Measuring HR for business success

Written by Cornerstone on 4 June 2014 in Sponsored Article
Sponsored Article

For some top execs there is the misconception that Human Resources (HR) is ‘just’ another administrative function – reviews need to be carried out and training needs to be completed just to tick the box. 

The reality; however, is that HR plays a critical role in an organisation’s culture, productivity and ultimately its success, as a business’ employees are often its key differentiator against the competition and the quality of the service provided. Some HR Directors fail to measure the outputs of HR effectively or link them to the overall business objectives due to not having the right tools in place to do so. However, if you don’t measure HR and benchmark its success, how can you gain insight into how the business and its employees are performing?

Using metrics to get the board onside

There are multiple reasons to create, track and analyse HR metrics such as; recruitment costs, staff turnover and training effectiveness. One crucial reason is that it enables HR Directors to speak to senior management in a language and tone that they understand. CEOs, CFOs and other senior executives are metric-focused and therefore need to presented with data to explain issues, highlight needs and justify new initiatives. Simply explaining that the company is experiencing a high staff turnover, without supporting it with fact won’t help action a solution. Instead, metrics need to be developed, documenting the impact over time on key issues, such as recruitment fees or staff satisfaction.

Numbers tell a powerful story, which can’t be ignored. They act as a strong benchmark, whether it is to help identify the strengths or weaknesses of the business or help prioritise key activities, such as training. By using metrics to support HR, a clear plan of action can be made. However, businesses do need to remember that tracking and reporting on too many metrics can be just as ineffective as no metrics at all. This is because people can get lost in all the detail and if they have to manually manage this data it can be extremely time consuming and complex.    

What metrics to measure

It is crucial to focus on meaningful metrics to the business, for example; staff productivity, quality of hire, the time to profit when onboarding a new employee, staff turnover and recruitment fees. These metrics will give a more top line benchmark of HR and the businesses overall performance.

Findings from internal engagement surveys will help reinforce these findings; however, these should be used with caution and not solely relied upon by HR to gain insight into employee behaviour and satisfaction. A differentiation must be made between those who are transactionally engaged (i.e. task or job) or emotionally engaged[1] (i.e. mission and values), as the latter are much more likely to perform, have higher levels of wellbeing and remain engaged through both good times and bad.

Benefits of automating metrics  

Ultimately if a business isn’t producing HR metrics, how can it see what initiatives have worked well and what needs to be improved? HRDs need to remember that there are performance management tools out there that can make the whole process of managing HR metrics a lot easier and allow them to use this insight to ensure that they are attracting, retaining and developing the right talent.

By using technology to create an automated, ongoing, metric-based process, it can transform a business and its workforce, and arm them with the insight needed to make smart decisions regarding HR issues, employee engagement and productivity to support the business. It can also represent a serious competitive advantage for forward-thinking organisations, as it has the potential to make them an employer of choice.

To read more on metrics, download our paper on the ROI of talent management

[1] Chartered Institute of Personnel & Development (CIPD) and Kingston Business, May 2012 

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