Metrics for Organizations

We are in the era where the organizations are the most inventive social arrangement of our age and of civilization. It will be spectacle to know that hundred of thousand of people with highly individualized background, skills and interests are coordinated in various corporations to pursue common goals. The ultimate goal of every organization is to create surplus for the corporations as well as for the country, that’s why every country is fond to establish an industry or organization with in the country. Employees are the main thing on which the organizations are merely emphasize because they are the one who earns revenue for the entity. The most substantial thing, an organization has is its employees which refereed as the family (Richard, 2004). Organizations always seek to hire the best available talent in the country which ultimately helps them to increase their net income. Albeit, the organizations have a number of department in it but the most valuable department before the top management is the Human Resources Department.

HR department is held responsible for the hiring, recruitment and selection process. It doesn’t mean that above mentioned are the only duties a HR department performs, but it also include all the labor and employees issues and their management. The term human resources refer to the people in the organization. When managers engage in HR activities as part of their jobs, they seek to facilitate the contributions people make to achieve an organization’s strategies and plans. The HR department makes strategies and plans to hire the best skills workers for the organizations which pertinently affect the overall productivity of the organizations. In this short analytical report we have to critique an article name “Human Capital Metrics” by Joshua L. Schwarz and Thomas E-Murphy. Let me define about something about the article and its significance first and then we will shift our gears towards the analysis and critique of this article.

Introducing the Article

The article is sought to answer or elaborate their readers regarding the applicability of a metrics called Human Resources Metrics (HRM). The author no doubt has done their best to educate their every reader and that is why no jargons and technical terms have been used while presenting the views. Article has also elaborated that why should the management have to consider such type of management for the long run of their organizations.

Significance of the Article

The article is all about measurement. The measurement includes the working of management practice and the employee’s intentions towards the work. The author has identified a number of references of the researches who identified the benefits associated with the metrics used by the organizations in order to measure the capability of management. The article has its own significance because a small amount of researches have been performed in this context and no doubt the metrics and the methods incorporated in this research for measuring the performance of management as well as the performance of employees is incredible. In my view, if the same metrics and methods have been consider effectively than the chance of biasness and unsatisfaction from the work place will be duly eliminated. In this next section, we will perform a critical analysis of this article. Please note that critique doesn’t mean negative as critique can be done in positive aspects. Let’s turned towards the critical analysis.

Analysis of the Article

The relationship between the economic value of people and the investment incurred on them is quite incredible which was first highlighted by Becker in (1964). From the word investment, he means that the training and development process and phase is quite important from the standpoint of an organization. According to Becker, the stance of training and development is very important for an employee to perform well because when he has a fair idea regarding his duties and in which manner he has to perform only then he can give his 100% efficiency and I am totally agree with his perception. To achieve real returns, enterprises must invest in their human capital the same way they invest in other assets. Since Becker’s original conceptualization, there has been an evolution of thinking in how to best approach what we call Human Capital Metrics (HCM). The metrics initiated by Baker was no doubt incredible as it evident the human resources involvement and the financial benefit the company receive from their involvement. This activity has been referred as Human Resources Accounting (HRA) by Toulson and Dewe. In general, an HRA approach to HCM seeks to include human capital as an asset in the enterprise’s financial statements. It involves the quantification of the economic value of people in both financial and management accounting terms (Toulson & Dewe, 2004). The idea presented by both these authors regarding the involvement of employees in the financial performance, I am totally agree with it, the contribution of the employees is inevitably far more than their salary benefits. Apart from this approach of HRA by Toulson and Dewe, Fit-enz and Ulrich had also pointed out the same thing regarding the human involvement. According to them the involvement of human capital will strengthen the decision making stance of the management which has a direct effect on the long run of the organization. The best thing which I find in the HCM is that, this metrics evaluates and measure the performance of either management or employees by with the help of benchmarking. In my view doing work with the help of making ad hoc standards and benchmarks is more beneficial than the work done without these provisions. One lacking which has been finding in the process of human resources is the availability of transparency in the recruitment procedure within the premises of the organization. According to a large number of human resources analytics the recruitment procedure should be transparent enough by which the organizations especially the management of the organization become able to hire and then invest only on the competent persons comprehensively. According to some analytics, there is strong relationship between an employee’s satisfaction and customer satisfaction and loyalty, Sears was one of those analytics who found the same relation. Sears effectively demonstrated that a variety of new management practices designed to improve employee satisfaction were directly correlated to similar improvements in customer satisfaction. I am quite content with the result highlighted by Sears, as if you have satisfied employees in your premises than you have a very good chance to have satisfied customers as well. Precisely, it can be say that the HCM approach should be consider by every organization, because the HCM approach to management will help an organization understand the potential value of its human capital and consider investments in its development, not as costs, but as opportunities to enhance overall organizational performance. The management must take into account the cost of hiring professionals within their organization because from these professionals they earn a substantial amount of benefits, so they have to compensate them well, as well. HCM approach also mandates an organization to take every bit of cost into account and then calculate the Return on Investment (ROI) and Net Present Value (NPV) analysis before hiring any employee for a job. Apart from that the management should timely check the policies, procedure and other things relating to employee’s issues which are quite important to run the momentum of the company smoothly.


We have critically analyzed an article which emphasized on using the HCM approach within the organization for the sake of the organization. We have analyzed the approach from different slants and found that using HCM within the premises of the organization will be not only helpful but also quite productive as well.