KEY PERFORMANCE MEASURES

The key question in measuring HR effectiveness is whether staffing programs are building the organization’s capacity to meet current challenges and embrace future opportunities. The key performance questions for addressing efficiency are whether the program services are plentiful, timely, error-free, and provided at a reasonable cost. Since HR programs provide services, the unit of analysis is the transaction, which includes the service and the payment for the service. (Chapter 6 explores efficiency measures of services as outputs.)

Efficiency Measures

The primary staffing function lies in filling positions. Table 2-1 presents a hypothetical set of important measures for filling positions. The table is divided into four parts that relate to intake or position-fill requests, work production or the number of requests completed, backlog or number of requests not yet completed, and cycle time or the average time to fill a position in business days. Since internal fills are different from new hires, separate figures are presented for each, along with figures for all appointments.

TABLE 2-1 Sample Position Fill Measures

The first section on intake in Table 2-1 shows the annual average of new requests to fill a position for the three-year period of 2004–06, the number of requests for 2007, and the change. The annual average for 2004–06 is a baseline against which the 2007 results can be compared.

The second section, on production, shows the baseline yearly average of the number of positions filled during 2004–06, the figures for 2007, and the level of change. The table also provides production targets or production goals for 2007, along with comparisons of 2007 production levels against the target. As can be seen, the number of new hires for 2007 is well below the target. This suggests that either the target must be adjusted or a new initiative must be implemented to reach future goals.

The third section reports the backlog of fill requests and whether the backlog is increasing or decreasing. The backlog of requests for internal fills has decreased slightly, but increased dramatically for new hires. These figures provide further evidence for the need of a special initiative to address hiring new staff.

The fourth section of Table 2-1 shows how long it takes, on average, to fill a position. Since new hires must be recruited, it is to be expected that these appointments will take longer to fill than internal promotions. Still, due to the increased need to bring in new hires, the average time needs to be reduced. Thus the hiring initiative should concentrate not just on filling more positions but also on reducing the average cycle time.

Table 2-1 is a good example of applying key performance measures, but these measures do not tell the whole story. In fact, they raise more questions. How do we decrease our average position fill cycle time? Can we do it? Are there any negative consequences? The diamonds are in the details.

To present the kind of information shown in Table 2-1, data must be posted, processes tracked, and results calculated. In a real case, one agency processed approximately 2,500 appointments and promotions over a three-year period. The average fill time was 63 business days, including a finance review period, an administrative approval time, a review and approval period by the budget division, and recruitment and selection time. A closer look revealed that 23 titles—less than 10 percent of all titles filled during the three-year period—involved 65 percent of all agency appointments and 70 percent of all recruitment and selection time. It was obvious that reducing fill times for those critical titles would have the greatest impact on reducing average position fill cycle times.

These key performance measures for filling positions—intake, work production, backlog, and service cycle times—can be applied to all staffing activities. Although tracking performance does require data collection and analysis, spreadsheets maintained on desktop computers can often be used for the majority of these activities. A key point to remember is that the request for service begins the cycle time, and approval times affect the total service time.

Effectiveness Measures

Building HR capacity directly affects the capacity of an organization to complete its work and determines HR program effectiveness. As just noted, one indication of a more effective HR program is a decrease in the backlog of requests to fill positions. But how can we tell that organizational capacity is increasing and that HR programs are contributing to the improved state? Here are five ways:

• Measure the efficiency of HR programs

• Monitor organizational effectiveness from reports by the operating divisions on program performance

• Ask the operating divisions directly or with a survey

• Ask the employees directly or with a survey

• Ask your HR staff directly or with a survey.

The use of customer satisfaction surveys has increased dramatically in recent years because they serve as a feedback loop for vital information on the effectiveness of HR program services. But the use of surveys can be applied to all stakeholders—the executive staff, the program managers, the HR program managers, the employees, and the HR staff.

Organizational reports are a useful resource for determining whether the organization and its divisions are effective and where there might be weaknesses. Surveys of operating divisions and bureaus can also provide evidence about their own effectiveness, the effectiveness of HR services, and the relationship between the two. Feedback on HR staffing services might relate to staffing levels, the abilities of newly hired staff, or suggestions for new or revised recruitment or retention activities. Employee opinion surveys can disclose information about job satisfaction that can help improve HR retention programs and services.

Often, a well-constructed survey of HR staff can yield a formal list of improvement opportunities that might go unnoticed when offered in casual conversation. To eliminate mundane suggestions, preface the questions with a request for information that will significantly increase HR capacity, performance, and community, thus aligning improvement suggestions with strategic objectives. While there may be some value to minor improvements, too many suggestions can bog down the process, particularly when many have minimal expected benefits.