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Create Value With Human Resource Measures

Human Resource Measures Are the Foundation of Your HR Department Business Plan

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Create Value With Human Resource Measures

Create Value With Human Resource Measures

Jacob Wackerhausen

Are you interested in how to measure the impact of Human Resources leadership, management, actions, policies, and assistance in your organization? A significant component of your Human Resource business planning is identifying what Human Resources measures to collect.

The Goal of Human Resource Measures

When you consider measuring the performance of your Human Resource department, developing the appropriate set of measures forms the cornerstone. Your selection of measurements should be driven by two factors. You want to contribute to the overall success of your organization and the attainment of your organization’s most important goals. You want to provide the Human Resources department with measures that you can use for continuous improvement.

Once upon a time, standing in my kitchen, four vice presidents called me, out of the clear blue, from a client company. They were meeting to assess the effectiveness of my training and consulting activities and they made the age old mistake of measuring actions, not results.

They proposed that my accountability would be the number of training sessions I presented, the number of employees who attended the training sessions, and the number of improvements employees made in their work areas. I told them I could begin to work with them on the last one, but the first two had nothing to do with the results we wanted to achieve.

What Impacts Human Resource Measures?

This story has played out in workplaces perpetually it seems. And, part of the problem is that HR staff members get so busy just providing services, that collecting data and measuring success and contribution in addition is a stretch. At least in the small and mid-sized companies where I have spent much of my time, this is true.

My larger clients such as universities or state departments collect more data but have less of a need to prove contribution, in my experience. Many of my smaller clients are so grateful to have a group that deals with the employees that they fail to ask for Human Resource measures.

One of the measurements that HR has collected data on is cost-per-hire. I was interested to see that SHRM has spearheaded an effort to develop a new human resources standard for measuring cost-per-hire, the first of its kind in the United States. You’ll want to see what such a standard entails for measurement in your organization.

Another measurement that organizations should consider is time-to-hire. Yes, I know you don’t control all of the factors that go into creating the timeline. But, measuring the length of your hiring process gives you a baseline for improvement in which you can enlist the help of others.

I don’t generally start a training and continuous improvement process without determining the desired outcomes or deliverables. And, sometimes, we’re just honest and decide that providing management development is about ideas and progress – not necessarily, easily numerically measurable - is charted in each manager’s performance development plan.

Other HR processes I’ve known organizations to measure include the impact of a continuous improvement process on cost savings and the improvement of work processes in time taken or steps involved. In one example, a department of eight HR employees charted out the steps they took in their hiring process. They found that they took 248 steps to hire an employee. Analyzing the steps, they determined that many of them could be discarded or consolidated.

Weeks later, they had eliminated half the steps but the process still took the same amount of time. They discovered that they had an empowerment problem. The HR director added ten days to the company time-to-hire because he required his signature at certain milestones in the process. The paperwork was buried on his desk for days, and staff did not have permission to proceed without his signature. His priority was the executive team on which he served. Once he truly empowered his staff, hiring managers company-wide were thrilled with the improvement in time-to-hire.

How to Decide What Measurements to Use in HR

Because of the number of functions that the average HR department serves, it is not possible to measure everything that you do. In choosing what to measure, a business needs assessment in your organization will inform you about what your employees, colleagues and executives believe are your most important Human Resource measures.

A second option is to look at what processes are critical for your organization’s success. A third consideration is to determine which HR processes cost your organization the most money. A fourth is to determine which human resources measures will help you most successfully develop the skills and contribution of your employees.

From these factors, develop a doable HR scorecard, or key performance indicators (KPI) and begin to establish base measures for each process you decide to measure. Start with just a few and don’t overwhelm your time and staff with more than you can do. It is better to consistently measure one or two operations than to poorly use Human Resource measures in many.

Examples of What HR Departments Measure

Here are specific examples of factors that Human Resource departments measure.

  • Cost per hire
  • Time per hire
  • Employee turnover rate
  • Employee turnover cost
  • Preventable employee turnover
  • Percentage of performance development plans or appraisals current
  • Cost of training and development activities with respect to company goal attainment
  • Employee satisfaction
  • Length of employment
  • Components of the compensation system such as cost of benefits per employee

These are just a few of the areas that you can consider for development o your Human Resource measures. The more specifically your Human Resource measures fit your company goals, the better your measure serve you and your organization.

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