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Article No.: 12-6, June1, 2012

Article Title: Demonstrating How Human Resources is Optimizing Business Capabilities

Author: Linda Gravett, Ph.D., SPHR, CEQC

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I haven’t heard any arguments lately about the importance of measuring the performance of the business.  In order to position ourselves as strategic business partners, then, Human Resource practitioners need to measure how our actions optimize business capabilities.  Much of what Human Resources does directly or indirectly affects the organization’s success, so why not demonstrate this on a frequent basis.
 
Time is precious, though, and it’s important to take the time to measure the right activities and results that demonstrate effectiveness rather than simply efficiency.  I believe there are a few factors that are important:

  • First, commit to being a part of the business, rather than just visiting.  If you do, your tendency will be to work on the business rather than work in the business.
  • Measure only the results that you plan to take action on.  If you don’t plan to do something about the results you measure, why take the time and set others’ expectations?
  • Choose HR metrics that help your organization define and evaluate its success in relation to leveraging its human resources to meet business imperatives.
  • Explore and measure the drivers of results over which HR has influence.  Examples are motivated employees; staff that possess the skills and competencies required to meet business objectives; and excellent recruitment and selection methods.  You’re probably measuring the results of some HR activities (such as employee retention) already; I’m suggesting you dig a little deeper.
  • Don’t worry if your measures are in conflict with one another; worry about balance across the measures.  Cycle time may be in conflict with quality and employee satisfaction may be in conflict with productivity.  Think about how HR can influence how the organization to find an appropriate balance.
  • Speaking of influence, consider what HR can truly influence – and conversely has absolutely no control over.  If you want to measure HR’s impact, measure what HR can either control or influence, such as policy and process changes.
  • Performance measures will change over time, as your company’s needs change.  If you have measures that you established five years ago, I encourage you to revisit them and determine if they’re still appropriate for today.

In summary, metrics should help organizations measure and record results of human resource behaviors and establish a framework for motivated, results-driven employees.  Consider whether the measures you’re using have these three characteristics:  strategic importance; financial significance; and widespread impact.
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