Human resource (HR) metrics or KPIs are implemented with the only purpose, namely to provide data related to the efficiency of your HR department that may contribute to enhanced financial outcomes. These metrics are introduced within the Balanced Scorecard System and are considered a significant part of performance measurement and management. They help define how well the personnel department of your company accomplish the major HR goals, which, in their turn, are linked to more serious business objectives. Managers of the company may use measurement results to review their HR strategic plans.
The most effective way to present HR metrics is to use a human resource Balanced Scorecard system mentioned above. The Scorecard was introduced in 1992 by David Norton and Robert Kaplan and is used to specify the company’s strategies with regard to four basic perspectives, including financial (helps identify what HR strategies have to be implemented in order to satisfy the needs of customers), internal (deals with the company’s endeavors to make HR activities and functions consistent enough to satisfy customers’ demands), customer (helps find out what exactly customers expect from the company and how HR metrics should be presented favorably) and organization learning (helps learn how to improve the productivity of HR personnel).
What you should realize is that it is impossible to measure all HR activities at the same time. Otherwise, you will have to implement dozens of HR metrics simultaneously, which will complicate the whole measurement process. Actually, it is not necessary to do that. Instead, you should measure only those metrics that are important (if not crucial) for your business. Thus, you can easily measure the efficiency of the recruitment process, performance management, training and productivity improvement, benefits and compensation etc. Profound analysis of these aspects will help you draw appropriate conclusions in order to identify those factors that have to be enhanced for the benefit of your organization.
Each HR metric has two sides. They provide a strong link between human resource activities and your business goals. It means that if you manage to adopt proper HR strategies, your chances to reach your business objectives will increase as well. Likewise, if you fail to reach your business goals with the lapse of time, there will be a need to review those HR metrics you have implemented and set up new KPIs if possible. In other words, you should understand that the main goal of HR measurement is the productivity of your organization.