Ultimate Performance: Measuring Human Resources at Work

Introduction

As if they didn’t already face incredible challenges, 300 years ago ships were unable to accurately measure their east–west position. Getting lost was common and many ships disappeared, ran aground, or sank because they could not measure longitude. The costs in life, property, and performance were immense until 1760, when a contest underwritten by the British crown drove the development of a solution.

Human resource performance is the measurement challenge of our time and the implications are analogous to that of longitude. While organizations will quickly benefit from measuring HR correctly, it’s important to understand what we’ve been doing wrong and why HR measurement has lagged well behind that of other organization functions.

Senior executives used to consider HR as a “soft” unavoidable cost of doing business that handled executive compensation, processed employment transactions, hosted employee functions, dealt with employee problems, and, they hoped, minimized lawsuits. Three factors changed this perception: the significant impact of high performance HR, the implications of poor performing HR, and soaring HR operating expenses. This top down demand for HR metrics has faced a number of inextricably linked challenges:

• The metrics that we’ve been using are fundamentally flawed, and because they’re flawed they don’t make a positive difference, and because they don’t make a positive difference all HR measurement is undermined. These metrics include the ubiquitous ...