While HR professionals have a big role in shaping an organization they are faced with a challenge of establishing tangible results.
Contemporary HR does a good job in quantifying the sub-process within HR; hiring, performance management and R&R with respect to numbers. These numbers may indicate improvement in hiring, conversions or penetration of an R&R process, and make for a good MIS, HR but does not establish a direct linkage to either productivity or profitability.
Here’s an example; A corporate HR manager needs to fill up vacancies for regional sales office. He may overlook the larger business reasons leading to low employee engagement and subsequent attrition. In the absence of that connect, he is unable to recommend or drive initiatives for making the required business impact. He is unable to access an extremely competitive market which makes sales extremely difficult to execute.
This leads to moderate targets looking extremely difficult to achieve. In the absence of such understanding HR is unable to influence the business to introspect, revamp products, improve the compensation or provide intensive product training for the sales force. Only non-achievement of the target is highlighted.
So main focus of HR Manager becomes employees leaving & backfilling those vacancies.
While the hard sales number can be measured but the psychological aspect of not getting results, inability to sell in an extremely competitive market has no index to capture.
HR faces the continuous challenge quantifying such dimensions and presenting touch points for improvements.
Yet, HR has found its own ways to measure the psychological, social dimension of its work force through attrition figures or annualized engagement survey reports. While attritions numbers can also be attributed to other factor like attractive salary than just low morale. Engagement survey reports are annual to bi-annual events, which does not bring to the surface the ongoing dynamic data.
Another example can be a leadership intervention spread over a period of three months with extremely good feedback on the same. While feedbacks can be taken about individual leaders and their overall behavior, but whether such behavior has led to business improvements hardly gets measured. So you may spend large sums in training, but the transfer of learning does not get measured in business performance.
Similarly an R&R program shows the number of people being rewarded or recognized, yet it is unable to establish whether reward or recognition has led to any improvement in business performance. While there can be numerous debates to establish the correlation between how improvement in individual performance leads to improved business results it is never easy to establish a direct co-relation between the two due to independent and intervening variables in the overall process.
In my view HR professionals can change the game by not measuring the process but measuring the end result through a defined HR process.
HR takes up business KRAs as against HR functional KRAs.
• What unique combination of policies and practices would best build the necessary human capital which in turn will give sustainable business results?
• What factors link policies and practices to human capital enhancement?
• What attributes distinguish effective from ineffective business policies and practices?
A good HR leader will identify the business model components and areas to drive value and then develop a HR strategy to execute the business model. Here’s an example to highlight the same.
A typical business KRA would mean:
1. Improve productivity of people from 90% to 94% through R&R process/PMS process
2. Save cost by $$ amount through HR process improvements, HR vendor management etc.
3. Contribute to business profit by 5% more by ensuring there is continuity of work at all times.
While the conventional HR KRAs are like:
1. Reduce attrition by 3% and keep it below the industry standard by 2%
2. Increase employee engagement index by 5%
3. Reduce cycle time to recruitment by 10%.
The above are smart KRAs yet they do not establish a direct link to the business. If a HR professional starts thinking business all the time and uses the HR processes merely as tools to improve business performances, he or she will be able to show tangible business results.
He can be a game changer and bring a paradigm shift to his work. The challenge for HR professional is to change this paradigm, create business level measurements and drive HR processes including employee relations as a central process, leading to direct business results.
Written bySuvendu Ghoshal
Principal Consultant & Head of White Windows Consulting. He has been associated with the Corporate World for over 23 years now. In the past he has worked with Hewitt Associates as VP-HR and Senior HR leader with Xansa (Currently Steria Sopra India Ltd.), Airtel & Samtel. He is also a visiting Professor at IMI Delhi, IMT Ghaziabad. Has co- authored a Book on HR practices `Perform or Perish’. His Key interest areas are: Organisation Development, Business Transformation, Leadership Development, Emotional Intelligence, Talent Assessment, Achievement orientation, Change Management, Team Building, Organisation building