Employee Returns: Linking HR Performance Indicators to Business Strategy

Citation

(2000), "Employee Returns: Linking HR Performance Indicators to Business Strategy", Journal of European Industrial Training, Vol. 24 No. 6. https://doi.org/10.1108/jeit.2000.00324fae.001

Employee Returns: Linking HR Performance Indicators to Business Strategy

Employee Returns: Linking HR Performance Indicators to Business Strategy

Alison Carter and Dilys RobinsonInstitute for Employment Studies (IES), Report 3652000ISBN 1 85184 295 0£19.95(The report may be purchased from Grantham Book Services Ltd, Isaac Newton Way, Alma Park Industrial Estate, Grantham NG31 9SD. Tel: 01476 541080; Fax: 01476 541061.)Keywords Performance, Effectiveness, Employees

Why are HR professionals so shy of selling indicators that relate to people and their performance, and of defending their use to senior managers? People indicators have as much validity as their financial counterparts, and can be used by HR professionals as their contribution towards the measurement of how well the organisation is doing in relation to its strategic goals.

This IES guide for HR practitioners provides ideas and tools to help them get to grips with measuring the effectiveness of management and employee performance across their organisations.

Rather than attempting to measure everything they do, HR functions should adopt more considered and focused approaches to measurement. Measuring everything in sight can result in leaving no strategically relevant measurements visible.

There is no single prescription for all organisations. Different aspects of people management and performance are key to different businesses. For example, a high tech (or any) company may aim to succeed in its niche market by continuously bringing better products, product applications and after-sales services to its customers (i.e. through innovation). It therefore needs its managers to create an environment that is conducive to team-based achievements and encourages creativity. It will need to pay above-market rates to attract good people. Two priority HR measures will be to test how supported individuals feel in taking risks, and to assess the equity of the organisation's internal reward systems.

However, an organisation whose existence depends on cost reduction, efficiency and fast results regularly needs to analyse and tie down to external pay rates, and orient appraisal towards short-term results. Its retention focus will be on the most efficient employees, not the risk-taking innovators.

Attitude surveys can indicate the value that HR policies can add to employee behaviours of most benefit to the organisation. Hard statistics, together with soft measures such as employee commitment and customer satisfaction, can be combined with financial indicators in a "balanced scorecard", which can be used to measure an organisation's true performance.

HR professionals need to understand their own "value chain" of specific processes that contribute to their organisation's success. They can then define which key HR objectives provide indicators with strategic value. Presenting these confidently in the knowledge that they understand how, where and why they fit into business strategy will go a long way to raising the profile of HR.

This guide outlines business strategy issues in a straightforward way. It includes practical tools for presenting, calculating and analysing indicators; briefings on defining hard indicators and deriving indicators of satisfaction and commitment.