Measuring Human Resource Efficiency and Effectiveness

Efficiency is one of the very few sustainable advantages that creates a significant barrier to entry and at the same time ensures profitability for companies.

Efficiency is often defined as the degree of accomplishment of objectives and the extent to which specified problems are resolved. In comparison to efficiency, effectiveness is determined without reference to costs. To rephrase it in practical terms, efficiency means "doing things right," effectiveness means "doing the right things."

In the management domain, the methodology of measuring effectiveness and efficiency of the functional service department activities remains a significant challenge. A suitable measurement outcome will correlate with "getting the right things done right". According to Peter Drucker effectiveness is a key branch of learning that "can be learned and must be earned."

Measuring Dimensions for Human Resources

The dimensions for measuring the effectiveness and efficiency of a human resource department can be sub divided into three broad categories, namely (1) the strategic alignment of the human resource department, (2) the decision enablers and processes that impact on the effectiveness and efficiency of the human resource department and (3) the employee development and empowerment dimensions of effectiveness and efficiency.

Strategic Alignment

In respect of strategic alignment managers and supervisory staff should have accountability for their company, department and section goals and objectives. For strategic alignment to be effective incentives should be decided in a transparent and participative manner that is based on the contribution of each individual, sections and department to achieving these goals and objectives.

The human resource department must implement suitable and sufficient tools to track the progress of all their initiatives in order to get an objective measure of achievement. The transactional human resource functions can and should be automated to maximize the effectiveness and efficiency of the human resource strategic fit.

It is imperative that all key human resource positions are clearly identified and that the talent pipeline is maintained for effective succession planning.

To ensure maximum strategic alignment compliance in respect of regulatory requirements impacting on the department should be adhered to. This includes issues like maintaining comprehensive employee data in accordance with legislative requirements.

Enablers and Processes

The key success factors necessary to achieve the goals and objectives of the company should be well defined. The enablers for effectiveness and efficiency include accurate manpower statistics that are available in a format that reflects the key success factors. This is necessary to ensure that decisions associated with employee growth are transparent and based on real-time information.

To have a solid base of enablers and processes, it would be necessary to have a process where goals and objectives are established and adjusted for all employees in a manner and on a platform where it can be tracked effectively.

One of the primary processes that lead to the setting of goals and objectives is on time completion of individual performance appraisals. This process should include and be linked to the real time tracking of the achievements and milestones that contributes to the organizational goals and objectives.

The transactional human resource processes should be based on the human resource best practices current in the particular industry.

The talent acquisition process should be a candidate friendly process to ensure that it is an enabler rather than an obstacle for effectiveness and efficiency. The organizational structure could be an enabler if it is developed in such a manner that the unexpected departure of key employees has a minimal impact on the business and operation's effectiveness and efficiency.

Employee Development and Empowerment

A third dimension that is often used to measure the effectiveness and efficiency of a human resource department is the level to which the employee development and empowerment enhances effectiveness and efficiency of the department and the company.

Measuring this dimension includes verifying that each employee has a well-defined individual development plan that is based on inputs from business needs, managers and employee inputs and is aligned with the outcome of the performance appraisals. In this regard it is important to be able to track the training undertaken by employees and the effectiveness of the training programs that is embarked upon as a result of the individual development plan.

In order to ensure appropriate alignment, managers should regularly counsel the employees. This should not only be done when sub standard performance is detected, managers should be focused on catching their employees doing the right things right, and then give them recognition for the positive behavior.

Another key success factor to ensure high effectiveness and efficiency is to ensure that the different competencies and skills required for each and every jobs or job family are properly defined. The information contained in these job descriptions should then be used during the talent acquisition and talent development activities. In order to ensure that the available talent is aligned with the required competencies and skills a comprehensive skills inventory of all key positions is a must.

In order to ensure that managers have the correct leadership skills attending customized leadership development programs should be compulsory for managers at all levels in the organization.

A functional one stop help desk providing support to employees in respect of issues like leave, claims, complaints and other necessary employees support services will go a long way to ensure that transactional activities is used to enhance employee development and empowerment. This will contribute to a lower turnover rate of employees and could play a significant part in ensuring that the employee value proposition for the existing workforce remains fairly high.

Conclusion

Companies are turning to a more pragmatic, intuitive and result-driven method of measuring the effectiveness and efficiency of their investment in human resources.

The measurement of the effectiveness and efficiency of the workforce is growing in importance. By expanding the measurement beyond the traditionally monitored input based activities to measurements that is founded on the basis of contributing results achieved has resulted in improved workforce effectiveness and efficiency.

Human resource departments traditionally had problems with reference to their lack of visibility in respect of the bottom line contribution to the organization. There are significant difficulties to measuring their true contribution to the company's bottom line and many human recourse professionals are not well prepared for this.

In comparison to production, where measurements can be done in milliseconds, error rates of one in a thousand or even less can be quantified and financial success can be measured down to a decimal of a cent, areas that deal with notoriously imprecise qualities such as human resource effectiveness can pose measurement problems. Of late the development of scientifically based measurement tools for human resource effectiveness and efficiency have been developed that can be used to measure this dimension more accurately. The tools include scientifically developed surveys that are regularly conducted across the organization and comprehensive human resource audits based on scientifically developed audit protocols.

Irrespective of the methodology utilized, the fact remains that measuring the effectiveness and efficiency of the human resource component of an organization accurately and in terms of the contribution made to the financial and strategic success of the company is no longer optional, it has become an integral part of measuring company successes.

© Carl Marx