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What if HR Performance is linked with EPS of Co. ?
Human Resources » Performance Management

Chrm Message From: siddharth Total Posts: 33 Join Date: 07/12/2006
Rank: Executive Post Date: 29/12/2006 06:32:39 Points: 165 Location: India

Dear Friends,

I wish to initiate a healthy debate on the importance of HR performance being linked with the EPS of the organization. ( EPS = Earning per share). I wish that you take this forward and build it.

This debate is necessary because lately virtually every HR Champion worth his salt has been proclaiming the eventual ascent of HR to the 'corner desk'. The worst thing about this conviction is that it is possibly conveying the wrong image about the scope of HR, to the fresh HR professionals. I don't wish them to believe that religious monitoring of attrition rates and training feedback scores are the only figures which would sail them through, to the corner desk.

At the beginning of this debate, I wish to narrate a series of incidents which motivated me to probe this issue publicly.

Incident 1: I recently had the opportunity to hear a very senior HR professional who spoke on a public HR forum who spoke very eloquently and convincingly about how well his policies were impacting his organization and were being appreciated as well thoughout his organization. From what I could understand, he was also talking about the increased influence that HR was acquiring with regards to the top management.

Incident 2: I, being a stake holder of that organization was very impressed and chose to increase my investment in that particular IT company. But much to my disappointment, when I checked out the price trends of the share price, I discovered that the stock price of this share had dipped by about 40%, while the other IT majors had shown an appreciation of over 50% during the same interval of time. The EPS growth of this particular IT major was also nothing worth talking about.

Incident 3: Out of curiosity, I did write to this particular HR professional seeking some explanations about this contrary trend. I wrote to him around fifteen days ago and I am still waiting for an answer.

Incident 4: The increasing trend of costly training progrms, which focus on helping HR professionals become better core HR professionals, hence possibly leading them more away from the basic purpose of business.

I believe that HR professionals who wish to reach the corner office should start bothering about the impact of their policies on the Earning Per Share of their organization. They could possible create a HR-EPS quotient, so that they are able to start talking 'business impact' figures rather than just 'hr impact figures'

Figures and Trends such as " Training Man days per month" or "Training Programs conducted" or "Attritrion Rate" and " Feedback Averages" other HR matrices are fine as a function, but ones superior performance in these areas does not automatically qualify at the Business Impact level. HR professionals who talk about various HR jargon such as 360, Compensation, Kirk-Patrick, Managerial Grid and other such GYAN… isolation would also be aware of the negligible impact all this has on the overall business growth.

There are surely many people doing this already. Would it not be great, if such professionals, share their success stories. They would be the true inspiration for all concerned.

I welcome your views.



Chrm Message From: shaolin Total Posts: 28 Join Date: 07/12/2006  
Rank: Executive Post Date: 29/12/2006 06:36:29 Points: 140 Location: India

I am not very sure if you are looking for a change in philosophy or you want a change in the system coz of your personal vendatta.

Before I put things in perspective, let me share with you that I have a double specialization in HR and Marketing.

Now, let me put the points in perspective:

a. First, are you convinced that a high attrition or a lot training figure DOES impact the business? If yess, we proceed ; if not, maybe we'll go back to basics on a one-to-one.

b. Are you looking at EPS as a measure just because you have been a shareholder in a particular company?

c. What is your feelings as to the relationships between the figures of EPS, P/E ratio and Attrition and Training?

d. Going back to the first question, if you agree with the fact that high attrition or low training attritbutes to high cost of turnover and replacement, why do you feel that tracking the same is a waste of time?

e. Following up on your above question, instead of monitoring and presenting trend analysis, what does your Finance MBA do as a value add to the system? As far as I understand, he/she also only reports problems in excel and does not do anything about solving it ; so why/how is this particular expectation from HR that they'll see the problem in an email and straightaway resolve it by the click of their fingers? Your expectation is highly appreciated but I guess we, HR professionals, are yet to graduate to that level of magic :-)


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