In knowledge industries, where employees are the primary assets of a company, the human resources management function is the backbone. Thus it is important to have a quality system that measures the performance of the HR systems and provides early warning signals like employee dissatisfaction, skill depletion and performance.

The main quality vectors that could be used to measure the performance of an HR system can be broadly categorized into 

- Planning 
- Recruitment and retention 
- Workforce Performance 
- Service time and response time for requests

Planning
Planning is done on the basis of feedback obtained from field, marketing and operations. During the planning process it is a practice to determine the number of people that the company plans to recruit (or in some cases lay-off), the skills that the company is looking for and the average experience level of the people that it is hunting. Inputs for such a planning phase also involves in operations supplying information regarding the current skill availability. For instance, a software services company might sense the need for Java trained engineers as opposed to C++ trained. Thus, during the planning, a prudent practice would be to break up the number of people the organization plans to hire from outside and the number of its people for whom it plans skill augmentation workshops or training programs.

Retention
An organization’s ability to deliver products and services of repeatable and constantly improving quality depends upon the quality of its work force. Framing a good retention policy is important for an organization’s performance. Typically retention is done by creating a highly competitive and meritocracy based work culture. Giving out competent salaries and benefits too are important, but in most cases stay second to creating a work environment that the employees like.

Recruitment
Recruitment processes, by which new employees get into the organization, should be treated as seriously as retention of talent is. The leading organizations in the world have a strong recruitment process. Microsoft’s interview questions are known to tease the best brains, while Cisco Systems have a five-gate interview process before the candidate is selected. The result of such a system is obvious - a great workforce augmented by carefully selected best-in-class people.

Workforce Performance
One of the key values that the HR system adds is in assessing the workforce and determining the top and bottom performers. Normally, each company has its own mechanism of performance appraisal review. The reviews are done by the supervisors and facilitated by the HR team. The top performers are rewarded and efforts put in retaining, while the bottom performers are given a chance to improve or fired. It is believed that General Electric has a system identifying its bottom performers and removing them, this is probably one of the ways by which GE has a highly competent workforce.

Service time for requests
The HR organization of a company also gets a lot of requests such as salary certificates, reimbursement requests (sometimes routed to finance directly), and policy clarification requests. It is very important to have a fast response mechanism in place for such queries. Leading companies are known to outsource administrative requests and policy clarification requests to BPO organizations. Normally it is a good idea to have a service level agreement for requests to HR. By outsourcing such activities, a lot of bandwidth can be freed up and used for more pressing activities.