The Ropes of HR Evaluation

By Sam Miller

 

Success of any company depends on professionalism, loyalty and creativity of personnel. The recent financial meltdown is another proof of an extreme importance of having loyal and professional employees. Even in a recession some companies were able to boost sales and gain new market shares due to innovative approaches to running business and dedication of personnel. If employees have a keen interest in performing better, both strategic and personal goals of personnel are achieved.

This explains why lots of big and midsized companies have HR departments and invest money in HR. On the one hand, it may be quite easy to find qualified personnel. Today, people use the Internet for job search which truly simplifies the process. On the other hand, HR is more than just hiring people. That is why, it is often important to analyze HR efforts and strategies, especially their compliance with company goals, mission and values. So, usage of performance evaluation tools is logical in HR, although HR departments are often auxiliary, i.e. they do not earn money (as known, the majority of strategic management tools and performance evaluation systems are designed for organizations with purely commercial goals).

HR evaluation with the Balanced Scorecard is not easy. As mentioned above, often human resource management is thought to be a mere process of hiring personnel. Yet, when developing HR strategies it is imperative to make sure those strategies comply with strategic goals of the entire company. In other words, everything HR managers perform should have a clear purpose related to company goals.

For sure, choosing the right key performance indicators for HR evaluation is one of the most important stages. Managers should be able to understand what KPIs are really important. The most common HR metrics include employees’ turnover rate, organization climate, sick leave rate, average time to hire one employee, employees’ satisfaction rate etc. The most important task is not only to hire an employee but also to create favorable working conditions to ensure a high retention rate. Sometimes, an organization may hire employees and invest money in their education but people quit within a year or so. As a result, the company loses qualified personnel and money spent for recruiting and training.

Such aspects as employee’s satisfaction with wages and work conditions, as well as organization climate are also important. A typical employee will never show his/her best performance unless he/she is satisfied with working conditions, attitude of top management, and of course, compensation plan. Therefore, HR managers should look for a good balance between goals of personnel and company aspirations. Once the balance is achieved, employees will do their best to show an excellent performance.

So, this is where the Balanced Scorecard can help. By optimizing HR strategies and performance, companies do not only reduce HR related expenses, but also improve performance of employees which can certainly contribute to implementation of strategic goals for any organization.

If you are interested in methods of HRM evaluation, feel free to download our hr kpi package. Visitors may comment on KPIs and even suggest own measures!