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HR Insights
HR Insights

Blog: Measuring HR Impact

What’s the most important HR driver in your company when it comes to business impact? Perhaps leadership? Performance management? Engagement? And are you effectively measuring these drivers to improve your processes and achieve more clarity on your organisation as a whole? According to our latest report with Bright & Company, an HR strategy consultancy firm, it’s likely you aren’t making the most of metrics.

Just as metrics can help organisations be more informed about their business and markets, they’re also becoming an increasingly useful tool when it comes to predicting business outcomes. 

We created an in-depth report on people metrics, KPIs and how these link to business outcomes, compiled using data from over 200 companies across the world.

The HR drivers that organisations found to be the most impactful on business are, in order of impact, ‘leadership’, ‘performance management’ and ‘engagement’. However, the drivers in which most metrics and KPIs are captured are ‘turnover’, ‘engagement’ and ‘career & mobility’. Despite their perceived importance, ‘leadership’ and ‘performance’ score the lowest on average metrics use. So, are we focusing our energy on collecting data in the wrong areas?

The business impact of HR drivers is often disproportionate to how effectively they're measured.

Perhaps the reason the most important drivers tend not to be measured by organisations is that information collected around them needs to be concerned with how people are feeling rather than what people are doing. It’s the intangibility of measuring ‘feeling’ versus ‘doing’ that can prove a pitfall in measuring. Data has to rely on perception, making the figures less objective than other, more measurable, drivers.

Though more than half of the organisations surveyed selected leadership as an important HR driver for business impact, only 38 percent keep track of their leadership development rate and 36 percent measure the prevalence of leadership development plans. Capturing this information usually comes down to 360 degree feedback, but only top performers are using all measurement methods available.

Being able to gain insights about people and about what and how they are performing could be the key to increasing future business performance. For a more in-depth look at the relationship between metrics and HR efficiency, read the full report