Human Resources is one of the most important practice of any organization. Assessing and evaluating the practice in a quantitative manner is a competency that every firm must develop.
The key HR activities are:
• Hiring and Staffing
• Succession Planning
• Linking compensation to performance
• Training
• Retention
These activities are essential for the organization to improve its competitiveness, productivity, employee and ROI as well as minimize the risk factor. This involves identification of problems, development of goals and objectives, as well as develop methods to monitor performance.
Metrics are used to measure performance with respect to a goal. The objectives of using metrics are:
• To manage specific HR functions
• To design and maintain HR strategy
• To manage the impact of HR on specific business areas
The four-fold approach to define a meaningful metric is to prepare, design, build and implement.
1. The preparation phase involves:
• Understanding HR strategy
• Understanding HR policies, programs and processes
2. The design component consists of:
• Understanding the inputs and outputs of the HR policies, programs and processes
• Articulation of an HR strategy
• Preparation of an implementation plan
3 & 4. The building and implementation components involve:
• Assessment of software and other support systems
• Implementation and utilization of systems
• Change management
• Follow up on the implementation
This approach helps clarify priorities. It also enables establishing of strategic as well as operational guidelines.
The HR metrics are classified into:
• Demographic profile metrics
• Workforce productivity metrics
• Workforce availability metrics
• Workforce mobility metrics
• Performance and workforce development metrics
• Workforce and compensation benefits metrics
• HR operational profile metrics
• Staffing function metrics
• Staffing training function
Demographic profile metrics involve staffing rate, staffing ratio, span of control, and managerial staffing ratio. Workforce productivity and workforce availability as well as all other HR metrics involve one or more of the following components: financial measures like, human investment ratio, corporate expense ratio, employee ownership rate, workforce costs, and cost of turnover; employee satisfaction measures; customer measures like, customer-facing employee staffing rate, customer-facing time ratio, and revenue generating employee staffing rate; attendance measures like attendance rate, average work week, absence, and unscheduled absence rate; recruitment measures like net hire ratio, employee growth rate and external hire rate.
Working in close alliance with these metrics can save the firm a lot of resources as well as money. The keys to the success of these metrics are to make them specific to the brand, make them easily measurable, make them doable, relevant and in compliance with the firm’s goals and strategies.
