How can HR metrics be used to gain a competitive advantage?

The heat is on HR executives to maximize the contributions of their human capital in order to remain competitive. HR's first job, according to Nicholas Burkholder, Scott Golas and Jeremy Shapiro, authors of Ultimate Performance: Measuring Human Resources at Work, is to properly measure workforce performance. They suggest that by employing new ways of measuring employee potential and performance, CEOs and other C-level executives can finally gauge accurately how to manage people for maximum productivity, performance and results.

According to the authors, HR metrics can be used to measure human capital in the following five ways:

1. Keep track of data. It is important to have the necessary data available. For example, it is impossible to calculate cost ratio and efficiency without first knowing your organization's external and internal recruiting expenses.

2. Measure consistently. Be careful not to overdo it; calculating quality, time, satisfaction and efficiency more than once a month can distort results.

3. Monitor activity indicators weekly. Indicators should be monitored every week. Trends that these results yield, both positive and negative, should be examined closely.

4. Make adjustments. Be sure to correct the negative trends while exploiting the positive ones.

5. Don't be afraid to experiment, even if it may-or does-produce negative results. No performance curves go straight up. Look for mistakes. Things are never as bad, or good, as they seem.