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Joe Vallender

Sift Media

Production Manager

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How to: Measure the value of HR

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In this Expert Guide, Paul Kearns condenses 25 years of experience as a Practitioner and Consultant, draws on the lessons from his eight books, numerous articles and conference presentations to bring HRZone members the essence of HR measurement.

HR measurement is not about measuring HR
It is about measuring performance. The first, most important and over-riding point about HR measurement is that it is not about measuring the HR function or department, per se. HR measurement is about using business measures to ensure that human resource management has a beneficial impact. For example, it is not about how much it costs or how long it takes to recruit someone but how well new recruits perform in the business. HR teams that manage to recruit high performing employees, though, will obviously be judged to be doing a good job themselves.

Why use measures in HR?
HR teams design and develop a whole range of policies from recruitment and training to diversity and work-life balance. It is self-evident that the organisations need ‘people policies’ but measures ensure that those policies help to deliver results. So, why have a policy on diversity? Because the law demands it? Because it seems ethical to pursue such a policy? Or because diversity means harnessing the whole talent pool to have the greatest chance of employing the best talent available?

So what needs to be measured?
Concentrate on measuring outputs not inputs. Start by looking at any single team or department and ask the question ‘how well are they performing?’ If this, in itself, presents you with an immediate hurdle to overcome then ask the team leader to:

  • 1. Produce any business evidence to indicate the performance of the team (e.g. costs, sales, productivity, quality) and indicate where improvement is required and;
  • 2. Ask them to score each individual in the team from one to 10 (three or less being ‘unaccceptable’ and eight or above being ‘superior’)

Notice how the measurement should be done by the line, not by HR. Now the HR team has to decide how to help improve both of these measures – using their own expertise in selection, recruitment, training, development, motivation, rewards, recognition, diversity etc.

What other issues should be considered?
HR teams who think measuring speed or cost of recruitment is a gauge of how well they are doing their job need to realise that cost and speed only become an issue once the quality of and performance of employees is established. Then efficiency also demands attention, but not at the expense of employee capability.

Obviously some improvements at the team/department level can only be achieved by cross-functional or organisation-wide solutions (for example re-designing the organisation chart or business processes). Any HR teams that can help in these areas will be able to make an even greater contribution to the business.

The HR functions that make the tightest connections between their policies and business performance will then be ready for the ultimate measures of HR – Human Capital Measurement and Reporting (see the Newbury Index)

Further information:
* Still looking for further help? Post a question to HRZone’s Any Answers and connect your latest HR measurement and evaluation questions with expert advice.

Paul Kearns is author of “HR Strategy: Business Focused, Individually Centred” and “The Bottom Line HR Function” – Paul Kearns can be contacted directly at [email protected]

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Joe Vallender

Production Manager

Read more from Joe Vallender
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