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The High Performance Toolkit
Your Guide to Managing a High Performance Organisation
Workplace change: Measuring HR outcomes
‘Our people are our greatest asset’ is a common observation in high performance organisations, and the biggest single business expense in most organisations is the cost of the people doing the jobs – the organisation’s human resources. So, much of the performance of an organisation depends on the motivation and commitment of its employees, as well as their knowledge and skill. Yet relatively few organisations make a systematic attempt to assess the initiatives and programs that are put in place to maximise the effectiveness of human resources or to measure improvements over time.
How to use this fact sheet
This fact sheet aims to help your organisation measure human resource outcomes. It includes ideas on how you might do this, as well as examples from other organisations where such measurement strategies have been successfully implemented. While there are some broad strategies that can be used to measure human resource outcomes, it is important to remember that each organisation is different, so the specific tools and techniques that work may differ. You will need to tailor any ideas to your own unique situation. However one thing is certain; any measurement strategy will need to be based on agreement and consensus between all those involved – managers, employees and any representative body such as a trade union. Successfully measuring human resource outcomes requires a step by step approach and this fact sheet sets out a three-stage process to help you. And although this fact sheet focuses on measuring human resource outcomes, it must be seen in the context of the other strategies canvassed in related fact sheets.
Industrial Relations Victoria Department of Innovation, Industry and Regional Development
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First stage – starting out
High performance organisations ensure they maximise all resources. This includes their key resource – their employees. They put in place programs and initiatives to ensure they get the best possible outcomes from and for their employees and they collect data to ensure they can measure the success of these programs and initiatives.
Ideas worth trying
Each person in an organisation has a role in human resource management, be it observing occupational health and safety requirements, or taking part in training to maintain their skills. Measurement of human resources is basic to understanding the character of the organisation: numbers of employees, their location, skill base, length of time with the organisation and views about the work place are some examples of data that can be used for measurement. There are several ways to measure human resource outcomes. One is to simply measure the effectiveness of the function. Another way is to demonstrate the links between human resource strategies and organisational performance. Here, you’ll need to measure the effectiveness of all the policies or programs that impact on the people in the organisation. Quantitative information – the numerical data collected through payroll and leave systems or through employee surveys – can provide a basis for measurement. Qualitative data – employee views and attitudes ascertained through focus groups or employee surveys – can also assist in ascertaining the effectiveness of human resource initiatives. Both quantitative and qualitative data are essential in assessing outcomes. The workforce profile – the number of people at each level of the organisation – is probably the most readily accessible quantitative data. Using workforce profile figures and comparing them over time will help indicate the effectiveness of the human resource initiatives aimed at increasing retention and cutting down on turnover of skilled staff. If the workforce profile includes data on gender and ethnicity, the effectiveness of diversity and equal employment opportunity initiatives can also be measured. Collect the basic data and then determine exactly what will be measured. That is, what outcomes are to be assessed, what improvements are aimed at and when are these to be achieved.
» Essential
Remember that measurement of human resource outcomes is not an end in itself. Its purpose is to improve work performance and organisational productivity.
» Good practice
Hazelwood Power has instituted a bonus payment system based on a range of individual and collective performance criteria. The same annual bonus is paid to all employees and the quantum is based on indicators drawn from the ‘balanced scorecard’ – the power generating target for the year, the mining target, financial, environmental and safety targets.
Industrial Relations Victoria Department of Innovation, Industry and Regional Development
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Second stage – moving forward
‘If you can’t measure it, you can’t manage it’ is a truism that also applies when assessing human resource outcomes against the agreed goals and objectives within the organisation. A comprehensive human resource strategy will include aims, objectives and indicators for measurement. It will also include links to the organisational business plan.
Ideas worth trying
Consult with the workforce or their representatives to ensure that any measures used to assess human resources can be readily applied, in terms of day-to-day work schedules, and can be readily interpreted in a meaningful way. This will also ensure workforce commitment to the collection of the data and any improvements that arise from the analysis of the data. Consider how effectiveness will be measured when developing the Human Resource Strategy. How and when will success be recognised, what form will it take and will the perception of success be the same for the organisation’s employees and customers. Data collected through the workforce profile can be utilised. You might also use a quantitative measure such as an organisational climate survey to evaluate the effectiveness of human resource initiatives. Asking employees and supervisors about their reactions to particular human resource programs and initiatives via the use of a questionnaire will help you work out what is working and to fine tune for improvement. If an initiative is not shown to be effective and there’s no sign of improvement, try something new. Be aware of any external factors that might impact on measurement. These could include changes to the economic climate and will need to be taken into account in evaluating outcomes and the effectiveness of initiatives. For example, if you are measuring the effectiveness of job retention strategies, changes in the general economy including downturns or upturns in employment will impact on them.
» Essential
When measuring the effectiveness of human resource initiatives ask yourself: • What happened – were there changes in particular areas of the organisation? • What stage is the initiative at? • Did it work or not? • What did I learn for next time?
» Good practice
At Siemens VDO, performance indicators are reported weekly or monthly in management meetings and include measures of absenteeism, turnover, visits to the medical centre and the type and nature of injuries. The figures are benchmarked to the outcomes achieved in previous years.
Industrial Relations Victoria Department of Innovation, Industry and Regional Development
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Third stage – new horizons
In stage three, measurement of outcomes becomes a part of the workplace practice and culture and the human resource strategy is linked to wider organisational goals and targets. Outcomes are regularly reported to all stakeholders – management and the workforce. Measurement tools and associated indicators are reviewed periodically to ensure ongoing relevance. Changes are made to programs and strategies, based on the information obtained though the measurement.
Ideas worth trying
Measure the ongoing effectiveness of the human resources outcomes through agreed plans, goals and indicators/targets as the basis for evaluation and change. Link these to wider organisational goals and targets. Ensure that: • there is something to measure against (qualitative as well as quantitative), that has been agreed by management and the workforce at the outset • the overall human resources strategy is holistic, covering all aspects of the organisation, and • the human resources function is brought into the mainstream of the organisation, by putting in place indicators and requiring HR to set up transparent accountability processes/measures, as in other areas such as operations and marketing. Measurement of HR outcomes is not an end in itself, it leads to reflection and review of the HR objectives and strategies, and fine tuning if necessary.
» Essential
It is not enough to tailor the measurement strategy to the particular organisation, it must also be driven by the needs of the organisation.
» Good practice
A collaborative approach between Publicis Loyalty call centre, employees and the Australian Services Union has ensured business efficiency. Productivity is up and the absenteeism rate has sharply declined – from 5.9% in 1998 to 3.2% in late 2000. Through measurement of HR outcomes they have demonstrated there is a direct correlation between employee working conditions and the standard of customer service they provide.
Industrial Relations Victoria Department of Innovation, Industry and Regional Development
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