2008 Trend 6: Key Performance Indicators

If (turbulent) developments in the external environment lead to modifications within the company, these must be based on trustworthy facts and analysis. This is to avoid the organization continually reacting to changes at the cost of its own sense of direction. For HR this entails having detailed (especially qualitative) information on the performance and targets of personnel, and also supporting business scenarios through thorough analysis.

In the past few years many HR organizations have taken the time to create backend systems (often to comply with legal obligations) comprised of dashboards and warehouse solutions. As these systems save data in a non-ambiguous manner, they can offer a valuable insight into personnel information. Business’ demand for key performance indicators is being continually better addressed by HR.

ANALYSIS

The next step is processing these numbers in the context of scenarios and analyzing the consequences. Beyond this, the company needs more complex data as to its productivity: utilization, contribution, turnover and profit. HR has to take the next step to meet the company’s demand for adequate analysis of performance and target figures. This analysis is crucial to the success of the company strategy and to the achievement of HR’s role as strategic partner.

An example to illustrate: Last year a client wanted to open a new outlet at a new location on the other side of the country. They hoped to circumvent the problems posed by the tight labor market and wanted to be located close to certain large clients. The agreements with the municipality were at an advanced stage, and the discussions with the project developer had already been initiated. In the meantime, HR took the initiative of starting a labor market analysis, from which could be concluded that, due to an ageing population, this region would not have enough qualified prospective employees (with the required knowledge and certification) within five years. Furthermore, moving employees to the region was not an option. Most probably the new location would only be able to work at half capacity. This conclusion led to the whole project being cancelled, and an expensive mistake was narrowly avoided.

One noteworthy point with performance and target figures is the best-of-breed solutions. In order for management information to be trustworthy, clear definitions are needed. This is increasingly more difficult when aggregating information from various systems, due to the fundamental differences in the way data is processed and stored. If information cannot be shared, it can not be consolidated. HR must keep this aspect in mind when mapping the system architecture to any potential expansions.

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