The low cost-to-hire approach may be profitable and the high cost-to-hire my not be. Every impact of a hiring decision must be high enough to justify expenses, especially when the company’s success is mainly dependant on its employees’ efficiency. Before we can address and measure the employees’ effectiveness we have to analyse factors that determine the level of the job performance. The most important factors are engagement in decision making processes and leadership, taking responsibility, opportunity to show skills, non-stressful working environment, bonuses, disburdenment, higher wages, opportunity to learn, train and have a progressive career, motivation and so on. Employees must be involved in intrapreneurship and internalize vision, whilst companies must establish realistic and measureable goals, supervise their employees and monitor employees behaviour, competencies, employees mentality and mind-set, which co-create offered products or services. Companies must also conduct various staff surveys.
The employees’ performance is the result of their physical and mental abilities, education, work experience, adaptation, age, motivation and company’s characteristics and know-how. It is one of the most important basic measurements used by management and the results of such measurements are excellent feedback to work force.
The indicators of human resource effectiveness are:
1. GENERAL
- revenue
- costs (ratio to total costs)
- profit
- level of loyalty of staff
- level of involvement of staff (interest in taking part in company activities, such as annual dinners, charity events, team buildings…)
- staff turnover rates
- labour-cost ratio
- manpower plan attainment
- key position plan attainment
- added value per worker
- responsiveness and consistency
- number of participants in learning and development activities, learning outcomes achieved and impact on performance ratings
- number of participants in talent programmes and outcomes achieved
- employee sickness/absence rates and ratios and cost of staff attendance/absence and impact on business results
- cash value of innovations made by employees
- impact on business success (strategic contribution)
- relationships between changes in levels of employee engagement and customer satisfaction levels
- relationships between employee capability levels, employee productivity and business outputs
- proportion of staff retained with core skills critical to business success
2. PRODUCTION-SPECIFIC
- achieving required quotas
- speed of production, jam resolving…
- ability to tackle bottlenecks
- number of interventions on production lines
- volumes
- sales figures
- dealing with equipment failure, process failure, idling, minor stops, reduced speed, defects in process, reduced yield…
- discrepancies between planned machine production time and actual running time (downtime losses), target output and actual output (speed losses) and actual output and good output (defect losses)
- total times, planned production times, loading times, operating times, (actual) running times, earned times, effective times and overall resource effectiveness
- level of preparatory work, planned down times, facilities break downs/non-availability, set-up and adjustment losses, material shortages, absence of man power, performance losses and defect losses
3. SERVICES-SPECIFIC
- positive feedback (benchmarking)
- customer satisfaction
- customer loyalty
- number of given tasks done
- communication success and fast problem-solving
- customer complaints and speed of resolution
- customer perceptions of service quality and staff expertise
It is crucial to ensure that the measurement framework is relevant to and suits a particular organisation and its context, people, nature of business, operating environment, strategy, labour, market and so on. Every organisation must also determine available (financial) resources and accept the level of effort needed for data collection, analysis, reporting and implementing. In addition, it is meaningless to try to cover all of the stated measurements and is, therefore, advisable to focus on a few of them. This is the most critical step in implementing effective human resource politics.