Wednesday, March 25, 2015

#1 HR-related metrics in predicting achievement of an organization's objectives?

In many cases, it is actually a weighted index reflecting several underlying metrics.
Talent is always the most invaluable asset in organization today, HR analytics also becomes the emergent trend in managing talent life cycle more effectively. As old saying: we can only manage what we measure. Which HR-related metrics are most effective in predicting achievement of an organization’s objectives? And how to leverage them in strategy execution?

Varying KPIs are thought provoking, but there’s no “dominant" one in predicting achievement: Regardless of the organization's objectives (as varied as they might be), HR related metrics will never solely be the most effective in predicting achievement. This isn't a slight on HR Related metrics, the finance related metrics would also fall short of providing a stable prediction. Rather, HR related metrics should be able to predict the relevant composite parts of an organization's objectives namely. Behavior, performance, direct employee related costs, the sustainability of performance and the capability of the internal workforce, Net Promoter Scores, employee engagement, attrition even alignment (though how you would enter objective and reliable data on alignment is in itself a tricky issue) are all means by which HR attempts to triangulate the answers to what do people contribute? what do they cost? and what are they worth? Can employee well being or stress at work metrics predict or forecast the productivity? To ensure organizational objectives are achieved, the HR strategies should be aligned with the business strategy of the organization.

Like many other puzzles, the answer is “it depends” – in this case, It's on the nature of both the objectives (how performance is defined) and the business model (how human performance relates to corporate performance). Similarly, metrics which highlight the prioritization of work and choices made about the distribution of finite human energy/attention can have strong predictive value – for example, staff utilization on (inorganic) business development vs. client delivery (for professional services), or allocation of time to sales vs. service (for contact centers). There is always a trade-off between alternative solutions; and there is natural tendencies to game the metric or inadvertent influence through the simple act of observation (“what gets measured gets done”, etc.) can therefore be self-constrained to some extent.

In many cases, it is actually a weighted index reflecting several underlying metrics. Employee engagement has long been misunderstood; in many organizations the headline results are a lot more widely communicated than the underlying insight/transparency into what those figures mean. That is a recipe for over-use and under-met expectations in many areas. In the context of “predicting achievement,” the issue with employee engagement is that it can be both a lagging and a leading indicator – depending on how it is defined and measured. In many cases, it is actually a weighted index reflecting several underlying metrics. Some of which have more predictive value than others. The advantage of simplicity (having a single composite indicator for broad people management performance) has to be weighed against the disadvantage, that the same figure cannot simultaneously be a targeted, optimal measurement of both past achievement and future potential. Some factors of employee engagement are important to measure, to recognize and highlight the outcomes of demonstrated people management performance, but have low predictive value.

This balance point is contextual. The traditional 'HR Related' metrics is that they tend to aggregate individual responses, employee engagement which provides only minimal insight into team/collaborative performance that underpins organizational performance. Academic studies in this space tend to indicate peak performance is achieved when an appropriate balance between cohesion and diversity is achieved.
FOCUS - teams and individuals have a clear understanding of business goals and direction, why they are important, and how their work contributes to their achievement.
LEARNING - teams and individuals take opportunities to grow and develop through training and self-development and take responsibility for sharing work based learning.
OPPORTUNITY - people are able to utilize the full expertise and capability of every team member, and have the autonomy to do so.
WORTH - people are widely recognized for their capability and achievement, praised and thanked for their efforts and results, and appropriately rewarded for their contribution.
SUPPORT - every team feels it has the resources, information and management support and commitment it needs to be able to perform at the highest level.

Although there’s no such magic metrics to predict the achievement of organizational object, how to measure depends on what the organization’s objectives. The point is to well define the business goals and objectives,  and the HR strategies, needs and metrics that support it.


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