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December 17, 2018

How Can a Department Like HR Measure Itself?

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Plenty of people understand how relatively easy it is for a manufacturing operation to perform objective measurements on its output. Each machine is capable of performing X number of actions per hour, and each associate is also capable of producing X number of units in that hour.

You can measure units produced, downtime, and even scrap and waste. And most machines even have meters that will count hours of operation so you know when a part is about to fail before it actually does.

But how do you measure the non-manufacturing parts of the business, the parts that don’t produce actual tangible products that you can count? For example, how would you measure the Legal Department’s performance? Or the Finance Department? Or Human Resources?

There are a number of ways HR can measure themselves. For one thing, they can measure themselves through safety results, since they’re the ones who are ultimately responsible for it. They can measure the numbers of associates they run through safety training, they can give quizzes and measure the scores. And of course, they can count the number of accidents, the number of days without an accident, and the monetary cost of those injuries.

They can measure company retention, such as the average turnover rate of employees in different departments, the length of retention, new employees hired each month, and the costs and length of the hiring process (also called time to hire).

Measuring things like time to hire can help the HR department spot other performance issues outside their department. For example, if a department needs someone with a specific skill right away, they don’t want to wait six months to fill that position. But if there are long delays between the time a job is posted and the time it’s filled, managers need to know if it’s a problem with the HR process so they can take steps to fix the problem, or if the hiring manager is dragging her feet because she can’t decide on a candidate.

For reasons like this, HR should absolutely measure their performance because they will also need to show they’re meeting their requirements. If they’re required to train 100% of the entire workforce on safety procedures every month, and someone gets injured, the HR department should be able to show that they’ve met those goals and that everyone received the appropriate training.

Similarly, if the VP of Operations wants to know why HR isn’t hiring people quickly enough, they need to be able to show that they’ve been referring candidates to the hiring manager within three weeks of the job posting.

Finally, HR normally deals with payroll, so there should be zero defects in payroll. (Never make a mistake with someone’s wages!) In my old organization, everybody was paid hourly, and they clocked in and clocked out. And there were usually issues with someone’s paycheck or another, and HR was always under the gun. We required 100% accuracy every time.

But rather than HR bearing the brunt of the responsibility, we created a system where the associate played a big part in the accuracy of their own payroll. When the associates clocked out at the end of each day, a button appeared on the screen that said, “Do you agree with these hours? Yes or no?” If there was a problem, they pressed No and went to their supervisor to fix it.

If they pressed Yes, that eliminated any argument about whether an associate worked more hours than they were paid for. There was an electronic record of what they said they worked and what they got paid. It kept people from being dishonest and from making mistakes about their schedules. And best of all, it helped the HR department reach 100% accuracy on the paychecks every time.

Even if HR and other back-office jobs don’t seem measurable, everyone has an output and optimal performance they would like to achieve. With a little planning and quantifying of that performance, you can come up with a system to objectively measure whether they’re achieving it.

Comments? You can contact me directly via my AdvisoryCloud profile.

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