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The fact remains that you need to know your current state of performance before you can look

at means to improve it. Measurement provides you with information on the status of any performance. It represents a feedback mechanism, indicating whats working well and what isnt. But the trick lies in figuring out exactly what it is you need to measure. You dont want to be measuring the wrong thing. Taking in too many indicators could result in losing sight of the objective of measurement.

There are many tools available, from the Balanced Scorecard to the Return on Investment (ROI) method. But no single tool fits all organisations and may vary depending on whether youre considering the private or public sector. While similar concepts of measurement may apply, the indicators are sure to vary, sometimes requiring customisation and some degree of alignment to the enterprise-level performance. What HR metrics represents is a comprehensive analysis of key indicators focused on the HR structure, HR processes and activities, financial expenses, and time spent by an organisation. It seeks to provide detailed information on the effectiveness and efficiency of an organisations HR management system in comparison to the overall organisational performance. In essence, HR metrics portrays the HR functions contribution to the organisation. As a method of quantifying the impact of HR, its programmes and activities, it includes both leading (future predictors) and lagging (historical/financial) indicators. Linking to business results So, how do we ensure that various measures employed are linked to business results? Well, the intent of HR metrics is not just to evaluate the HR function effectiveness or efficiency but to link the metrics to the overall business performance. Each of the measurements or indicators, which are components of the HR metrics have significant links to the business operations. Lets take time-to-hire measures, as an example. The shorter the time-to-hire, the faster the new employee will be contributing to the function he has been hired for. This then translates to increased departmental productivity which thereafter leads to overall business performance! Similarly, consider the training investment per employee. Obviously if the organisation is willing to spend more on employee training, then employee productivity will grow as well. But it must be investment in the right sort of training; there are companies which invest in wrong training interventions and expect miracles. I am positive that each of the measures that forms the HR metrics contributes to the overall business performance either directly or in-directly. There are many common measurements including attrition rates, time-to-hire, cost per FTE, average remuneration etc. These measurements can be categorised into the following buckets:

Financials Productivity Compensation and benefits Resourcing Learning and development

Behaviours which includes attrition rate and absenteeism Workforce structure

Examples:

Time to fill Total days elapsed to fill requisitions Number hired Training Investment Factor Total training cost Headcount