| HR is a crucial supporting function whether you have a | | | | denominated revenues and expenses can provide a |
| team of 2 or 2,000 and business managers need to | | | | good set of indicators to assess and control the |
| get the very best out of their people if they are to get | | | | contribution of the HR department to the organization. |
| the very best business performance. KPI's typically | | | | Does the implementation of a staff benefit scheme |
| lend themselves to monetary or physical metrics such | | | | affect employee turnover ? If employee turnover |
| as dollar value of sales or number of widgets | | | | remains unaffected upon introducing staff medical |
| produced by a team or region. KPI's or balanced | | | | benefits, then is the continuing expense really |
| scorecard metrics (the two are essentially one and the | | | | worthwhile from a commercial point of view ? |
| same) provide management and decision makers with | | | | This leads on to an interesting point with KPI's, particular |
| an overview of business performance and software | | | | those used to measure the impact of the HR function |
| based solutions give a dashboard type presentation | | | | on an organizations human resource. It is simply this, |
| that allows users to "drill down" to view performance | | | | that KPI's will usually prompt more questions than they |
| at the micro level. | | | | will in fact answer. KPI's if properly designed and |
| Applying KPI's to non-monetary functions such as HR, | | | | implemented will advise management and decision |
| that do not produce a tangible dollar benefit or a | | | | makers on what and where something has happened |
| physical item in production still lend themselves to KPI | | | | but it is unlikely to say why it has occurred, particularly |
| analysis. We just have to look at what these business | | | | if you are using raw metrics. Management will almost |
| units (taking the HR department as the example) are | | | | always be required to ask more questions before they |
| actually producing in terms of training days delivered, | | | | are able to arrive at a decision on action to take if any. |
| staff turnover ratios, sick days taken. If you view the | | | | KPI's are not only about measuring metrics, they are |
| HR function as producing an indirect benefit to the | | | | also about exercising control over activity and |
| business operation (which you will do if you are | | | | expense. The knowledge that HR are collating data on |
| allocating the cost of the HR Department out to | | | | staff sickness for instance will in itself help reduce |
| operating divisions) then it will follow that simply looking | | | | unauthorized absences simply by virtue of the fact |
| at training days delivered is not a useful measure of | | | | staff know they are being monitored. Likewise |
| contribution to business performance. Combining | | | | productivity is likely to increase or be maintained for |
| training days delivered to the sales force coupled with | | | | the very same reason, however skilled use of KPI's |
| increases in sales revenue would be a better metric | | | | can also bring about increased business productivity |
| that seeks to represent the correlation between | | | | and profitability but the key issue is knowing what the |
| training and improved revenue. | | | | metric you choose actually is telling you. |
| Similarly combining HR metrics with other tangible dollar | | | | |