Business

Measuring Performance Using Metrics

For an organization to constantly stay ahead of its competition and to stay on top of its game, the HR department should operate efficiently. Only an efficient HR department can push the employees into higher productivity levels. While the HR teams would tell you that they have the best practices, the members of the organization would disagree about the same.

By using key performance indicators, it is possible to analyze the effectiveness of the HR department. Increase the productivity of the organization also results in better business. There is no better way to show that the employees are working hard than by results. Another way to encourage performance is to show productivity metrics.

HR

Points to Remember

Traditionally, organizations were more focused on the process. With the work ethic and organizations becoming more secular, the focus has also shifted towards results. There are three factors to be remembered before measuring performance.

  • The process should be transparent. This way there are no discrepancies in the process. The measurement, metrics and all the processes involved should be recorded and documented properly.
  • The process should be based on the definition and the achievement of a clear set of goals. Usually, the goals are mentioned in the vision and mission and the employees are expected to adhere to them and work towards the achievement of these goals.
  • Each employee is different and works differently. All employees cannot be measured by the same scale. For instance, an employee on the technical team and the support team cannot be measured by the same indices on the same skills.

Performance Metrics that are commonly used in Organizations:

There are several ways by which productivity can be measured; they are also helpful in deciding if the present HR practices are working towards the achievement of this goal.

  1. Compensation: Heritage Foundation has stated that along with productivity, compensation should also rise, which will reap the maximal By tracking productivity metrics and by tracking compensation, the rate at which employees become productive can be plainly visible. In case the employee is not entirely productive, increasing the compensation of the employee will only reduce the turnover of the company. By keeping productivity high, when the compensation increases, the turnover is not affected; in fact, the turnover increases.
  2. Training: It is possible to keep track of how productive an employee is the number of training hours that he goes through. Training and productivity should have a positive correlation. If a positive correlation can be demonstrated, it can make a good case for the current training program and the ones to come.training
  3. Positive Management: Upon interaction with employee relations, the employees who do not perform as well should show an improvement in their productivity. In case it does not provide positive results, make sure you analyze the program. Change the structure of the program and determine the aspects that need to be changed. By positive management, the employee morale can be influenced. When employee morale is improved, productivity also increases.
  4. Software Usability: When you work with an HR Information system that is either old or inefficient, productivity is also affected. This metric is usually used to change from the existing HRIS to a more futuristic system that is effective and productive. Once a new software is installed and brought into use, by comparing the performance and productivity before and after the inclusion of the new system, it is possible to determine the performance metrics. The new system’s effectiveness can be proved and the support that is needed for future upgrades and training can also be provided.
  5. Hiring: There needs to be a change in the methods that organizations use to hire talent. This will increase the productivity. When there are shorter periods by which vacancies should be filled, turnover reduces. There are also higher retention rates. These are key factors which are indicators of productivity. It is also an indication of the efficiency of the Applicant Tracking System (ATS) as well the methodology used in recruitment.
  6. Revenue Per Employee: Return on Investment is the best and the most popular measure of performance. It is also the most convincing argument available to prove how effective the Human Resources program actually is. It maintains a record of all the expenditure done on an employee. The expenditure can be in recruiting and hiring, retention, housing, HR costs, employee relations, and training. It matches the expenditure with the average revenue per employee. It helps in understanding the efficiency of the HR team. As the employee becomes more productive, the revenue per employee also increases, and the gap between the investment done on the employee and the return on investment (ROI) is bridged.
  7. Absence Rates: By tracking an employee’s productivity, the employers can be informed and updated about the performance of employees in the organization. It is also used to evaluate performance. Some other commonly used metrics that can be used to measure the productivity of the employees include absence rate. Absence rate is defined as the number of employees who are absent from the organization and work during a given period. A growing absence rate is an unhealthy sign for productivity and for the business.
  8. Employee Productivity Index: The employee productivity index is another key factor that can help measure productivity. The definition of productivity varies from organization to organization. Hence employee productivity index is also variable and changes with the organization.

Metrics are merely possibilities and opportunities by which performance can be measured. Efficiency can be measured and effectiveness can be tracked with the help of the metrics. These practices are most useful and informative in demonstrating how efficient the HR practices that are in implementation actually are. The results can also be analyzed. An efficient HRIS system is used to monitor progress as well as reduces the inefficiencies in the methodology in existence. Performance, in itself, is subjective. It varies with perception and is based on the beholder, usually, the business owner and the investors.

About the author

Carl Petoskey

Carl Petoskey is an accomplished writer with years of experience covering the tech industry. When he’s not writing you can find him covering companies like Comcast Business Class.

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