Although considered an intangible and difficult to measure function, human resources management is nevertheless closely linked to company performance. On the statistical side, the implementation of indicators and dashboards has become essential to measure and manage HR performance.
As there is no “standard” performance indicator, the choice of the latter must be consistent with the objectives pursued and allow for a relevant analysis of performance. Knowing that a relevant indicator is above all a quantified and precise data representing a concrete reality in relation to the company’s objectives, how to make the right choice of the latter?
Faced with its new strategic challenges, what approaches should be chosen and promoted? How to effectively manage HR performance?
The challenges of HR performance
a) What is the company’s HR performance?
Human resources management represents all the means implemented to enable the company to manage its resources and staff needs, both in terms of quantity and quality. Today, the close link between human resources management and business performance contributes to the achievement of the company’s objectives. HR performance is the ability to create sustainable added value in order to achieve these objectives.
The HR performance axes vary according to the company, here are some examples.
- Hiring the right people at the right time and in the right position
- Building employee loyalty and attracting new talent
- Manage and develop the skills of employees
- Anticipate the needs of the organization
- Optimal cost management
- Establish internal cooperation
HR performance is more than a simple evaluation, it makes it possible to improve the practices implemented and to evaluate an individual, a team or the company as a whole.
b) HR performance, a strategic issue
In recent years, the HR department has been central to the company’s strategy, performance objectives and transformation. In 2016, the 4th Deloitte and Misceo Barometer on HR Governance confirmed this trend via a large majority of the managers interviewed. Respondents rated the level of HR influence as 7.4/10 compared to 4.3 in 2012.
The Human Resources Department also has to face many challenges on a daily basis.
- Internal customer satisfaction: Employees and General Management
- Mastering HR processes: ensuring the quality of these processes, which are a major challenge in the search for HR performance.
- Develop HR actions: the HRD must ensure that its long-term policies are in place and know what is new to enable the company to evolve.
- Responding to financial challenges: The HRD must also operate within a defined and limited framework and budget.
c) Quantitative and qualitative approaches to HR performance
The quantitative approach to HR performance is a central concern because it allows a quantified evaluation of HRM activities through different actions. (Opinion surveys, HR indices, benchmarks, customer approach, HR accounting, cost and benefit analysis).
In recent years, the qualitative approach has become another challenge for the Human Resources Department. Consequently, HRD must adapt to these new performance criteria by taking greater account of the human aspect. Today the experts are formal. There is a direct link between quality of work life and HR performance, which have become a means of sustaining performance and ensuring employee involvement.
Measuring HR Performance
a) Build the dashboard adapted to your needs
In order to be able to improve HR performance, HRD needs tools and indicators that provide all the information needed to develop the strategy. The use of a dashboard supports HR in the various strategies undertaken, improves communication between company managers and the HR department. It provides real-time data on the various aspects of HR management. It makes it possible to report in figures on the situation of the organisation and to compare the gap between the objectives and the results obtained. The effectiveness of an HR dashboard lies in the choice of indicators used by the company.
b) Choose the right indicators
The choice of indicators is a key step in the development of an effective dashboard. It must prepare itself in advance by considering the relevant indicators for its implementation. The human resources department must face many challenges and questions, which complicates the choice of indicators. Some data such as employee motivation or workplace well-being are difficult to assess. It will therefore be necessary to improve the tool in order to obtain better predictive analyses to develop one’s talents in the company. However, it is still possible to classify some indicators by category in order to obtain a better overview of the different possibilities and to facilitate decisions. Human resources managers can judge the performance of an indicator by referring to the 4 criteria that a good indicator must meet, namely;
- Be comprehensible to all
- Dynamic: must be able to reflect the situation in real time and report on the changes taking place in the company
- Be in line with the strategic axis: the indicator must meet the needs of the organization and make it possible to evaluate an essential point in the HR strategy conducted
- Be objectively measurable: the indicator must be able to provide quantifiable information and data to properly assess the company’s situation
These objectives can be intertwined with HR processes (Recruitment, career management, compensation and departures).
Manage HR performance
a) The 3 axes of HR performance management
Piloting makes it possible to analyse the information in the dashboard in order to ensure better decision-making. Based on the results of the actions carried out, the management will make it possible to build action plans and outline the HR strategy. This is divided into 3 main aspects:
- Operational management
- Benchmarking type control
- Strategic steering
In addition, it reveals the effectiveness and efficiency of the organization, two essential points in the analysis of HR performance.
- A company’s effectiveness lies in its ability to achieve results that are identical to the objectives set.
- Efficiency is defined as the relationship between efforts, resources provided and results achieved.
However, good HR performance management requires the participation of everyone in the company.