Measuring HR Performance

HR performance is a vital aspect of any organization that deserves attention. Its various processes are undeniably linked to the performance of the organization as a whole.

HR performance refers to the effectiveness of people management, or human resource management, and is usually seen as one of the most difficult aspects of organizational performance to measure. In contrast to the financial aspect, for instance, which more or less has a strict, objective set of metrics (or measurement parameters) and performance criteria, people management is less cut and dried.

Intuitively at least, the link between HR practices and organizational performance is quite undeniable. Managing people well will inevitably lead to improved performance, in general. To be systematic about investigating and characterizing this link, over the years, many people have considered various types of metrics. Here, we present an overview of the different metrics and parameters commonly used to describe and evaluate different aspects of HR effectiveness.

The human resource process typically begins with selection and recruitment. Whenever there are vacancies to fill, it is the HR department’s job to find applicants and select from those most qualified to fill the available jobs. The relevant measurement dimension would then be the sophistication of these processes. That is, it would be useful to look at whether or not the application and selection process makes use of psychometric tests, whether or not there are clear criteria for selection, and whether or not interviews are well-structured.

The next processes are induction and training. Induction refers to the official entry of new employees into the organization. Once again, metrics that measure the sophistication of these processes are the most relevant. For instance, the duration of these programs in terms of time spent per employee may be a relevant metric. The effectiveness of induction and training, on the other hand, may be measured using targeted surveys of participants.

The final and perhaps most important HR process would be performance management, or how HR monitors and supervises the daily workings of the organization, with respect to its employees’ performance. It is important for these performance management processes to be coherent; that is, they should be orderly, logical, and they should fit well together. It is also important for these processes to have as large a coverage as possible; that is, as many aspects of organizational performance as possible should be managed. Relevant metrics would then be manpower and man-hours dedicated to performance management, percent increase or increase over time of employee efficiency due to management, and so on.

And of course, it is also important for performance managers to have a solid set of metrics to measure employee and organizational performance. These metrics would differ from organization to organization, depending on their business processes and the services they offer or perform.

So, in a nutshell, HR performance may be measured by looking at its processes, from selection to induction and training to day-to-day performance management. These processes may be evaluated using relevant metrics, some of which have been enumerated above. The measurement and evaluation of the HR aspect is a useful complement to the measurement and evaluation of the financial aspect of any organization, and thus should be given the same amount of consideration.

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