HR policies vs. profits: Determining the impact of HR policies on business results
While there is no single, prescribed answer to HR analytics; let’s learn the tools to apply them to our specific circumstances, and deliver the unique solution that will be best for our organisations.
HR metrics measure the effectiveness of the HR function in delivering value to enable the workforce. As such, they are fully owned by the HR department. The main concern here is to ascertain which HR activities would best support the strategies articulated in the people/talent strategy. In other words, if we are to build vs. buy talent, for example, which are the right HR programmes to do so and are they working? Are we recruiting from the right sources? Are we training people enough? And so on.
The HR metrics drive then the talent metrics. Talent metrics measure the state of workforce effectiveness in bringing about desired business outcomes. Usually, these are co-owned between HR and the business line. These are more outcome focused inasmuch as these should describe the workforce that results from a successfully executed people strategy. Are 80% of our job openings (above entry-level) filled with people promoted from within? Is our sales force at least as productive as that of our competitors? Along these lines.
Talent metrics, in turn, drive business outcomes. Business outcomes are measures of business success, fully owned by the business units. Metrics at this level are concerned with answering the question: “How do we know if we have been successful in executing the people strategy?” For instance: Is the productivity of our sales force increasing? Would it be more profitable to add more part-time employees? Metrics at this level link HR policies with business outcomes.
Of course, business results will inform talent strategies, and these in turn will inform HR policies, thus closing the feedback loop. This feedback mechanism is extensive to two critical metrics in HR: Manpower costs (particularly between people strategy and business outcomes) and employee engagement results (specially between talent metrics and HR metrics).
This article was first published in Human Resources and is reproduced with permission.
Original can be found at https://www.humanresourcesonline.net/hr-policies-vs-profits-determining-the-impact-of-hr-policies-on-business-results/