Measuring the HR Function
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Added on 2021-03-24
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By the end of the week you will be able to: Describe a range of inputs to HR evaluation Describe a range of tools for measuring HR Outline a number of risk areas and describe the HR role in relation to these risks. Contribution of the HR Function All HR functions are trying to add value to their organisations and clear systems and procedures for evaluation must be in place to measure efficiency and effectiveness. Efficiency and effectiveness Like any key organisational function, it’s important for HR to demonstrate its ability as
Measuring the HR Function
Added on 2021-03-24
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Unit 5 Week 6This week we will be reviewing different ways the HR function can be evaluated and how this links to the overall performance of the business.By the end of the week you will be able to:Describe a range of inputs to HR evaluationDescribe a range of tools for measuring HROutline a number of risk areas and describe the HR role in relation to these risks.Let’s start by looking at how you currently measure HR.How do you measure HR contribution?Historically, the HR function was mainly an admin-based function but, these days, HR in many organisations has moved away from transactional activities. The opportunity it has to contribute to organisational performance has changed and so has the method of measuring its contribution.Contribution ofthe HR FunctionAll HR functions are trying to add value to their organisations and clear systems and procedures for evaluation must be in place to measure efficiency and effectiveness.Evaluation & Human ResourcesPatton, (1987) describes evaluation as “a process that critically examines a program. It involves collecting and analysing
information about a program’s activities, characteristics, and outcomes. Its purpose is to make judgments about a program, to improve its effectiveness, and/or to inform programming decisions”.This definition provides us with an understanding of the fundamentals of how we measure and evaluate.Many HR measures are activity based rather than performance based. Even when the measures used are performance based, it is difficult to show that the outcome results from something that HR has done, rather than something that has occurred through another function or from changes in the environment or the competitive situation.A challenge is that many outputs and outcomes of HR can be hard to measure as they are intangible and not readily measured. However, it remains of vital importance that we do measure the HR contribution.In the discussion thread below, share some ways in which your own organisation, or an organisation you are familiar with, measures its HR contribution.Measuring HR's contribution1. Efficiency and effectivenessLike any key organisational function, it’s important for HR to demonstrate its ability as a value-adding function. It is therefore critical that the right evaluation methodologies are adopted. Selecting appropriate measures and metrics from which organisational insights can be drawn happens once you have identified the strategic drivers for your organisation. You are then better placed to consider how best to undertake measurement, assessment and evaluation in these key areas tooptimise HR decisions and practices. Of course, it’s worth noting that measurement is also important because it shows you are focusing attention in the correct places. The HR function should do this for its own benefit, not just to justify its ability to add value.
When measuring HR’s contribution, three different types of measures are important and these are illustrated below.Measures of HRefficiency– to what extent is the HR function ‘doing things right’? Efficiency measures are concerned with the extent to which HR processes are undertaken in a way that minimises the use of resources. Many organisations engage in HR benchmarking activities,evaluating HR processes through a comparison with external standards of good practice or excellence. This practice is most valuable when it is part of a continuous process to challenge and improve HR processes.Measures of HReffectiveness– to what extent is the HR function ‘doing the right things’? Effectiveness measures focus on the extent to which organisational objectives are achieved and specific problems are solved through the contribution that the HR function makes to the organisation. They also typically include measures of the strategic skills and core competencies in the workforce.Measures of HRimpact– to what extent have HR activities met defined priority needs for the organisation inits specific and strategic context? Impact measures show the results of bundles of activities on the achievement of strategic priorities, through being closely aligned both ‘vertically’ with strategic priorities and ‘horizontally’ with the work of other parts of the organisational system.
The matrix below further illustrates the differences between efficiency and effectiveness.EffectiveIneffectiveEfficientOrganisation succeedsat minimum costsOrganisation controls costs,but does not succeedInefficientOrganisation succeeds, but at high costsOrganisation failsAction pointWrite down three areas of HR practice where efficiency could be measured. Identify the measures that may be used to effectively evaluate them and consider how this may be used tohelp improve HR effectiveness.On the next page, we’ll look at some examples of measures of efficiency and effectiveness.2. Examples of measures of efficiency and effectivenessSales (revenue)Net profitsCostsReturn on investmentMarket/shareholder value.3. Examples of HR Practice MeasuresThe table below shows examples of the type of information thatthe HR function will obtain to map future success.
Action pointThe recruitment row has been completed but the training and development, performance systems and health and safety measures have not. Spend a few minutes noting down some ideas for those areas then move on to the next page to see some possible answers.HR ActivityPossible MeasureRecruitmentNumber of recruiting advertising programmesAcceptance per offer ratioNumber of applicants contacted compared with those reporting for job interviewsTime to fill a jobCost of filling a jobAverage tenure of employees (divided by low and high performers)Percentage of internally-filled jobsPercentage of jobs filled with candidates onsuccession planPerformance of hired applicants (e.g. performance of candidates from different schools, types of experience, etc.)Percentage of global units which are staffed locallyRatio of back-up talent (number of prepared back-ups in place for top‘X’jobs)Performance of those hired with different techniques.Training andDevelopment
Performance SystemsHealth and Safety4. Possible measures answersHere’s the completed table with some possible measures. Did you mention any of these?HR ActivityPossible MeasureRecruitmentNumber of recruiting advertising programmesAcceptance per offer ratioNumber of applicants contacted compared with those reporting for job interviewsTime to fill a jobCost of filling a jobAverage tenure of employees (divided by low and high performers)Percentage of internally-filled jobsPercentage of jobs filled with candidates onsuccession planPerformance of hired applicants (e.g. performance of candidates from different schools, types of experience, etc.)Percentage of global units which are staffed locallyRatio of back-up talent (number of prepared back-ups in place for top ‘X’ jobs)Performance of those hired with different techniques.
Training andDevelopmentNumber of training days and programmes held per yearCost per trainee hourPercentage of employees involved in trainingNumber of courses taught by subjectPercentage of employees with development plansNumber of courses taught by subjectPercentage of payroll spent on trainingPayroll expense per employeeComparison: those who did and did not attend trainingRatio of advanced to remedial educationTime for new programme designPercentage of new material in programmeseach yearEfficiency of training registrationEvaluation of programmePercentage of employees applying training on the jobPercentage of managers reporting positive impact of training on employee performancePerformance SystemsAcceptance of appraisal processes by employeesEffectiveness of appraisal process for dealing with poor performersPercentage of employees receiving performance appraisal
Percentage of total salary at riskSpeed of salary action processingAverage merit increase granted by classificationRatio of salary to competitor salaryExtent to which measurement systems are seen as crediblePercentage of employees reporting effective performance conversations with managerPercentage of employees that rate the performance management system as fairPercentage of employees that understand the link between performance and how they get paid.Health and SafetyLost work days due to healthCost of injuriesIncidence of injuriesPercentage of smokersPercentage of employees who are involved in wellness programmesTrends in workforce illnessPercentage of employees that are aware ofwellness programmesPercentage of employees comfortable using the organisation’s health and safety programmes.5. Evaluating measurementsBenefits ofevaluationofmeasurements
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