Scorecard Metrics for HR

Evaluation of human resource management is equally important in all business areas.  Sure, some businesses require greater participation of people in production process, while other businesses are fully automated.  In both cases human factor plays different roles, but still, the business is run by people.  Some business owners tend to forget that their business is not only capital, real estate, production facilities, but people who work for the company.  Recent financial meltdown turned out to be a good lesson for many companies that did not value intellectual potential they had.  Many companies turned bankrupts just because they had no idea what to do in the new business reality, of while other businesses manage to survive and even expand.

Human resource management is all about recruiting, employing educating and retaining of personnel.  These processes seem quite easy and a first glance.  But nowadays it is not so easy to find a professional employee and create suitable working conditions for him.  Headhunting is very popular in certain business areas.  That’s why due attention should be given to human resource management at any midsize and large company.

Human resource policy and methods should be clear and understood for employees.  Only in such a way the feedback system will work which is very important for any company.  At the same time, performance of HR department should be evaluated.  Ineffective human resource management will not only result in loss of money but it can also weaken company position in the market.  Lots of competitive advantage is the worst thing that can happen to any business.

When evaluating human resource management in logistics/transport business it is imperative to take into account peculiarity is of this kind of work.  Logistics services require thorough planning and a very serious approach.  When using balanced scorecard system for HR evaluation in logistics it is recommended to measure the following indicators:

1. Average travel costs per employee.  Many logistics specialists have to accompany cargoes on the way to end customers.  The distance can be measured in thousands of miles.  A certain balance is to be kept here: logistics specialist should use convenient means of transportation but at the same time expenses should be reasonable.  By decreasing value of this indicator logistics department may save additional costs which can be used for special bonus and compensation programs.  Sometimes, there is no necessity or urgency for a logistics specialist to accompany cargoes.  In such cases the entire delivery process may be managed remotely.
2. Employee lateness.  This indicator is applicable in any business.  Being late for work is not good.  But lately is in logistics business may lead to failure of the entire delivery chain.  For example, logistics specialist is 1 hour late for work.  The cargo came late to airport terminal and thus it will come late for seaport.  Of this is a breakdown of the entire delivery scheme.  That’s why employee lath should be strictly controlled by HR department.  Those employees who were regularly late for work should be punished, while punctuality must be encouraged.

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In the post crisis economy it is imperative to understand that personnel is the supreme value for any company.  Of course, there are businesses were human factor plays an important role and businesses with the automated production process.  However, in both cases humans play the most important role.  With a rapid development of IT technologies production enterprises require less work force as compared to 20^th century.  But all those machines and robots are created by people and manage by ordinary people like us.  To that’s why ignoring needs and requirements of the personnel means plunging a company into the crisis.  By the way, recent economic meltdown proved that only those companies can survive that possess the most valuable intellectual capital.  Machines and robots can not invent new products, services, strategists in the market.  They cannot adopt decisions and assume responsibility.  So, human resources matter much.

If we’re talking about production enterprises which should take into account the fact that sometimes employees are working in very tough conditions.  It especially concerns chemical industry as employees may contact hazardous chemicals that can cause illnesses, injuries or even death.  Chemical industry is characterized by increased risk factor, and those people who come to work to chemical enterprises are made familiar with this fact.  Human resource department at the chemical enterprise should understand the risk workers are facing, when managing personnel.  And of course it is imperative that performance of HR department is carefully evaluated.  The following key performance indicators will be quite helpful when measuring HR performance with balanced scorecard system which is known as one of the best tools to link operational and strategic management:

1. New hire retention.  When a person comes to working to chemical enterprise he sometimes changes his mind as to desire to make career in chemical industry.  Employees evaluate dangers and analyze their working conditions.  So, a person leaves the company having worked there for to three months.  In such a way, chemical enterprise loses money for recruiting and education of such an employee.  For this reason the indicator new hire retention must be properly and timely measured, possibly once a month/quarter.  HR managers need to track newly hired employees and help them integrate into the company.
2. Employees on long term sickness leave.  If this indicator is constantly increasing it signals about dangerous working conditions, especially if we’re talking about illnesses related to production activity (poisoning, accidents etc).  Besides the company have to pay such employees while their positions should be substituted which also requires time and money.  If this indicator exceeds allowed limits a thorough investigation needs to be carried out to find out reasons for frequent sicknesses.
3. Incident rate.  Unfortunately, accidents happen at production enterprises including chemical plants.  High traumatism decreases employee loyalty and satisfaction and increases medical costs for the enterprise.  Sometimes high incident rate is explained by frequent rules violation of production personnel.

Sure thing, there are more indicators which should be created taking into account peculiarity is of production process, company goals, structure etc.

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What do you need to do when you first notice that your business or company is not doing OK? Sure, you need to evaluate current business performance, find weaknesses and strengths and then create a plan of strategic development, or a crisis management plan if necessary.

But where to start? What takes your company down? What should you evaluate in the first place? Ah, so many questions which need definite answers. There are no excuses in the modern business. If you do not take urgent measures you may wave good-bye to your company.

Well, you will definitely need Balanced Scorecard System which will help you in evaluation of business performance. Moreover, you may use this popular business tool in evaluation of separate departments or aspects of your company. Why not start with a HR department? We do not want to say that HR is the root of all problems. But at the same time many of problems arise from imperfections in the work of HR managers.

Use recruitment metrics evaluate HR performance

Recruitment metrics helps in evaluation of HR performance

You need to remember that your business is people who work there. If these people do not feel comfortable or receive inadequate compensation they will have very little motivation to offer some creative solutions to problems in the company.

HR department is where a business starts since your HR managers find and employ the best professionals. If these people (HR managers) are doing a poor job you will just waste money to pay them and cover recruitment expenses.

With the help of Balanced Scorecard system, you will need very little time to evaluate performance of HR department. Moreover, you will not just get total figures and general graphs, but measure individual indicators, also known as KPIs (key performance indicators).

Recruitment metrics helps find out how much a company spends to hire and educate one employee. You will also get to know how much time your HR department needs to find employee which you need.

Having a look at the average employment time you will understand whether or not people like your company. If no one wants to spend more than a year with your company, then the problem is your and your policy whatever it might be.

Balanced Scorecard is helpful in measuring many more KPIs which directly or indirectly show overall performance of a HR department. Use of this tool is highly recommended to top managers and heads of HR offices and recruitment companies.

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Now let’s talk about some useful HR metrics for large organizations, or criteria for measuring HR performance. Knowing about these metrics would help managers more accurately gauge their HR performance.

Management has grown to become more and more strategic and based on actual results and observations. To this end, the concept of metrics has been developed and applied with great success in many companies and organizations. Metrics, sometimes called measures, refers to particular standards which are used to gauge and communicate progress on different aspects of the business. These standards are quantitative, more often than not, and as such conveyed in numbers and percentages.

The adoption of this concept of metrics has helped to make managing an organization more objective and less vague. These metrics offer a structured and well-defined way of observing the progress and development of the organization’s various aspects. Decisions then become better-informed than before.

Not all metrics are going to be as useful for all organizations, however. Here we make a list of some of the most powerful HR metrics that are relatively easy to understand and implement.

First of all, the very best indicator of successful HR performance is workforce productivity. Productivity would not mean the same thing in different companies (and even in different departments within companies), but in any case there are already established measures of productivity that could be used. Some of the metrics to describe workforce productivity include the percentage improvement in workforce productivity and the currency value of this year’s increase in workforce productivity. Managers would of course seek to maximize these metrics.

Another important aspect of HR to measure is what is known as employee engagement. This refers to the relationship between employees and the management. High employee engagement would mean that employees tend to value their employment, and hence stay with the company as productive members. The metrics in this category take the form of employee survey results that can gauge employee satisfaction. For instance, the percentage of employees who look forward to coming to work is a useful metric, as is the percentage that feels comfortable with current management practices.

Recruitment is, of course, one of the main responsibilities of any HR department. To assess the effectiveness of recruiting, these simple metrics may be used. One is the average performance appraisal score of newly hired employees, which may then be compared to preceding years’ results for the same position. Another is management satisfaction with these new employees, determined through surveys. The turnover rate of these new employees within the first year is also usually a good metric to take note of.

Finally, employee retention is another aspect of the business that HR should be well aware of. Useful metrics in this category include a performance-based turnover metric, especially in important positions. This is a weighted measure of turnover, with better performers being ranked as more important that worse performers. Management satisfaction with HR efforts with regards to employee retention, determined through surveys, may also be a somewhat useful metric to monitor.

These are just some of the simpler and more important metrics to consider when gauging HR performance. More sophisticated HR metrics are available and may also help, but implementing even just these simple ones is sure to make a big difference.

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