HR Evaluation Meaning, Definition, Reasons, Approaches and Uses

Table of Contents:-

  • Meaning of HR Evaluation
  • Definition of HR Evaluation
  • Reasons for HR Evaluation
  • HR Evaluation Framework
  • Approaches to HR Evaluation
  • Meaning of HR Evaluation Programme
  • Definition of HR Evaluation Programme
  • Purposes and Uses of HR Evaluation Programme¬†

Meaning of HR Evaluation

HR Evaluation is the process of assessing the value of individuals to an organization. It involves measuring their productivity, performance, and promotability. This process encompasses the procedures and processes that gauge, evaluate, and communicate the value added to the organization by HR practices.

The importance of Human Resource Management (HRM) evaluation arises due to the intensive focus on cost control, efficient resource allocation, contribution to the bottom line, and the potential for human resources to furnish a competitive advantage to the firm.

Definition of HR Evaluation

According to Bratton, “HR evaluation is defined as the procedures and processes that measure, evaluate and communicate the value added of HR practices to the organisation”.

Reasons for HR Evaluation

HR evaluation has been advocated for several reasons, including:

1) Highlighting critical HR practices.

2) Demonstrating accountability in the utilization of resources.

3) Demonstrating the function’s role in achieving the firm’s goals.

4) Promotion of change by identifying strengths and weaknesses.

5) Introducing financial assessment as a decision tool in selecting human resource programs.

6) Promoting the HR function by demonstrating bottom-line contributions through reduced turnover.

HR Evaluation Framework

The image above provides a complete framework for HRM evaluation. The model highlights the overall relationship among three essential elements, which are given below:

1) HRM Policies and Practices

HRM policies and practices encompass employee hiring, training and development, performance review, and compensation systems. These aspects impact employee performance at both individual and group levels.

2) HR Performance Measures at Both Individual and Group Levels

Employee performance emphasizes outcomes such as turnover, accidents, grievances, and absenteeism. While these indicators offer an objective performance assessment, they may overlook more meaningful indicators.

HRM policies and practices should lead to behavioural outcomes beyond quantifiable indicators. These outcomes include employee loyalty, commitment, hard work, motivation, and morale.

3) Organizational Performance Indicators

Organizational performance indicators encompass cost, quality, productivity, profitability, market share, and Return on Investment (ROI). These outcomes directly stem from HRM policies and practices and can be utilized to evaluate the effectiveness of the HR function.

If employee and organizational performance falls short of desired limits, HRM policies and practices may need redesigning.

Approaches to HR Evaluation

There are several general approaches to human resource evaluation and various measures and criteria of effectiveness. The most well-known ones are as follows:

List of approaches to HR Evaluation:

  1. Benchmarking
  2. Analytical Approach
  3. Audit Approach
  4. Quantitative and Qualitative Measures
  5. Outcome and Process Criteria
  6. Balanced Scorecard

1) Benchmarking

Benchmarking involves employees learning and adopting the so-called “best practices” by comparing their HRM practices with those of other (more successful) organizations. Benchmarking essentially involves employees studying the practices followed by competing firms and evaluating practices with those thus collected.

Besides evaluating their own HR practices, benchmarking enables managers to learn from other companies and implement successful HR strategies. Additionally, benchmarking can help create and initiate the need for change because it identifies what an organization needs to do to improve relative to the HR strategy in excellent companies.

2) Analytical Approach

The second method used for evaluating HRM is through an analytical approach. The analytical approach is based on cost benefit analysis, also called utility analysis. Utility analysis aims to quantify evaluations in economic terms, which are more useful for decision-makers.

Several HR activities have been evaluated with utility analysis, including employee hiring, appraisal systems, training, and turnover. Although utility analysis is widely applicable and represents a quantitatively superior means for evaluating HR activities, the process can be challenging. This method has been restricted to specific circumstances due to the difficulty and the amount of resources and effort required for analysis.

3) Audit Approach

Also known as the stakeholder approach, the HR audit is a systematic formal process akin to any audit designed to examine the strategies, policies, procedures, documentation, structure, systems, and practices concerning the organization’s human resource management. It systematically and scientifically evaluates existing human resources’ limitations, strengths, and developmental needs to enhance organizational performance.

4) Quantitative and Qualitative Measures

Quantitative or qualitative measures are another evaluation consideration. Several quantitative and qualitative measures can be constructed to gauge the effectiveness of a company’s human resources or the human resource function.

Quantitative measures can sometimes be combined into composite indices, and weighting schemes necessary for such indices can be developed through policy-capturing approaches. The human resource function can also be assessed as a cost centre.

Furthermore, the benefits of human resource management programs, such as reduced turnover or improved percentages of good hires, can sometimes be determined in dollar values.

The function’s effectiveness can be measured as a profit centre in such cases. It is worth noting that an excessive emphasis on quantitative evaluation measures can become dysfunctional. This occurs when the focus on goals or objectives, as operationalized in terms of such measures, does not contribute to accomplishing strategic goals.

Changes in the attitudes of an organization’s workforce can also provide a partial indication of the effectiveness of the human resource function. Although inherently more qualitative than many other organizational characteristics, these indicators can be captured in measures that allow them to be subjected to statistical analysis.

5) Outcome and Process Criteria

Another evaluation issue is whether the criteria involve outcomes or processes. The difference between the two types of criteria is that outcomes are results or end products of work, while processes concern behaviours or how activities are performed.

An example of an outcome criterion might be productivity, the ratio of a company’s workforce. Despite the appeal of their link to production activity, ease of measurement, and objective nature, outcome or output criteria often need to be made aware of external factors unrelated to the evaluated activity.

For example, high turnover rates indicate low unemployment rates in the local labour market more than weaknesses in a company’s selection or compensation systems.

Conversely, an example of a process criterion could be whether a unit meets affirmative action milestones according to a schedule, such as completing a utilization analysis by the end of the first quarter, conducting an availability analysis by the end of the next quarter, etc.

Web Story: Job Evaluation Process

Many managers need help in defining objectives in terms of processes. When they have difficulty articulating a desired process by which an activity should be performed, it is sometimes helpful to reverse the question and ask them if they can describe how the activity should not be performed.

Almost without exception, they can explain how the activity should not be performed, which helps stimulate and organize their thinking on desired or efficient processes.

6) Balanced Scorecard

Robert Kaplan and David Norton created the balanced scorecard approach in the early 1990s. The balanced scorecard is a comprehensive performance measurement framework that translates an organization’s strategy into clear objectives, measures, targets, and initiatives.

This system provides feedback on internal business processes and external outcomes to continuously improve organizational performance and results. It represents a management system that can motivate breakthrough improvements in essential areas of product, process, customer, and market development.

Meaning of HR Evaluation Programme

More and more organisations invest millions of dollars in HRD programs to gain a competitive advantage. As a result of their investments in developing and administering their HRD initiatives, organisations are increasingly interested in evaluating their efforts.

Evaluation can be defined as an analytical process involving collecting and reducing data from all (or some) aspects of the instructional process, culminating in synthesising a report containing recommendations about the instructional program being evaluated.

The overall aim of the evaluation is to influence decisions about the need for the program in the future, the need for modifications to the program, and the need to provide cost-benefit data about the program.

Evaluation is not just for the trainer organisation or policymakers; it is also vital for the learner. It is the most important reason for evaluating people properly, fairly, and with as much motivation as possible.

Definition of HR Evaluation Programme

According to Boulmetis and Dutwin, “Evaluation is the systematic process of collecting and analysing data in order to determine whether and to what degree objectives were or are being achieved”.

Schalok states, “Evaluation is the determination of the extent to which a programme has met its stated performance goals and objectives”.

According to Phillips, “Evaluation can be defined as a systematic process to determine the worth, value of meaning of something”.

Purposes and Uses of HR Evaluation Programme 

The purposes and uses of HR evaluation programs are as follows:

1) To identify the Strengths and Weaknesses in the Training Process

The most common purpose of evaluation is to determine the effectiveness of an HRD program’s various elements and activities. Program components include, but are not limited to, presentation methods, the learning environment, program content, learning aids, schedule, and the facilitator. Each element makes a difference in the training effort and must be evaluated to improve the program.

2) To Decide who should Participate in Future Programs

Sometimes, evaluation provides information to help prospective participants decide if they should be involved in the program. This type of evaluation explores the program’s application to determine success and barriers to implementation. Communicating this information to other potential participants helps decide participation.

3) To Compare the Costs to the Benefits of a Training Program

With today’s business focus on the bottom line, determining a program’s cost-effectiveness is crucial. This evaluation compares the cost of a program to its usefulness or value, measured in monetary benefits. The Return on Investment (ROI) is the most common measure.

This evaluation measure provides management with information needed to eliminate unproductive programs, increase support for programs which yield a high payoff, or make adjustments in a program to increase benefits.

4) Evaluation sometimes provides a testing and validating instrument

To Test the Clarity and Validity of Tests, Cases, and Exercises. Interactive case studies, activities, and tests must be appropriate in the learning process. They must measure the skills, knowledge, and abilities the program is designed to teach.

5) To Determine Success in Accomplishing Program Objectives

Every training evaluation program should state objectives in a generally accepted format (i.e., measurable, specific, challenging, etc). Evaluation provides input to determine whether objectives have been achieved.

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