications.
Lo, K., Macky, K., & Pio, E. (2015). The HR competency requirements for strategic and
functional HR practitioners. The international journal of human resource
management, 26(18), 2308-2328.