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Human capital measures, strategy, and performance: HR managers' perceptions

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  • Stephen Gates
  • Pascal Langevin

Abstract

Purpose - The purpose of this paper is to report the results of a survey and interviews with human resource (HR) professionals to identify and better understand their perceptions and expectations of human capital measures' (HCM) content, links to strategy, and impact on performance. Design/methodology/approach - This paper relies on a quantitative analysis of survey questionnaires collected from 104 HR executives, as well as on a qualitative investigation using six interviews. Two types of HCM are derived using principal component analysis. One factor measures employees' work efficiency and cost consciousness (efficiency indicators), whereas the second factor measures employees' entrepreneurial and innovative capabilities (innovation indicators). Findings - The results confirm the following hypotheses: first, according to HR managers, the more advanced a company is in the development of HCM, the higher the company's performance; and second, in companies following a differentiation strategy, HR managers are interested in innovation indicators, while in those following a cost reduction strategy, HR managers are interested in efficiency indicators. Research limitations/implications - Results are based on a cross‐sectional study of HR professionals' perceptions. However, it underscores the critical role that HCM plays in delivering performance in the HR managers' opinion. It also shows that HR managers are conscious that HCM should be aligned with strategy. Practical implications - Based on HR managers' perceptions, the paper suggests that HR professionals might invest more effort in creating and implementing their HCM to deliver higher levels of performance. It also implies that HR managers and management accounting and control systems experts have a common interest to collaborate when implementing HCM. Originality/value - The paper demonstrates the importance of implementing human capital (HC) metrics into a strategic performance management system to deliver performance from a company's HC. It contributes to a cross‐disciplinary (HRs, management control, and strategy) perspective on HC strategy.

Suggested Citation

  • Stephen Gates & Pascal Langevin, 2010. "Human capital measures, strategy, and performance: HR managers' perceptions," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 23(1), pages 111-132, January.
    • Handle: RePEc:eme:aaajpp:v:23:y:2010:i:1:p:111-132
    DOI: 10.1108/09513571011010628
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    References listed on IDEAS

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    3. Pamela Kent & Tamara Zunker, 2017. "A stakeholder analysis of employee disclosures in annual reports," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 57(2), pages 533-563, June.
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    5. Muhammad Shujaat Mubarik & V. G. R. Chandran & Evelyn S. Devadason, 2018. "Measuring Human Capital in Small and Medium Manufacturing Enterprises: What Matters?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 137(2), pages 605-623, June.
    6. Amalou-Döpke, Linda & Süß, Stefan, 2014. "HR measurement as an instrument of the HR department in its exchange relationship with top management: A qualitative study based on resource dependence theory," Scandinavian Journal of Management, Elsevier, vol. 30(4), pages 444-460.
    7. Corinne Ollier Bessieux & Emmanuelle Negre & Marie-Anne Verdier, 2022. "Moving from Accounting for People to Accounting with People: A Critical Analysis of the Literature and Avenues for Research," Post-Print hal-03889478, HAL.
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    9. Meir Russ & Bino Catas?s, 2014. "Editorial. Intellectual Capital and Management Control: Human Capital Valuation and other challenges," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2014(2), pages 5-21.
    10. Samson, Kelly & Bhanugopan, Ramudu, 2022. "Strategic human capital analytics and organisation performance: The mediating effects of managerial decision-making," Journal of Business Research, Elsevier, vol. 144(C), pages 637-649.
    11. Jian Xu & Yue Shang & Weizhen Yu & Feng Liu, 2019. "Intellectual Capital, Technological Innovation and Firm Performance: Evidence from China’s Manufacturing Sector," Sustainability, MDPI, vol. 11(19), pages 1-16, September.
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    13. Kuipers, Ben S. & Giurge, Laura M., 2017. "Does alignment matter? The performance implications of HR roles connected to organizational strategy," LSE Research Online Documents on Economics 115318, London School of Economics and Political Science, LSE Library.
    14. Barone, Elisabetta & Ranamagar, Nathan & Solomon, Jill F., 2013. "A Habermasian model of stakeholder (non)engagement and corporate (ir)responsibility reporting," Accounting forum, Elsevier, vol. 37(3), pages 163-181.

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