The HR Simulation: Evaluating Performance
There are many ways to measure a company’s performance, and many of them are dependant on what one is looking for. For example, investors look at a company’s profitability and how risky the investment would be while creditors look at how capable the company is of paying off its debts. Different departments within a company look at different things; the HR department looks at different ways of measuring the performance of employees whereas the finance department looks at the state of the company’s finances and how to best use the available funds. However, there is one common way of measuring a company’s performance, and all concerned parties look at it. This measure is the bottom line.
Unfortunately, during the course of the HR simulation, we were never given our company’s bottom line or any other measures of how well our company as a whole was doing, such as sales or operating income. Instead we were mainly given HR-related measures with a few other measures mixed in. These measures were how many units were produced at overtime, the quality index, the productivity level, the accident rate, fringe benefits, the turnover rate, the morale level, the number of grievances, the absenteeism rate, and some industry averages. It is conceivable that many, if not all, of these measures affect more than just HR. In fact many of them probably have an impact on the bottom line. It could have been extremely helpful to see how the HR measures affected the overall performance of the company. If the company was able to be extremely competitive despite some low HR results, then some of the pressure to be better than everyone else in terms of the HR measures would be removed. Conversely, if the bottom line was extremely hurt by low HR performance, more pressure would be applied to the HR manager because the company needed to remain competitive in order to survive. I also think it is unrealistic that the HR department would not have access to this information.
Comments
Posted by: Katelyn Handlos
Posted on: December 11, 2006 08:02 PM
I completely agree with this entry. I think the HR simulation would have been even more interesting if it could show how morale and productivity affect the bottom line. It was just assumed in the simulation that all the outputs were important for the company, but exactly how important are they? Surely some outputs, such as morale or productivity, are more important than others. I would have found it more interesting to have a bottom line in the simulation so that we could measure how the different combinations of the outputs affect the bottom line.