5 Ways to Measure ROI in Human Resources

A department of eight HR employees charted out the steps they took in their hiring process. They found that they took 248 steps to hire an employee. Analyzing the steps, they determined that many of them could be discarded or consolidated. Weeks later, they had eliminated half the steps but the process still took the same amount of time. They discovered that they had an empowerment problem. About.com

Are you measuring the right data? Will the data you collect, help you5 Ways to Measure Data for HR Planning to hire better? Increase productivity? Create better management practices? Or, will it cause more problems from drawing the wrong conclusions?

Here’s is an excellent primer on data from a software leadership company that will keep you focused on data that matters and avoid overload:

1. Are they Actionable? There is no purpose in tracking a metric that cannot be acted upon. Always evaluate your metrics by asking this fundamental question: can I make a business decision based on the metric?

2. Are they Understandable?  Your focus should be on tracking metrics that can be understood, not only by you but by your employees as well. Employees need to understand the metrics in order to know how they can influence them and what is expected of them.

3. Do they have a Functional Impact? Every metric should help you evaluate at least one business function in your organization. Be sure your metrics are focused on the sales organization, the operations team, the marketing group, etc. We’d add the HR group.

4. Do they have an Economic Impact? Almost every internal company initiative has one of two objectives: improve operational efficiency or create future revenue. Your metrics should track improvements along one of these paths. If your metrics don’t provide information about operational efficiency or generating economic value, then they should be abandoned.

5. Do you Understand the Time-frame? You should understand if your metrics are leading or lagging indicators of how the business is performing. Does a metric indicate you currently have a problem or does it warn that soon you will have a problem if the current trend continues? Be sure and understand the timeframe factor related to your metrics.

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