Considerations for Evaulating the HR Function

The following piece was initially suggested by a fellow HR practitioner who was questioning the approach we take in evaluating the HR function. Some good food for thought.

 

The Wall Street Journal had an interesting article on 7/30/12 where they identified and ranked the Top Chief Financial Officers of major companies. Their ranking was reported to have been “ ...created using a combination of quantitative and qualitative analysis”.

WSJ’s initial candidate pool for finance was drawn from the S & P 500 for companies with a market cap of $5 billion or more and in their jobs for at least three years. These companies were reviewed for financial performance and interviews were conducted with financial recruiters and analysts to determine who should be in the final list.

Could we do something like this for the chief human resource officers (CHRO) of a similar group of companies? The author of the article states, "My bias is to say that we could not", for the following reasons:

The CFO operates in a field that is dominated by performance data, which may not be the sole result of the CFO”s job, but he does compile and report it, and therefore has a sense of ownership/responsibility for it. The CFO is also the focal person for reviewing a company’s financial results.

 

However, those of us in the HR field deal with what is primarily a set of intangibles that may be crucial to achieving and maintaining an effective organization, but are rarely measured or visible to the outside world, unless there is a terrific calamity.

While it is true, turnover can be measured, safety and health data is quantitative, attitude surveys can give us data on employee views, recruitment data and success rates for job placements can be measured but is this data considerd as of core importance to the organization?

Maybe, the author continues, we can take another tack and identify what functions, activities, or behaviors should be measured in order to get a handle on what is important to the business so that the effctiveness or even the contribution of the HR functon can be evaluated. For starters, the author suggest the following ideas:

1.    The level of meaningful participation in corporate planning

2.  The degree to which contributions are made to the development of new business strategies

3.    How effective is HR in responding to the board on a variety of topics related to the function such as:

     a) social and economic trends that will affect the character and qualities of human assets

     b) how well executive management team operates, achieves objectives, and is prepared for and

          resolves problems 

     c) How well does the firm's reward and recognition program foster and support the organization's

         mission, goals and objectives?

4.  Does HR help the CEO and other members of management spot new and developing talent?

5.   Are there systems and processes for capturing hard and soft data regarding the building of talent for

     management continuity and succession?

6.  Are the HR functions required by the corporation are effective and up to date?

7.   Is the HR function open to new ideas and is it creating cost effective solutions to new issues and

     competitive pressures?

8.  Is there some form of HR Philosophy to help guide managers in discharging their responsibilities to the

     employees?

9.  Does HR demonstrate the courage and the wisdom to tacfully respond where management is taking

     unethical positions, violating the rights of employees, or taking positions that are in conflict with the

     social policies or cultures of the countries within which the company operates?

10.  Does HR effectively represent the organization in various public forums where the interests of the

      enterprise directly or indirectly may be affected by official and unofficial outside bodies?

11. Does HR take a long but balanced view of corporate practices, plans and policies that affect company

     costs and are relevant to will being of all parties.

 

If you can’t measure it, you can’t manage it, and this old saw is the issue for HR. Therefore, it would be interesting to sharpen this list and make it as complete as possible. Then each of these criteria could be evaluated as to whether it can reflect some form of quantitative measurement. On the other hand maybe relevant scales could be developed illustrating performance targets. However, the question remains, would the results have as much stature as the evaluation of the CFOs?