HR Measures: How it Drives Business Performance
HR Measures in Performance Management
You’ve heard the saying, “what gets measured gets done, and what gets reinforced gets repeated.”
The same is true for your human resource management & people practices. Organizations have a more significant impact on their people and HR efforts by measuring HR and applying reinforcement steps to drive desired results. By identifying key measures, tracking results, and making needed adjustments, improvement was identified.
Measuring HR Effectiveness
Most employee results, behaviors, and attitudes reflect your people/HR practices—document key baseline measures before implementation and track after implementation for a reasonable period. Next, assess the impact of your training, new initiatives, policies, changes, techniques, and other HR efforts.
Consider the following when measuring HR and the effectiveness of your HR/people management practices: Employee performance, turnover, engagement/morale, leader effectiveness, attendance, tardiness, accidents, staff efficiency, and organizational effectiveness. Indeed, overall business results, such as sales, profitability, cost control, quality, and productivity, reflect your people management practices. Soft measures such as communications, conflict, stress level, and work environment also show HR impacts on the organization.
HR Measures in Employee Performance
Measures of employee performance include, but are not limited to:
- Sales: Growth in sales numbers measured per salesperson or sales per employee.
- Productivity: Output or results per employee work hour or other measures and utilization of labor and
- Quality: Number of internal errors, external returns or
- Speed or Quantity: The rate or quantity of output per employee work
- Accuracy: Ability to perform a given function or service precisely as trained or
- Key Performance Indicators (KPIs): Ability to achieve specific essential job indicators or tasks that, when accomplished, satisfy the purpose of a given
- Goal Attainment: Ability to set and attain specific goals that have meaning to the organization, team, customer or
- Competency: Any number of knowledge, skills, abilities (KSAs), and behaviors that lead to impactful results and accomplishments. For example, you know an excellent customer service person does her job through demonstrated service skills, product knowledge, and interpersonal communication
- Performance Appraisals: There are multiple appraisal systems, all of which reflect measures of
HR Measures in Employee Turn Over
Employee turnover is the average number of employees who leave the organization divided by the average number of employees. Tracking the turnover ratios and the reasons why someone leaves is a good indicator of your HR effectiveness. Conduct exit interviews to get the fundamental idea that someone has left the organization.
Generally, employees leave for one of the following reasons:
- Poor fit with the job, hence ineffective hiring practices
- Dislike for managers or management methods, a measure of leader training & development
- Pay or benefits
- Work environment
- Better opportunity, which usually means inadequate fit assessment, lacking competitive pay or ineffective training or career path planning
Employee Engagement & Morale
Measures of employee engagement and morale are typically obtained through an “employee opinion survey” that captures these, among other essential employee perceptions. Conducting surveys provides employers with reasonable indications of these critical factors. An employee’s engagement level impacts their performance, attitude, and overall impact on the organization. Engagement and morale measurements through one-on-one employee discussions, task force meetings, and through such measures as performance and turnover.
Leaders genuinely are the real HR managers as they coach and oversee employees and their work results. Effective HR programs and practices will provide leaders with needed training, resources, tools, and techniques to best do their job. Although challenging to measure, leader effectiveness can be obtained through leader surveys collecting feedback from their employees, manager, customers, and others with whom they interact. A 360-degree assessment that focuses on core leader measures is one method to obtain good HR measures. Other means of leader effectiveness are looking at their overall department, and employee performance tests under their direction.
Attendance, Tardiness, Sick Leave & Accidents:
Monitoring these vital employee measures identifies symptoms that help you understand the overall effectiveness of your policies, training, practices, performance management, and leadership skills. Not only are these key expected employee performance measures, but they can also be very costly to your organization if not addressed with creative HR solutions.
Staffing efficiency is measured by ensuring the proper staffing levels and having the right person in place when needed. Measures might include over-or understaffing, resulting in reductions or downtime. Some organizations track their recruiting efforts through recruitment or new hire cost and several days to hire.
People are the heart and soul of an organization and determine its overall effectiveness. Therefore, overall business results are another indicator of HR effectiveness. Most organizations measure their effectiveness by looking at crucial business measures such as income statements, stock price, business growth, strategy achievement, objective attainment, budget achievement, etc.
Monitor and communicate these key measures often to see more significant results from your people management practices.
About HR Service, Inc.
HR Service provides broker and client solutions for benefit ERISA compliance and HR, ensuring organizations meet ERISA and Department of Labor (DOL) requirements. Summary Plan Description Wraps (SPD Wraps), Employee Notifications, 125 Premium Only Plans (125 POP), Summaries of Material Modification (SMM), Health Insurance Portability & Accountability Act (HIPAA), ACA Reporting, and Employment Laws. Our web-based SPD Wraps, Employee Notices, 125 POPs, and ACA Reporting tools make it easy to comply with ERISA.
Author: Anita Johnson, HR Service, Inc. Coach