Measuring HR is important because it is the only way to make HR more effective and efficient. The only way! It does a lot of other things too – such as creating an objective tool to making better investment decisions and it makes HR more credible as a strategic partner for the rest of the business.
The evaluation method must be objective and tangible and preferable use tools such as HR analytics.
KPI’s are important but ultimately I believe that all strategic HR initiatives should be measured using an ROI tool. If you want to work strategic, you need a tool which can tell you if you are creating value. ROI does that. It is not without complications (read about ROI dangers) but I think it is the most appropriate one to use.
There are five common pitfalls when measuring HR using ROI:
- Too complicated. Be careful about making this too complex. Avoid lots of paperwork and too many meetings. ROI is a simple tool. It requires careful thinking about its assumption and what goes into the equation, but it is not complicated.
- No before measurement. Evaluation requires before and after measurements. If you only measure after the activity has taken place you don’t get the full picture and you cannot assess the value creation (here are 3 reasons why not to measure retrospectively).
- Using a standard system. Every organisation is unique – don’t use one-fit-all template. While it is tempting to copy one from another department or company it simply will not work.
- Making measuring HR an end in itself. To measure is not the end – it is a mean. Measuring HR is a mean to create better HR. Sometimes ROI measurements can develop a life on its own and itself become the purpose of the project (read here for why measuring HR is not an end).
- Measure too much. I believe you should only measure a few initiatives. Those which mattes and which have an impact on strategy and overall efficiency. ROI measurements are laborious but potentially very value added. Only measure the few parameters which matters. Apply the 80/20-rule
Measuring HR is an important element of working with HR. Measuring HR is not complicated but also not easy. It requires strategic thinking, good data and a willingness to use the results.