Question

Discuss the main criteria and methods used to evaluate the contribution of the HR function (AC3.1) Your response should consider (briefly) the following: 1. HR metrics used to evaluate HR function contribution 2. SLA’s and KPI’s 3. Staff surveys 4. Benchmarking with other organisations 5. Return on Investment (ROI) 6. How a ‘balanced scorecard and/or ‘HR dashboard’ might be used to present HR metrics

Answer 1

Every organization tends to evaluate the performance of the employees. The HR department prepares the performance appraisal reports in collaboration with the top authorities. The performance appraisal is the report of the employees other than the Human Resource department. It is also essential to measure the contribution of the HR department in the organization. Following are the ways to measure the performance of the Human Resource department, and the employees:

1. HR Metrics: It is the method to measure the effectiveness of the initiatives by the HR department and members. It focuses on areas such as turnover, training, cost of labor, and human capital. There are different measures of HR department: cost per hire, time per hire, employee turnover, and absenteeism. All the factors amount to the measurement of performance by using the HR metrics.

2. SLA's, and KPI's: SLA stands for Service Level Agreement. It is a method that tracks down the response time of an employee to resolve issues, in response to the organizational commitments. It is a contract between the employees and the consumers. It provides a standard of quality. KPI stands for Key Performance Indicators. These are the factors that assess the contribution of the HR in the rest of the organization. For example, The measurements are Revenue per employee and length of service.

3. Staff surveys: The surveys give a better picture of the perception in other employees' minds for the HR department's functioning. The employees can tell the management about the feedback and related suggestions.

4. Benchmarking with other organizations: The company's management and authorities compare the performance of the HR Department with the performance of the competitors. It gives an idea to the management about the position of their human capital in the entire market. It also assesses the performance of Human Resource.

5. Return on Investment: Here, the asset of the firm is human capital. It is the authority of the department of the firm to select and recruit the best employees. The return on investment here means the benefits from the performance of the employees. The quality of employees also determines the contribution of the HR department.

6. Balanced scorecard: Based on all the KPIs and SLAs, the company formulates the employees' scorecard to facilitate any future developments and improvements. The authorities mention the pros and cons of the department. Hence, it will motivate them to function appropriately. HR metrics also play a crucial role. It is merely a report card of the HR employees.