Category: HR Scorecard Metrics

How to measure HRM in mining and oil/gas production?

In the post crisis economy it has become rather difficult to find competent and professional employees.  Headhunting turned out very popular in all business areas.  Both white and blue collars who can now choose what company to work for, of course if they are experienced and professional.  Recent economic recession let most businesses understand that the only people can overcome crisis.  No computer, no machine or many million investment can save the company, increase its customer base, introduced new products and services etc.  If the company personnel is not ready for changes, if there is an negative atmosphere inside the company, it wouldn’t be a reasonable to expect high performance from such personnel.  That’s why, the importance of human resource management keeps growing all the time.  As said above, adequate and competent employees are valued in various business areas, from production, mining and electronics to IT industry, financial services, investments etc.

Of course approaches to human resource management in industrial and intellectual spheres a fairly different.  At the same time, approaches to evaluation of HR performance in such business areas also differ.  Of it depends on specific nature of the work, company goals, requirements to personnel, demands and requests of employees etc.  However, use of balanced scorecard to evaluate HR performance can offer a unified solution to measurement of human resource management.  At the same time, it is important to remember that different key performance indicators are to be used in such evaluation, depending on business area being measured.

In mining and oil/gas production business approaches to human resource management evaluation are dictated by tough working conditions, high traumatism rate, frequent extra work, requirements as to physical conditions of employees etc.  When using balanced scorecard to measure HR performance in mining and gas production business it would be reasonable to use the following indicators:

  1. Percentage of employees who are willing to recommend company as employer.  Those who work in mining and gas production business know that this is a very hard work.  Moreover, often such employees endanger their lives.  That’s why, if a great number of employees can recommend a company as employer to their friends and relatives, it signals about their positive attitude two was the company and their satisfaction with working conditions, compensation system etc.  This is that secret way to measure employee satisfaction, to tell the truth.  As a rule, people would not recommend bad employers to friends and family members.  Of course, this indicator shouldn’t be measured too often.  Once a quarter or a half year will be enough.
  2. Average cost per medical claim. Mining and gas/oil production business is characterized by increased traumatism rate and dangerous to health and life.  Of as a rule companies cover medical claims in full, in case injury was not employee’s fault.  It is very important to keep track of medical expenses in order to save costs and control traumatism rate.  If this indicator keeps increasing, company personnel should reconsider working conditions and safety issues, otherwise lives of hundreds of people would be endangered, and the company will still have to cover their medical bills.

How should one measure HR performance in the Army?

The army and military cannot be compared with any business, although this is a business in a way.  The army renders services for the country.  It protects citizens who pay taxes and higher army to perform such functions.  Historically, organization structure, methods and approaches to personnel as well as requirements and goals of the army look fairly different as compared to other business areas.  There are no “buts” in the army.  Working conditions are surely tougher than in other activities, even police or the National Guard.

Perhaps, it is possible to say that human resource management is the most important aspect in the army.  Why?  Because all those equipment and arms will not work and shoot without people.  What is army? Army is the soldiers and military command.  Efficient human resource management in army results and cost savings and improving efficiency of military units.

In order to evaluate HR efficiency in military it is possible to use balanced scorecard which is known as one of the best systems that measures performance and links operational and strategic management.  If commercial businesses have financial goals, the military aims at rendering high quality services of protecting the nation and efficient use of taxpayers’ money.

As known, balanced scorecard system works through evaluation of key performance indicators which must be carefully chosen before initial steps in BSC implementation.  If we’re talking about military the following KPIs should be given a special attention:

  1. Average number of sick days per employee.  This is the very effective KPI which signals about different problems and issues in the army.  First and foremost, the army cannot afford having a large number of sick soldiers because it will be very vulnerable to attacks.  If the office clerk can substitute his sick employee a soldier cannot drive 2 Hummers or shoot three guns (only maybe in Hollywood movies).  At the same time this indicator shows efficiency of Medical Service as well as state of living conditions in the army.  Low value of this indicator signals that soldiers manage to stay healthy and thus ready to perform their duties.  It is recommended to regularly measure this indicator in order to find root of the problem, learn about most common illnesses and health problems soldiers and officers experience.  In such a way it will be possible to take counter measures.
  2. Average time to recruit.  As known, the military profession cannot be called the most popular one.  There are many factors which explain this fact: tough conditions, physical and moral pressure and even danger to life.  That’s why, very often the military it requires much time to recruit soldiers-to-be.  Of course, the sooner assaulted is recruited the less money the army requires to educate him.  For this reason, military human resource department should undertake every effort to shorten average time to recruit to fill in vacant positions as soon as possible.  Recruitment process consists of several stages from education and advertising to medical examination, physical and psychological tests etc.  Of course all this requires money.

HR evaluation in marketing and advertising business

Some business owners are wondering why the need to spend money to manage personnel?  Their business has everything required for success: production facilities, offices, investments etc.  But those business owners usually forget that all this will not work without competent personnel.

It often happens that a company hires competent professionals with a solid education and necessary experience, but the work is still not done properly.  What is the reason?  Well, one of the possible in answers is “The work is not organized in the proper way.” Even the best professionals may not show their top performance if they are not satisfied with working conditions, organization climate, training and coaching sessions etc.

So, human resource management should be given due attention.  At the same time, as any business unit, human resource department should be evaluated in order to track its progress to implementation of strategic goals.  Many successful companies are using balanced scorecard system to measure performance and link operational in strategic management.  One of the biggest mistakes is that human resource measures and goals conflict with the general strategy of the company, its mission and values.

In advertising and marketing human resource management plays an important role.  For this reason evaluation of HR performance in this business area is imperative.  As known, balanced scorecard measures business performance through evaluation of key performance indicators.  In case of HR in advertising and marketing we can talk about such indicators as:

  1. Staff turnover costs.  It is not a secret that a talented marketing specialist or an advertising agent made earn good money for the company, even millions of dollars.  Marketing is about correct positioning and promotional product in the market, and marketing specialists need to understand demands and desires of customers.  Thus, in case of a high turnover staff rate of the company will spend too much to hire new specialists.  These costs would include recruitment costs, advertising expenses, costs related to interviews.  High staff turnover rate is a negative indicator for any business.  But unlike other business areas, as already said above, it is not easy to find a good advertising and marketing specialist.  By keeping this indicator as low as possible HR department makes sure that employees are satisfied with working conditions, their compensation and bonuses, and that’s why they are not leaving the company.  In such a way both company and personnel benefit.
  2. Recruitment without advertising or outsourcing.  Advertising and marketing company should create such a positive image of an excellent employer so that the best specialists and professionals will look for employment was such a company by themselves.  This is an indicator of an excellent HR performance.  In such a way, HR department does not spend anything to hire an employee.  Savings costs may be used to educate such an employee and help him integrate into the company.  Besides, if potential employees are seeking employment with the advertising company it signals about positive organization climate and excellent public image of such an employer.
  3. Travel costs per employee. Advertising and marketing specialists are often visiting various exhibitions, meetings, forums, fares and other places where they can set contacts with existing and potential customers.  The value of this indicator needs to be optimized and kept as low as possible.

On HR measurment in IT business area

And the modern business human resource management has become very popular.  If previously human resource management was considered to be effective only in areas and business feels were human factor played an important role, nowadays personnel of a company is considered to be the supreme value, even at industrial enterprises with fully automated production process.  It was not until the recent economic crisis that most companies came to understand that only their employees can drive their businesses to success.  No investments and no production facilities will help overcome crisis if the company does not possess highly qualified, competent, adequate and loyal personnel.

Human resource management is an inseparable part of any management system.  It is also a part of a company strategy.  It is not a secret that if a business has no strategy is doomed to fail as markets are buried changeable these days and companies fight to win customer loyalty.  That’s why, it is very important that human resource goals and objectives comply with the company strategy in general.  Every business should have its mission, values and goals, and if human resource department conflicts with the mission, values and goals the company will face serious problems.

The recent decade saw a sharp increase in popularity of IT business.  With the development of the Internet and IT technologies most businesses understood that web presence and IT support are those success factors which will help company gain competitive advantage.  At the same time, every IT company needs to understand that software is created by people, web servers are maintained by people, customers are supported by people.  So, importance of HR management in IT business area cannot be over appreciated.

In evaluation of HR performance in the sphere of IT technologies, the following indicators may be used:

  1. Average equipment cost per employee.  IT specialists usually use rather expensive equipment and devices.  For example, webhosting uses powerful servers, special cooling and network equipment.  Of course, it is not reasonable to save too much on this equipment.  At the same time, it is imperative to keep these costs at a reasonable level.  That’s why HR department together with tech support should measure how much company spends to provide one employee with all equipment he needs.  In such evaluation it is recommended to ask employees themselves about their needs and requirements.  Savings costs are to be better used for bonuses and compensation for high performing employees.  This indicator will help optimize work and save some money which can be used for other purposes.
  2. Cost of office space per employee.  Nowadays, many IT specialists work remotely, but still, millions of them work in offices.  As any office clerk, and IT specialist needs office space and workplace equipped with everything he needs.  It is important to provide an employee with everything he needs in his work, and at the same time try to optimize cost of office space per employee (for example use daylight, share power systems etc).

In evaluation of HR performance in IT business area it is important to remember that specialists in information technologies should be provided with perfect working conditions and equipment, if the company wants them to create quality products.

HR evaluation in investment business

Evaluation of human resource management has become a priority task for most businesses.  The recent economic crisis let everybody understand that only human resources, i.e. people who work for the company, can help it overcome crisis, off or innovative ideas, solution of strategic problems and creative offers for the markets.  Investments by themselves and hi tech equipment can not solve problems and make decisions.  That’s why human resources play the most important rule in any business.

At a first glance, it is not easy to measure something that cannot be represented with traditional financial figures.  Indeed, how can one measure employee satisfaction or organization climate?  And what is influence of these indicators on company financial results?  Well, the answer is very simple.  A satisfied employee is more likely to offer some new ideas that will help company gained competitive advantage in the market, especially if we’re talking about highly competitive markets.  Employees are likely to work in a more productive way in a positive organization climate.  The primary task of human resource department is to hire the best professionals, educate them, create a positive organization climate and suitable working conditions in order to retain such employees.

The investment business is characterized by importance of intellectual potential.  Investment specialists give advice and recommendations to people who want their money make more money.  There are many investment options nowadays.  Some of them are safe while others are risky.  It is imperative foreign investment company to have well educated and loyal personnel.

When measuring HR performance in investment business with balanced scorecard system the following key performance indicators are recommended:

  1. Talent retention percentage.  They say that it is impossible to learn to become a genius investor.  Of course you can doubt this statement, but it is partially true.  There a born investors who have an inner sense telling them where to put money to earn more in future.  Talented investors can greatly benefit the company they are working for.  Of course, headhunting is very popular in this business field.  A talented investor can earn millions of.  That’s why, it is important to retain talented personnel by offering them competitive salary packages, working conditions, bonus systems etc.  By keeping this indicator as high as possible, human resource department preserves intellectual potential of an investment company, which on the one hand creates a positive public image, and on the other hand guarantees high revenue for the company.
  2. Forecast average absolute error.  The art of investment is the art of making predictions.  Investment in stocks is about buying shares of the company that will make success or, to the contrary, fail during the next years.  Making an investment mistake is losing money.  Very often investment companies use their customers’ money.  For this reason, it is imperative to keep this indicator under control, and keep it as low as possible.  It is necessary to analyze mistakes in order to avoid them in future.  Errors rate shows professionalism and competence of personnel in an investment company.  That’s why this indicator is very important in HR balanced scorecard.

KPIs for HR evalution in health care industry

In humanitarian and health care the importance of human factor is greater as compared to other business areas.  Sure, healthcare specialists make an effective use of new technologies and the IT solutions.  At the same time, the price of human mistake in healthcare industry can be too high.  A person’s death is a mistake that cannot be corrected.  That’s why it is imperative that every organization working in healthcare industry possess educated and qualified personnel.

Human resource management in Health Care has a number of peculiarity is and differences compared to other businesses.  As already said above, mistakes in Health Care may have a very high price.  It is important that employees working in this area are satisfied with their work, have suitable working conditions and fair compensation.  Besides, nurses and doctors have to undergo regular training, both practical and theoretical, to improve professional level.

It is not very easy to find talented surgeons of therapists.  It is even more difficult to employed excellent doctors for children, as well as family doctors.  Moreover, HR managers in Health Care have to retain good specialists.

As Health Care is customer oriented business HR evaluation in this field should include customer perspective. A satisfied customer makes the most positive image for hospital or an individual doctor.  That’s why, it is important to select the right key performance indicators when using balanced scorecard system to measure HR performance in Health Care.  Some of our suggestions are:

  1. Number of patients with medical errors per 1000 patients. Sometimes medical errors can be tragic.  Every mistake in doctor’s decision or a diagnosis may cause health problems or even patient’s death.  For this reason, this indicator should be kept at the lowest possible level.  As doctor’s work is very intense this indicator should be evaluated as often as possible.  Very often, the large hospital can have hundreds of patients.  This indicator shows both professional level of doctors and nurses, their attitude work and professional level of HR department that timely measures this KPI to prevent possible problems and mistakes.  If this indicator goes up this signals about negative trend.  Thus, the causes of the problem should be located and proper solutions must be offered.  With a high errors rate the hospital will be a target for attacks from patients, government regulators and social organizations.  High error rate will surely create a negative image for a hospital.
  2. Number of patients leaving against medical advice. This is a very interesting indicator.  On the one hand, a patient is not obliged to follow medical advice offered by a doctor.  On the other hand, doctors and nurses have to be very persuasive when talking to patients.  If this indicator keeps increasing it means that patients do not trust doctors or have some other reasons to disregard medical advice.  High number of patients leaving against medical advice may signal about problems in communication between doctors and patients were some psychological obstacles in their relations.  Frequent evaluation of such indicator will surely demonstrate professional level of doctors and nurses and harmony in their relations with patients.

How to measure HR performance in government/non-profit sector?

Human resource management evaluation has become especially popular in the recent decade.  With the development of various business management systems, techniques and tools measurement of human resource departments has become a part of overall evaluation of co performance on its way to implementation of strategic goals.  In this sense, balanced scorecard system has become the ultimate tool used by managers and business owners to align operational and strategic management.  As a rule, large companies consist of numerous departments which may have fairly different goals.  When such departments conflict with each other it is very difficult to implement company strategy and follow strategic vision.

If evaluation of commercial enterprises seems logical, government and nonprofit sector were the last to use performance evaluation systems.  This is easily explained by the fact that nonprofit organizations have different goals as compared to traditional businesses.

However, in government and nonprofit organizations much depends on professionalism of personnel.  If at production enterprises IT solutions, machines and robots are used, government bodies and nonprofit organizations use personnel as intellectual workforce.  For this reason measurement of HR Dept and government and nonprofit sector becomes a must.

Nonprofit organizations and government bodies use of taxpayers’ money.  So they should make sure this money is efficiently used.  In evaluation of HR performance in government sector the following key performance indicators may turn out quite helpful:

Percentage of correspondence replied on time. Government officials receive hundreds and even thousands of letters, emails, read coming patience and proposals.  It is very important to answer all of them to get to know about people’s problems and look for adequate solutions.  Of course some emails are very weird, but most of them concerned real problems people are facing.  This indicator shows efficiency of government officials responsible for public relations.  The higher the rate, the better the work.  Of course, it is physical impossible to answer all correspondence.  To Seoul, there should be a system of giving priorities to correspondence.  Measurement of this indicator is not difficult as this is ratio of total correspondence and car respondents replied on time.

Percentage of emails received but not read. As already said above, it is impossible to read all car respondents received by government officials and employees of nonprofit organizations.  However, in order to achieve greater performance it is recommended to read as much emails as possible.  Even if some letters remain unread they ought to be marked somehow in order to be read later.  This indicator measures efficiency of employees and attitude towards their work.  It would be a reasonable to sort out correspondence based on topic and issues/problems.  Unread mail will never be answered, so it is important to keep this indicator as low as possible.

To sum it up, it needs saying that HR evaluation in government and nonprofit sector should be given due attention, since human factor plays the most important role in this business area.  Moreover, government and nonprofit organizations are financed by taxpayers or sponsors, so excellent performance is a must.

HR in food industry

Human resources became saving factor for thousands of companies that faced recent financial crisis.  Having met with obstacles and hardships many companies appear to be vulnerable and helpless, while others managed to survive and even increase their revenue.  This is explained by the fact that these companies had adequate and professional personnel.  Only people can save business.  No computer all machine will come up with innovative decision.  That’s why, it is imperative to have loyal and well educated personnel.

Human resource management is an important aspect in running of any business.  Even if the company has professional employees they may not show their top performance because of mistakes in human resource management.  Professional employees may be not satisfied with their work or lack loyalty to the company they work for.  In such a way they will not use their knowledge and skills at maximum.  So, human resource department should create a positive organization climate and constantly work with personnel.

Of course, different business areas have different approaches and success factors in human resource management.  Industrial enterprises have tougher work conditions and thus different requirements to employees, while office clerks or finance specialists should have different skills and attitudes towards what they’re doing.  It is easier to find blue collars then smart engineers and tech specialists.

In food industry, evaluation of human resource department may be based on measurement of the following key performance indicators (sure, using Balanced Scorecard):

  1. Percentage of staff with appropriate professional qualification. Production of food is a complex technological process.  Any mistake made by technical specialists will affect quality of the products.  These mistakes will result in for quality of food products which can endanger lives of consumers.  This in its turn will result in sanctions and even court lawsuits.  If that’s why any food company should make sure it has sufficient number of professionals with excellent qualification to control food quality.  This indicator is to be measured not too often, usually after new hires.  Professional qualification can be measured through exams or special tests with questions on issues related to technological process, production safety issues etc.
  2. Percentage of job positions requiring temporary staff. Sometimes the enterprise is working in the food industry require temporary employees especially at certain seasons.  However, the number of temporary positions should not exceed certain limits.  It is simply too dangerous to control technological process without having enough permanent workers who have experience and necessary skills.  At the same time, temporary workers can really see if the company in high season when the company needs additional work force.  This indicator can be measured at certain seasons/parts of the year.
  3. Number of training hours per employee. Quality control in food industry is extremely important.  Any consumer or government body can sue food company if it produces low quality food products.  In order to avoid lawsuits quality food products are to be released to the market.  And this is where training can really help.  To concerns both managerial and production staff.

HR assessment in financial organizations

What does one need to run a successful business?  Of course, there should be a creative and effective business idea, sufficient investments, production facilities, real estate, offices etc.  But there are some business owners that forget to add educated personnel to this list.  Indeed, it is impossible to succeed in any business without having trained and efficient employees.  Intellectual capital is something that cannot be purchased within a second.  Well-known companies valued their personnel and sometimes they require dozens of years to find and employed the best professionals in a certain business area.

Human resources play an important role in any business.  However, it is imperative to effectively manage personnel, otherwise even the best professionals will not reach top level of their potential performance.  Human resource management is mostly about hiring, educating and retaining personnel.  Of course, different business areas require different approaches to human resource management.  HR strategies depend on company goals, organization structure, demands, requirements and responsibilities of employees etc.

Human resource management in financial services (like loans, insurance policies) pretty much depends on peculiarity is of this business area.  The financial crisis and breakdowns of some major banks people do not trust financial institutions like they did several years ago.  That’s why human resource department in financial area should focus on employing the best professionals and educating them to provide customers with high quality financial services.

As any business aspect, human resource management in finance should be properly measured to align HR strategy and approaches with company strategic vision and strategic goals.  Use of balanced scorecard is highly recommended for HR managers in finance.  The following indicators may be used in assessment of HR in financial organizations:

  1. Average interviewing costs. As already said above, financial institutions are interested in employment of the best professionals due to tough competition in this market and reduced trust level of the population towards financial institutions.  It’s not very easy to find a talented finance specialist.  That’s why interviewing costs may be too high due to large number of applicants.  Also, a job interview a financial organization is a more complex process as compared to interview at, for instance, industrial enterprise.  Paying too much for the interviews means wasting money, especially if applicants refuse to work for the company off to the interview.
  2. Percentage of employees that have been assessed.  In order to maintain a high professional level of personnel HR department should make sure that performance of all employees is regularly and timely measured.  Ideally, the entire personnel of a financial organization should undergo regular evaluation, begin from and ordinary front line manager and ending with head of department/business unit.  This indicator represents professional level of the personnel and helps reveal strong and weak points.  Evaluation of employees should be clear and transparent.  In other words employees should know why they have been giving high and low grades and what needs to be improved.
  3. Employee loyalty.  Employees at any financial institution have access to confidential information which should not be handed over to third parties.  That’s why it is important so that finance experts are loyal to the company and have no evil intentions.

About HR measurment in electronics

Global economy is characterized by highly competitive markets, and often severe financial crisis the competition has become even tougher.  At the same time it became obvious that those companies possessing sufficient intellectual capital have more chances to survive and win loyalty of customers.  Some business owners and top managers tend to forget that personnel of the company is the most valuable element in their business.  All new and innovative ideas are to be implemented by people no matter how much money the company has.

That’s why, all major companies have separate human resource departments that deal with recruitment, employment, education and retention of personnel.  A different glance these are quite easy tasks.  Indeed, is a difficult to hire person and explain him what he needs to do?  Well, in some business areas this is an enormous problem.  For example, if we’re talking about electronics industry which can share only say that is not easy to find a talented engineer, IT specialist or a project manager.  It is even more difficult to educate him and help him integrate into the company.  That’s why, having an efficient HR Dept is a must for every company that claims to be successful and has ambitious goals.

The point is that electronics industry is highly competitive.  This is explained by rapid development of technologies.  Of something that provoked IT revolution yesterday is forgotten now.  That’s why it is important to develop new and unique products and services.  It is impossible to achieve such goals without qualified and loyal personnel.  HR department in electronics industry should mostly focus on recruitment, education and retain and of highly professional personnel.  The following key performance indicators can be used when evaluating the HR performance with Balanced Scorecard system:

  1. Average time employees are in same position/function. Here is a simple example.  If a person works as a junior IT engineer for 10 or more years doing the same job as he did 10 years ago, it means that such an employee is not progressing.  Having worked in electronics for a couple of years and employee should be ready to instruct newcomers to the company in shared his experience, and then go up the career ladder.  That’s why such an indicator can measure both employees’ potential and the ability of HR department to timely locate and encourage talented employees.
  2. Percentage of roles with documented position descriptions. It is very important that typical engineering positions have special documented guides and step by step instructions.  Production process does not tolerate any deviations and mistakes, especially in the field of electronics.  That’s why, HR department needs to make sure that most important and responsible positions in the company a provided with manuals, guides, how-to instruction.  Such manuals will decrease error rate and improve employee confidence.  As known, confident employees are working better and thus they have a positive attitude to the company which in its turn creates a positive organization climate.

HR management in electronics should always follow frequent changes and challenges in this industry, thus making favorable working conditions for tech specialists.