Performance Measurement (KPIs)

Performance Measurement (KPIs)

Quality Control

Key performance indicators are crucial in managing the performance of employees in an organization. The performance indicators are the physical values that help to measure, manage, and compare the overall performance of the organization (Bhatti, Awan & Razaq, 2014). In human resource management, KPIs would only be effective and valid when the organization applies them comprehensively and consistently (Gabčanová, 2012). While one might think that the mere identification, definition, and formalization of KPIs is enough for the organization, this is not enough. Quality KPIs should align directly with the goals, objectives, and strategies of the organization. Therefore, all KPIs should affect a business decision in a particular timescale, depending on the available time.

Effective KPIs should meet specific criteria. As noted by Gabčanová (2012), they should be sparse, implying that the organization should strive to make them as few as possible. They should also be drillable hence allowing users to drill them into detail. Simplicity is the other crucial aspect of KPIs in HR that helps all users to understand them. Quality KPIs should also be actionable so that users can apply them to impact outcomes. Moreover, they should be owned by the organization and referenced to allow users to view context and origins. There is also a need for KPIs to be correlated to the organization’s goals and strategies to achieve expected outcomes. The HR management unit of the organization should also ensure that its KPIs are balanced by comprising both non-financial and financial metrics. The alignment of KPIs in the HR department is also vital as it ensures that they do not undermine each other. Finally, the department should validate the KPIs to allow workers to circumvent them.

Strategic KPIs

Strategic KPIs in HR is essential in aligning employee performance with the goals, objectives, and strategies of the company. The five key strategic areas targeted by these KPIs in the organization are customer satisfaction, higher growth that exceeds the market growth rate, employee satisfaction, good financial results, and strong sustainability development (Syväjärvi, 2016). The strategic map identifies the need for strategic KPIs to connect to HR processes and allow for continuous education (Gabčanová, 2012). The KPIs should continuously support employee education to create a pool of skilled and qualified employees in the organization. They should also support and develop managerial skills while creating and sustaining employees skilled in various fields. In essence, strategic KPIs in HR should align perfectly with the strategic goals of the organization.

Employee training is an effective strategy that allows staff to align their roles to the strategic KPIs and objectives of the organization. As pointed out by Gabčanová (2012), the HR function should align the training process with the needs, strategy, and mission of the organization. Therefore, the training process should target customer orientation, communication, internal relations, and teamwork. Customer orientation skills teach employees to deal with stressful situations, arrogant customers, and the most effective way of handling customers to achieve a win-win situation. Besides training, the HR unit should also implement specific HR activities to support certain partial goals of the organization. For instance, evaluation of the training activity and yearly employee dialogues are crucial in meeting the partial aim of supporting employees’ qualifications. In a nutshell, the identification and formalization of strategic KPIs in HR and the alignment of these indicators with the strategic objectives of the organization is crucial to business success.

References

Bhatti, M. I., Awan, H. M., & Razaq, Z. (2014). The key performance indicators (KPIs) and their impact on overall organizational performance. Quality & Quantity, 48(6), 3127-3143.

Gabčanová, I. (2012). Human resources key performance indicators. Journal of competitiveness, 4(1), 117-128.

Syväjärvi, S. (2016). HR-related KPIs that measure sustainable efficiency and productivity in retail.