hi all, i want some knowledge in measurement of HR effectiveness. if any one can share their view then plz.
From India, Kharagpur
From India, Kharagpur
Measuring the Effectiveness of HR Processes
Effective human resource executives strive to play more strategic roles in their organizations. Their goal is to implement HR strategies and processes that contribute tangibly to the success of their organization—measured in “hard dollars” whenever possible. In the not-too-distant past of human resources management, it was sufficient to “believe in” the effectiveness of HR. Evaluations of how well HR was performing tended to be casual, and statements of payoffs were largely anecdotal.
Today’s CEOs and CFOs often ask tough questions about the payoffs and returns on HR costs. They want facts—mostly financial—that show how HR processes impact key organizational metrics. When evaluating requests to fund new HR initiatives, the bar for scrutiny of ROI estimates is raised even higher. Thus, it is important that HR executives measure the results produced by HR processes and initiatives as objectively and systematically as possible.
Measuring Costs
The starting point in measuring returns from HR investments is to develop an accurate compilation of both the hard and soft costs associated with current or new processes. This includes direct expenditures for outside services, products, systems, or consulting. In addition, the fully loaded cost of HR staff associated with a process or new initiatives must be calculated. Often, it is important to consider other indirect costs, such as short-term reductions in productivity, increased training time, etc. associated with the implementation of new processes. The objective is to identify costs as completely as possible, frequently over a multi-year period. This becomes the part of the “base case” against which potential improvements or savings can be assessed.
Level of Measurement
The impact of HR processes can be measured at one of three levels:
1. Employee level measurement. What is the impact of the process on the employee’s learning curve, job performance, quality, safety record, absence, creativity, retention, etc.?
2. Business unit measurement. This can be a branch, division, department, location, or other operating entity within the organization. To the extent these units have distinct operational or financial measurements, effective HR processes would be expected to make a difference in these outcomes over the base case.
What to Measure?
Nearly all measurements of the effectiveness of HR processes focus at two levels: HR outcomes and business level outcomes.
To measure HR level outcomes, consider what impact the HR process or initiative would have on the performance of people in the organization. This can include a wide variety of measures, including:
• job performance as evaluated by managers
• objective measures of productivity or quality
• safety, accident, lost time or workers’ compensation rates
• customer service evaluations, customer satisfaction ratings, or sales
In addition, HR level outcomes can include indicators of workforce engagement, such as absenteeism and turnover.
At the business level, measures of HR effectiveness should be measured at the level of the specific business unit or the organization on the whole. Financial outcomes such as revenue growth, changes in market share, profitability, and market evaluation might be relevant effectiveness measures for certain HR processes or initiatives, particularly those that are broadly based. HR processes that have been implemented in some, but not all, comparable business units are a fertile ground for obtaining HR process evaluation.
Certain business outcomes may also be relevant measures when aggregated across employee groups.
http://www.aon.com/
Effective human resource executives strive to play more strategic roles in their organizations. Their goal is to implement HR strategies and processes that contribute tangibly to the success of their organization—measured in “hard dollars” whenever possible. In the not-too-distant past of human resources management, it was sufficient to “believe in” the effectiveness of HR. Evaluations of how well HR was performing tended to be casual, and statements of payoffs were largely anecdotal.
Today’s CEOs and CFOs often ask tough questions about the payoffs and returns on HR costs. They want facts—mostly financial—that show how HR processes impact key organizational metrics. When evaluating requests to fund new HR initiatives, the bar for scrutiny of ROI estimates is raised even higher. Thus, it is important that HR executives measure the results produced by HR processes and initiatives as objectively and systematically as possible.
Measuring Costs
The starting point in measuring returns from HR investments is to develop an accurate compilation of both the hard and soft costs associated with current or new processes. This includes direct expenditures for outside services, products, systems, or consulting. In addition, the fully loaded cost of HR staff associated with a process or new initiatives must be calculated. Often, it is important to consider other indirect costs, such as short-term reductions in productivity, increased training time, etc. associated with the implementation of new processes. The objective is to identify costs as completely as possible, frequently over a multi-year period. This becomes the part of the “base case” against which potential improvements or savings can be assessed.
Level of Measurement
The impact of HR processes can be measured at one of three levels:
1. Employee level measurement. What is the impact of the process on the employee’s learning curve, job performance, quality, safety record, absence, creativity, retention, etc.?
2. Business unit measurement. This can be a branch, division, department, location, or other operating entity within the organization. To the extent these units have distinct operational or financial measurements, effective HR processes would be expected to make a difference in these outcomes over the base case.
What to Measure?
Nearly all measurements of the effectiveness of HR processes focus at two levels: HR outcomes and business level outcomes.
To measure HR level outcomes, consider what impact the HR process or initiative would have on the performance of people in the organization. This can include a wide variety of measures, including:
• job performance as evaluated by managers
• objective measures of productivity or quality
• safety, accident, lost time or workers’ compensation rates
• customer service evaluations, customer satisfaction ratings, or sales
In addition, HR level outcomes can include indicators of workforce engagement, such as absenteeism and turnover.
At the business level, measures of HR effectiveness should be measured at the level of the specific business unit or the organization on the whole. Financial outcomes such as revenue growth, changes in market share, profitability, and market evaluation might be relevant effectiveness measures for certain HR processes or initiatives, particularly those that are broadly based. HR processes that have been implemented in some, but not all, comparable business units are a fertile ground for obtaining HR process evaluation.
Certain business outcomes may also be relevant measures when aggregated across employee groups.
http://www.aon.com/
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