Human resource management deals with the people side of a business, ensuring compliance with employment laws and supporting strategic business objectives. Hard and soft HR metrics provide data both the HR department and management uses to determine whether HR is meeting its staffing, performance, change management and administrative core objectives and assess how well HR is supporting the company's overall strategy.
Hard HR metrics are part of a traditional approach to managing and measuring HR policies and procedures. These use quantifiable data to assess the overall HR function and the processes for which it is responsible. Operational efficiency and cost assessments are prime objectives of hard HR metrics. Calculations determine, for example, the average time it takes to fill open positions, training costs per employee, compensation revenue ratios and revenue per employee.
Soft HR metrics – also called human capital metrics – focus on human capital value and on the impact human capital has on business results. Soft HR metrics view employees as business assets who are essential for maintaining a competitive advantage. Qualitative methods assess productivity, performance, adaptability and level of commitment according to a theory that happy, skilled and productive employees increase business efficiency and profitability. Examples include employee engagement or satisfaction ratings, utilization percentages, tenure ratios and performance goal ratios.
Despite or perhaps because of their obvious differences, hard and soft HR metrics can work together to aid a business in meeting its operational and strategic objectives. While hard metrics focus on the “what” of cost control and getting the function right, soft metrics link to the “how” of business strategies and desired outcomes. Together, hard and soft metrics provide meaningful data businesses can use in moving the business forward by making business decisions that meet the needs of both the business and employees.
The key to combining metrics so they provide useful data lies not in the number of metrics a business chooses to use but rather in how relevant they are to the business. Review and access free metrics information on sites such as the Society for Human Resource Management. Consider business goals, strategic objectives and the amount of data the business can reasonably track, analyze and use. Then ask and answer questions - such as what data the business needs to track or gather, how the data will be analyzed and how analysis will be used - that help determine which hard and soft metrics are the most important and which the business should use.