Unit 1.3 - HR Control and Evaluation

Question 1

Explain the purposes of HR budgets

Answer 1

1. Coordination & integration - they establish objectives in advance and next steps to accomplish them
2. Motivation - they involve goal setting and feedback, which increases motivation
3. Control & evaluation - they are a management tool used to monitor performance of a business unit and control its actions

Question 2

Explain the primary HR metrics to measure HR effectiveness

Answer 2

1. HR Audits
   * Human Resource Audit Process (process is described in another flashcard)
2. Statistical Benchmark (ex. uses ratios, percentages, averages, etc.)
   * Employee measures (ex. turnover, absenteeism, job satisfaction)
   * Productivity measures (ex. revenue per employee, cost of a new hire, output/input ratios)
   * HR process measures (ex. ratio of offers to acceptances, HR department expenses, benefits)
3. Human Resource Accounting
   * Outlay Cost - ex. recruiting, selecting, training, developing
   * Replacement Cost - how much it would cost to replace an employee
   * Human Resource Value - each employee’s expected contribution to the org’s net income (including expected future services, probability of staying with the org)
4. Costing HR Activities
   * Financial contributions of HR activities/programs

Question 3

Explain the difference between a leading and lagging indicator

Answer 3

Leading - measures future performance (ex. time to fill)

Lagging - measures results of process or change (ex. sales, profits)

Question 4

Describe the purpose and process of an HR audit

Answer 4

Audit:
- Could be focused on a specific area (measuring HR effectiveness) or all areas of an org’s HR function
- Determines compliance with employment laws
- Could be a result of an alleged violation

Audit process:
1. Define responsibilities of the HR department
2. Develop audit questionnaire and collect the data
3. Analyze the data and benchmark the results
4. Feedback & evaluation
5. Develop an action plan
6. Implement follow up

Question 5

Identify key performance
indicators (KPIs) and describe their
benefits within the HR scorecard. What is a balanced scorecard?

Answer 5

KPIs measure an org’s efficiency and effectiveness

Some examples are - cost per hire, turnover costs, time to fill, healthcare costs per employee

The process of collecting HR metrics and presenting them to managers is an HR Scorecard. It allows managers to assess HR’s contribution to the bottom line.

Balanced scorecard - performance tool that measure’s how how well an org is meeting its goals based on financial and non-financial KPIs; focuses on the KPIs most relevant to the company for simplicity (4) - org learning (strategic), internal processes (operational), customers, and financial measures

Question 6

Explain the benefits and different types of outsourcing HR functions?

Answer 6

Human Resources Outsourcing (HRO) is a means of outsourcing specialists
to perform human resources functions

Benefits - Can perform more efficiently, effectively, and they may be more aware of tech advances and new legal requirements

• Professional Employer Organization
  (PEO)
• Co-employment relationship
• PEO manages recruiting, admin,
  payroll, and legal compliance;
  company holds direct relationship to
  career progression, training, etc.
• Employee Leasing
• Supplies employees via temporary
  employment agreement
• Employer is leasing company