Understanding KPIs for HR Managers: How Do They Align with Performance Objectives?

Hello, Guys,

I am working on an HRM Diploma research project focusing on Performance Management. I understand that we use job descriptions to establish performance objectives, and we use performance objectives to determine KPIs.

1. However, I am unsure about the specifics. For instance, for the HR Manager, if one of the performance objectives is to reduce turnover in the company, what would be the KPIs for that objective?

2. Are the KPIs the elements we assess in the Performance Appraisal Form, such as Job Knowledge and quality of work?

3. Could KPIs be considered as a breakdown of the objective?

4. In my research, I am required to outline 5 performance objectives for 3 positions.

I would greatly appreciate your insights.

Thank you,
Nsattar

KPIs are derived from KRAs. In this case, Turnover is a KRA, which is why it is identified as a key objective for HR to address. One way to learn how to rationalize KPIs is to ask, "How would I know if I have achieved the objective?"

There are many people out there who have made KPIs look like some demonic measure for superiors to monitor their subordinates' performance, hence ending up being top-driven. I would like to treat KPIs as more of a self-motivation tool whereby job incumbents can collaboratively challenge their capacity and measure their performance output progressively. If it is tied to an appraisal system, then I would say it is 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-KPIs as a representative measure to address the "sources" of turnover such as Employee Satisfaction, Employee Complaints, Employee Engagements, Market Salary Alignment, 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 have more to do with internal retention strategies than external market conditions.

What benefit would an absolute "turnover" figure serve if you retain people who are there for the money, doing "satisficing" work, earning 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?"

Yuva

Yuva,

Thank you very much for this input. I just want you now to verify my understanding below: For example: For the HR Manager, one of the Performance Objectives is to "Increase overall department efficiency by 20% by the end of Q4."

KRA - Recruitment and Selection KPI - Reduce the bad hiring rate. Minimize the number 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 understood it... is this correct?

Thanks again. Nsattar

Dear All,

KRA and KRI may be compared to raw materials/input and end or finished products. In a process, if there is good and well-defined input, then the output will always be fine and good.

Regards,
V.V. Murugan

Nsattar,

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. By the way, can you explain what is meant by bad hires? Are you referring 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 influence 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 the number of training days, or hours, it conveys you are sending people for training for the sake of fulfilling a WANT, not a customized need of the individual. If you have a competency model in place, then you should use it. If there are mandatory core trainings, then it's fine. You also have to rely on a TNA to identify what is lacking in people and the system. I would advise you to "rigorize" the entire learning engagement. Have you heard of IDP? Start rolling it out because it's 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 a higher rate of accuracy.

Hope the above helps.

Thanks Yuva

Yuva,

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
- Advertisement Cost
- Termination Cost
- Expenses (Insurance/Training)
- Bad work performance (if dealing with external customers)
- Replacement Cost

Nsatar