How do we know we are doing a good job as an organization if we aren’t measuring what we are doing?
Other departments are great at measurement. For example, the finance and accounting departments track expenses and revenues and compare how well the organization is doing through a number of measures: accounts payable, accounts receivable, assets, balance sheet, capital, cash flow, cost of goods sold, expenses, gross profit, gross revenue, etc.
The marketing department focuses on measuring their activities to ensure they are bringing in more revenue than they are spending and might measure performance through: customer generation, customer conversion rates, customer loyalty, market share, sales, etc.
How is your organization measuring the impact your human resource activities are having on business effectiveness? Here are a few ideas to get you thinking:
Employee Turnover – Find out your cost per hire, which includes both separation costs (time for exit interview, administrative processing, payment of benefits and/or severance to exiting employee, diminished productivity and morale of remaining employees, business down time, etc.) and replacement costs (job postings, recruitment activities, administrative processing, interviews, employee selection, orientation and training).
Productivity Ratio – Your organization can measure employee productivity in comparison to your human resource expenses. This will require you to define what your productivity outputs are.
Training and Development – What does your organization hope to get out of your training activities and how are you measuring it? Many organizations use a simple training evaluation form after the training occurs, but is your organization measuring whether employees actually learned what they were supposed to? Or if the employees are changing their on-the-job behaviour? What about measuring the effects this new behaviour is having on the organization?
Employee Engagement – You will get more out of an engaged employee than a non-engaged employee. Employee satisfaction surveys can provide your organization with a lot of useful information.
The human resource costs to an organization are generally one of the largest expenses an organization has, but many organizations don’t bother to utilize their people to their fullest capacity. Yes, people are more unpredictable than money and therefore can be more difficult to measure, but there are metrics available for your organization to utilize. Measuring these impacts will have direct benefits to your organization’s effectiveness and yes – even your profits.
