What is the most important thing for any company or business? Or what is the supreme value for business? Many business owners mistakenly think that their businesses are offices, equipment, production facilities, means of transportation and of course money. But they tend to forget about one most important thing. Above all, a company is that people who work there. Even having huge Financial Resources and making investments will not help unless the company has a well trained and efficient personnel.
Moreover, employees should also understand strategic mission of the company and be aware of their own contribution to this vision and implementation of strategic goals. For this reason, most major companies have a special human resource department. The problem is that human resource department does not earn money as it does not produce anything or sell products or services. The key goal of HR Dept is hiring and educating employees for the company.
If a human resource department does not work the way it should work the company may suffer losses. Moreover, if HR department fails to find the best professionals in the particular area or fails to keep a such professionals in the company, such a business may suffer losses. That’s why performance of HR department needs to be evaluated. For this a reason use of balanced scorecard system is highly recommended.
Balanced scorecard is business performance evaluation tool that measures key performance indicators in order to approach company to reaching of strategic goals. Balanced scorecard works in four perspectives: financial, customer, internal processes, learning and growth. If we’re talking about the HR department then the last two perspectives would be relevant here.
In other words, HR department needs to make sure that it spends the minimum amount of money to find and hire the best professional and then to training to improve his offer professional level. Thus, HR metrics includes the following KPIs (key performance indicators).
Cost per hire. This is a very important indicator which shows the amount of money HR Dept spends to find and employed a person. Advertising costs, headhunting, agent’s fees are included.
Employment time. This is the average amount of time one employee works for the company. If this indicator is too low that means that people are unwilling to work for a company which signals about certain problems in their organization climate.
Time to fill. This is the amount of time HR Dept needs to fill a vacant position.