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HUMAN RESOURCES

HR policies hard to quantify

I recently discussed some human resource issues with an HR manager. In the middle of the discussion this gentleman pointed out to me, "You know, the position of an HR manager is very difficult in organizations today. Everybody thinks they understand it, and therefore everybody feels entitled to criticize you." It's true, HR usually gets a lot of criticism for being "too expensive." It is usually the first to be hit by budget cuts knocking out training and putting in place hiring freezes. But should this really worry people? How do we know that we HR managers are actually bringing value to the company?
Usually the most common way of assessing any human resource activity is to evaluate it using cost-effectiveness, net-equity, and the company's compliance with the law as criteria. This should be done in order that all HR activities can mutually complement each other crreating a consistent and reliable picture for both the organization and the employees.


Stanislava Luptáková

I recently discussed some human resource issues with an HR manager. In the middle of the discussion this gentleman pointed out to me, "You know, the position of an HR manager is very difficult in organizations today. Everybody thinks they understand it, and therefore everybody feels entitled to criticize you." It's true, HR usually gets a lot of criticism for being "too expensive." It is usually the first to be hit by budget cuts knocking out training and putting in place hiring freezes. But should this really worry people? How do we know that we HR managers are actually bringing value to the company?

Usually the most common way of assessing any human resource activity is to evaluate it using cost-effectiveness, net-equity, and the company's compliance with the law as criteria. This should be done in order that all HR activities can mutually complement each other crreating a consistent and reliable picture for both the organization and the employees.

Communication with the "internal customer," the employee, by management should be perceived as trustworthy and worth paying attention to. Employees should know what the internal rules of the company are and what their rights are. In other words, areas such as promotions, profit-sharing packages or employee development attract more active participation when they are clearly presented to the employees.

Even-handedness and justice should be used to implement human resource policies because it creates employee commitment and builds loyalty. However, there are several types of justice - employees pay careful attention to the style their manager executes towards them, they compare themselves with other employees and they evaluate the credibility of the system they are a part of. Once they trust the policies and procedures, they will consequently trust their managers and assume that they are treated the same as with their other colleagues.

From the viewpoint of the organization, any activity or policy has to stand up to the ultimate test of cost-effectiveness. Despite the fact that managers instinctively know that there is a link between human resource activities and employee satisfaction and productivity, and despite the claims of the importance of motivation, HR activities usually show on the cost side of the balance sheet. Human resource managers are viewed as those who spend money on hiring people and training them. They are criticized for designing compensation systems that offer generous benefits or offer welfare that is too costly.

Researchers as well as professionals have invested a lot of energy in finding out the best way to assess and evaluate human resource activities in order to justify their decisions. This is a challenge because it generally takes up to two years from outlining an HR policy to implementing it. The immediate cost is obvious - the benefit, if any, is a long way off in the future.

Stanislava Luptáková is a lecturer at Comenius University's Faculty of Management. Her column appears monthly. Send comments or questions to Stanislava.Luptakova@fm.uniba.sk.

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