Of course, it can be difficult for companies to tangibly measure the effectiveness of its HR, especially as the department deals with so many areas of the business. Consultancy, payroll, holidays, sick pay, auditing – there is a vast array of everyday aspects of a business which are controlled by HR, making it really tough to monitor. In addition, with the role of HR continually adapting and updating due to new technologies and workplace demands, measuring HR performance is becoming increasingly more taxing. The reality is, when it comes to measuring HR success, companies don’t know what to look for.
While it would perhaps be too time consuming, costly and unrealistic to analyse and evaluate all aspects of HR, here are a few areas to focus on to see how your department is getting on and where it needs to up its game:
Without doubt one of the biggest measures of HR success is employee retention. Retention rates go to show that hiring techniques are working effectively and HR is helping to find the right fit for the organisation. They also go a long way to indicating employee engagement and happiness in the workforce – after all, the happier the employee the less likely they are to jump ship. What’s more? Employee retention is easy to calculate and can be done regularly, even on a quarterly basis, without the need for too much manpower.
As job-hopping becomes more and more common, particularly amongst millennials, the hallmark of a good, strong company might just be how well it holds on to its current talent.
Again, a crucial role of HR is both training and developing staff and providing them with transparent career paths. Therefore, a high number of annual internal promotions would suggest strong employee development within a company and prove that HR’s role in training and mentoring is helping staff climb up the career ladder. Granted, promotion is not solely down to specific staff training programmes but there is no doubt it is an indicator of overall internal company development that is, at least partly, influenced by HR initiatives.
While promotions and employee retention are relatively easy to calculate, employee satisfaction can be a little trickier. One of the most effective ways of measuring the happiness of your workforce is by offering your staff a satisfaction survey. Surveys that can be done in private tend to glean the most reliable results, as employees are not put under immediate, face-to-face pressure to respond.
As HR is responsible for day-to-day operations in an organisation – managing everything from payroll to mediation to disciplinary action - employee satisfaction is a good measure of the effectiveness of a company’s HR department. The age old saying, a happy worker is a productive worker, is certainly true and HR plays a big role in ensuring this is the case. Listen to your employees, ask them what they think, and ensure that line managers understand the need for constant feedback from staff – it’s the only way to really know if a company is on the right track internally.
As I have highlighted in recent blogs, HR is playing a vital role in creating a strong company culture in business. Companies that exude a strong company culture highlighting values of fairness and equality tend to see improvements in talent acquisition and retention. HR is essential when it comes to promoting this company culture and ensuring that all employees are on the same page.
Company culture, however, can be even harder to evaluate than employee satisfaction. Holding values such as openness and transparency high within a business, promoting diversity initiatives, ensuring there are no gender pay gaps - these are all measures companies should be taking to harness a strong company culture. Clearly therefore, increases in employee retention and acquisition are good indicators that a business has a strong company culture that HR is effectively promoting.
While they may be costly or time consuming, measuring and analysing successes and failures in HR, or any department for that matter, are always worthwhile tasks. The trick is to ensure that the business elements which are being measured and built upon will ultimately add value to the overall strategic aims of the business. After all, we can’t improve on what we don’t know.
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