Factors to determine standardised human resource metrics for strategic business management : a case of selected organisations from the hospitality industry in Cape Town

Abstract

The paradigm shift from administrative to strategic Human Resource Management (HRM) has, arguably, necessitated the need for a more objective and quantitative HRM that shows how HRM interlinks with strategic organisational outcomes. Consequently, HR metrics, measurements and analytics can be tools, which can give HRM a status and position that is similar to other functional departments in organisations that provide numerical data. The purpose of this study was to explore HRM factors that are critical to determine strategic HR metrics. The purpose arose owing to documented scholarship, which argues that the current regime of HR metrics has no appeal to top management; is composed of too many metrics that are confusing; is suitable for traditional HRM; and does not give HRM a strategic status. The objective of the study was, therefore, to provide HR factors that link with strategic or organisational level outcomes and based on these factors, determine a metric that HR practitioners and top management can adopt as standard. The literature review had to be merged in a systems theory framework to develop the conceptual framework to start a grounded theory methodology. Within this methodology both secondary and primary data was collected and analysed. As part of its summary, the literature review included a meta study of prominent research on the HRM-firm performance relationship. The mini meta-analysis involved 27 studies whose mean coefficient of determination was calculated to show the strength of the variability in firm performance for which HRM accounted. This analysis revealed that HRM, on average, accounted for 31% of the variability in firm performance in the models that were used to investigate the relationship. An analysis was conducted of documents as part of a content analysis to collect secondary data, while questionnaires were used to collect primary data. The key finding was that the strategic HR factors are the HRM outcomes, namely employee engagement, commitment, satisfaction and embeddedness, while the HR metric that connects the HR factors and strategic outcomes is given as p=kH+c, where p is organisational performance, H are the HR factors, k is a constant of proportionality, and c is basic employee performance. It was also found that employee engagement had the most impact on organisational performance, relative to the other HR factors. As a result, the key recommendation made in this study is that organisations should use employee commitment, engagement, satisfaction and embeddedness to boost performance with special attention on employee engagement. The metric p=kH+c can be used to measure the level at which HR factors boost performance.