There are many people out there who have made KPI look like some demonic measure for superior to monitor their subordinate performance, hence end-up being top driven. I would like to treat KPIs' as more a self-motivation tool whereby job incumbants can collaboratively challenge their capacity and measure their performance output progressively. If it is tied to an appraisal system, then I would say it as purely incidental by choice of design.
So, what would constitute as KPI for turnover. In absolute terms it depends on what you want to benchmark against. Do you want to use the industrial or national turnover target or simply the comparative basis over the past years. Alternatively, you may want to draw other sub-KPi's as a representative measure to address the "sources" of turnover such as Employee Satisfaction, Employee Complaints, Employee Engagements, Market Salary Allignment, Leadership abuse, etc. When you see it from this angle, you will begin to appreciate why exit interviews and open employee feedback instruments are vital.
Sometimes leaders forget why they need to set "intelligent" KPIs. They keep their sights on the forest and forget the trees (initiatives and actions) which is what brings the real impact on achieving the performance objectives. To me turnover targets has more to do with internal retention strategies than external market conditions.
What benefit would absolute "turnover" figure serve if you retain people who are there for the money, doing "satisficing" work, earn a salary to pay bills, buying company time to weather the current tough economic situation.
Therefore, be wise in selecting and using KPIs. What exactly are you trying to measure and against what. Learn to simply ask, "Would absolute or comparative figures give useful meaning to the performance objective I have identified?"
12th March 2009 From Malaysia, Kuala Lumpur
Thank you very much for this input. I just want u now to verify my below understanding:
For the HR Manager, one of the Performance Objective is to (Increase overall department effieciency by 20% by the end of Q4)
KRA - Recruitment and Selection
KPI - Reduce the bad hiring rate.
Minimize the no. of days to recruit a candidate
KRA - Training and Development
KPI - Provide a minimum of 2 training courses for all employees
KRA - Compensation and Benefits
KPI - Benchmark the salaries of the employees with the market.
This is how i got it... is this right?
12th March 2009 From Egypt, Cairo
Before I go further, have you given thought as to how you would literally calculate the 20% efficiency.
I am going to assume you know the difference between effectiveness and efficiency in setting the objective. Hence, your focus would be to achieve 20 % efficiency in HR operations. The typical measures associated with performance efficiency are quality, time and cost.
Recruitment and Selection.
1. Try to use the positive intent, as opposed to negative. Instead of reduce, say increase % of good hiring. No of days to fill a position or even reducing cost down are all acceptable KPIs.
2. BTW, can you explain what is meant by bad hires?. Are you refering to failure of candidates at interviews or failure to be confirmed?. If it's the latter, would it be a KPI for HR or co-owned by the HOD. Central to this debate is who has control of final infuence in decision making over performance during the interview and at work.
Training & Development
Putting numbers to training is, in my opinion, not an intelligent KPI. This shows you don't do the right (effective) thing. When you use number of training, days, or hours it conveys you are sending people for training for the sake of fulfilling a WANT, not a customised need of the individual. If you have a competency model in place then you should use it. If there are mandatory core trainings, then its fine. You also have to rely on a TNA to identify what is lacking in people and system. I would advice you to "rigourize" the entire learning engagement. Have you heard of IDP? Start rolling it out because its a better and effective KPI.
Compensation and Benefits
I would suggest using the benchmark against market value as a measure of equity accuracy. Would doing it as many times reflect or mean higher rate of accuracy.
Hope the above helps.
14th March 2009 From Malaysia, Kuala Lumpur
Sorry for the late reply, Thanks a lot for your support.
What i meant by the cost of bad hiring is:
- The Recruiter's time / salary
- Advertisment Cost
- Termination Cost
- Expenses (Insurance/ Training)
- Bad work performance (If dealing with external customers)
- Replacement Cost
10th May 2009 From Egypt, Cairo