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Ways to Measure Strategic HR Effectiveness

During uncertain times business leaders and HR managers require robust strategies in order to foresee and overcome potential challenges. Traditional HR methods lack the analytical insight required to offer businesses the information they need to recognise trends and take action.

Here’s how strategic HR can give businesses a competitive advantage, drawing upon a wide variety of data allowing leaders to measure its effectiveness in real-time and deliver results.

Strategic HR offers a range of advantages over traditional HR practices, providing a framework linking the strategic aims of an organization with the objectives of the wider workforce.

Advantages of strategic HR include:

  • Alignment with the broader business strategy. Strategic HR places an emphasis on the top priorities of the company, whether this is improving customer service or accelerating productivity through performance programs.
  • Focus on long term goals. A strategic framework which understands long-term business goals is a key element, driven by an understanding of resources and linked to the evolving nature of work expectations.
  • Data-driven results. Data and people analytics and reporting are fully exploited to help drive decision-making processes, illuminating new trends and tracking metrics through clearly defined Key Performance Indicators (KPIs).
  • Proactive approach to HR. In contrast to traditional approaches to HR, strategic HR is proactive rather than reactive. Comprehensive data on performance, engagement and other metrics allows HR leaders to plan ahead, mitigate potential problems and maximize the workforce’s talents.
  • Flexibility and innovation. Strategic HR views employees as valuable assets while understanding the distribution of skills and competencies. This creates a competitive advantage through forward thinking talent management which draws upon the expertise and ingenuity of the workforce.

Establishing goals for effective strategic HR

Strategic HR begins with defining what outcomes are desired and how they can be achieved. A strategic HR plan of action starts with a clear understanding of the business strategy to ensure that the two are aligned. This broad strategy can then be refined to incorporate culture, performance and engagement.

Culture

Linking the company’s culture to the overall business strategy allows individuals and teams to envision the behaviours required to bring the company’s vision to life. Such a strategy will vary from one company to another, whether a company is seeking to enter a new market, downsize or expand specific departments, or any other given long-term goal.

Articulating this mission to the workforce in a framework related to expectations of behaviours and outcomes can be achieved through branding, onboarding and other documentation delivered via a multi-channel communications platform. Putting feedback mechanisms in place allows for the flow of constructive feedback, so HR leaders know that individuals and teams understand what they need to do to commit and contribute.

Performance

Defining performance expectations and aligning these to development objectives ensures that strategic HR initiatives are closely tied to the company’s overall objectives. Continuous performance management through regular feedback, transparent goal setting and tracking, and the distribution of skills in the workforce keeps performance tied to tangible objectives in a way which can be measured and adjusted in real-time.

This approach allows HR leaders and managers to forecast the needs of teams and individuals so that they can best accomplish their objectives.

Engagement

Setting up a strong multi-channel communications system to allow for continuous conversations gives managers and HR leaders the means to boost high levels of engagement. Intranets, messaging boards, and other communications platforms such as Microsoft Teams can be integrated into a performance management tool suite.

Engagement can be measured in a number of ways, and HR leaders will adapt their approach depending on the desired outcomes of the strategic HR program being implemented. Peer-to-peer recognition and other reward and achievement systems are clear indicators of which members of staff are engaging well, while regular feedback and one2one sessions can highlight employees experiencing problems in a way which can be measured with data.

Setting the right Key Performance Indicators (KPIs)

Choosing the right metrics to consider when measuring the effectiveness of a strategic HR policy depends entirely on the overall business strategy of the company. Performance improvement goals can tie to a wide variety of factors, so it is important to narrow these down to those metrics which matter the most and avoid being overwhelmed by mountains of data.

Different measures for establishing KPIs include:

  • Strategic. These are the measurements used to ensure that progress towards the business’s overall strategy goals is being met. These may be tied closely to a balanced scorecard in order to evaluate progress in achieving strategic objectives, and could involve goals relating to internal processes, financial targets or the overall capacity of the organization.
  • Operational. Day-to-day operational goals, for instance improving product or service delivery, require their own set of KPIs. These are linked to ongoing operational functions the business is seeking to improve.
  • Project. KPIs focused directly on projects to measure progress and effectiveness. These should be actionable and easily understood so they can be responded to promptly, for instance by displaying them in real-time via a performance management dashboard.
  • Risk. These measures focus on risk factors which may impact on the success of short- or long-term goals.
  • Employee. These KPIs can address a variety of employee-related factors, from performance levels and skills, to attendance records and other HR measurements.

Measuring strategic HR outcomes—tools and processes

While traditional HR strategies seek to understand what has happened, effective strategic HR is proactive, drawing upon the available data to predict what might happen in the future and deliver actionable guidance. Performance management software provides managers and HR leaders with the necessary tools to gather and analyse a wide range of data in detailed reports.

Culture feedback mechanisms

A successful company culture is intrinsically linked to employee sentiment so that the core values of the business are aligned with the goals of individuals and teams. Employee Net Promoter Score (eNPS) Surveys allow leaders to gain an insight into how the workforce is engaging with the company’s strategic objectives, giving employees freedom to express themselves, and leaders the opportunity to clarify values.

Through a better understanding of employee morale, leaders can refine their HR strategy to address future trends and increase satisfaction.

OKR Tracking

Individual, team and company-wide objectives and key results (OKRs) can be tracked in performance management tools in real-time, giving comprehensive insights into progress towards key goals. Real-time feedback keeps employees engaged, while recognition and awards programs help to identify top performers and encourage the behaviours that deliver results.

Dashboard reports

Performance dashboards allow managers and HR leaders to review performance data instantaneously, tracking the progress and development of individuals and teams, as well as gaining an insight into the overall performance of the company. Customisable reporting delivers the data which matters the most, and can be used to streamline appraisals and allow managers to address areas of concern or praise good performance.

HR dashboards and data analytics

While basic HR tools allow for the collection and databasing of employee information, more comprehensive HR and People Management software offers advanced reporting through the tracking of a number of key workforce metrics. Absence and attendance reports can be used to highlight issues with individuals and teams, while transparency in turnover rates can encourage departments and team leaders to refocus their efforts on issues they need to address.

Employee analytics and reports

The ability to upload skills relating to individuals, teams and specific roles allows HR leaders to implement a proactive strategy which builds upon existing talent stacks within the company. Skills gaps can be readily identified, and the correct resources and training delivered to the individuals and teams who need it the most. Internal training and recruitment opportunities can also be identified and acted upon.

The significance of a data-driven, proactive approach to strategic HR is highlighted in the Deloitte study, ‘Enabling business results with HR ‘measures that matter’, which explores how metrics have become a vital component of HR leaders seeking an edge over their competitors.

“Companies taking advantage of operational measures and tactical and advanced reporting are beginning to realize tangible benefits to both their business and HR customers … Companies that devote the proper time and resources to build workforce analytics capabilities will be better positioned to out-perform their competitors in the coming years.”

Enhancing outcomes with soft skills

If culture provides the backbone of an effective strategic HR campaign, and a data-driven approach to OKRs and KPIs constitutes the brain, then a leadership approach which emphasises soft skills provides the heart. With social isolation and anxiety playing a role in employee well-being due to restrictive lockdowns and increased remote working, HR and management should be focused on delivering a high degree of emotional intelligence to promote compassion and understanding.

In an interview with the Wall Street Journal, Deloitte CFO Pete Shimer outlined why emotional intelligence matters when creating high-talented teams and delivering effective decision-making:

“Emotional intelligence helps me be a bolder decision-maker because it provides a framework for understanding the consequences of decisions and how they might impact people, and for incorporating that understanding into the decision-making itself … being emotionally intelligent is also about how well leaders can fit their own technical skills, experience and business know-how within the paradigm of a team and how well they can utilize and rely upon the skills of others to achieve common goals.”