Concepts and measures


The objects in definition of measurements related to HR are a firm’s HR architecture and strategy implementation systems. The properties of these objects that are most significant are the value creating elements. The noted value creating elements are principally in two systems. The systems predominant are the HR deliverables and the firm’s performance drivers that the deliverables influence.

The properties are not only abstract concepts, but are also observable measures. First a top management team of an organization can identify key links in the value creation chain. This is done by taking a “conceptual� or “vision� perspective.

We in this article are taking the HR practice followed by SRS Super market one of the most successful in an advanced country. The simple relationship between employee attitudes and firm performance serves as the foundation of the SRS measurement model. SRS refined its model further with brief vision statements about the important attributes of each element in its model. The company’s top management decided that SRS must be a compelling place to work, a compelling place to shop, and a compelling place to invest (the “three C’s�).
A reputed retail bank was identified working with “superior cross-selling performance� as a key performance driver.

Such concepts and visions referred collectively as “constructs� are properties of the strategy implementation process. However, they are so abstract that they provide little guidance for decision making or performance evaluation.

To illustrate, identifying “superior cross-selling performance� as a key performance driver may take things one step beyond the vision stage, but it’s still too conceptual to be operational. What does it mean? How will we know it when we see it? Will two different managers both know it when they see it? In short, how do we measure it?

One way to detect a good measure is to see how accurately it reflects the required performance. A measure of the relationship between A and B is worthless if the underlying measures of A and B themselves are worthless. ‘A’ or ‘B’ would be worthless if they did not reflect the constructs behind them. Like if SRS Super Market measured the construct “compelling place to work� simply by assessing the level of employee satisfaction with pay, the measure would not have very much relevance. Why? Because it omits key dimensions, such as the understanding of business strategy or relationships with supervisors, of the underlying idea that it is designed to tap.

One way to avoid this kind of mistake is to use multiple measures that reflect different dimensions of the same construct. In SRS case, managers used seventy-item survey, which they then short listed to ten items as their measure of “compelling place to work�. Next they consolidated those ten items along two dimensions that is employee opinion about the job and employee opinion about the company. This approach gave the organization an explicit way to assess how well it was realizing its vision of being a “compelling place to work�

If a key driver is “positive customer buying experience,� the term used say “time with customer� as a measure. Market research shows that customers appreciate it, when sales staff, do not pressure them to make a quick purchase. If a deficient measure is used, it’s very likely that employees will ignore or misinterpret a particular performance driver. On the other hand, if this is the only measure of the customers’ buying experience, salespeople might be tempted to needlessly drag out their encounters with customers. It is still true that what gets measured gets managed.