Blog: HR Business Partnering KPIs: An unquantifiable role?

Strategic HR

HR Business Partnering KPIs: An unquantifiable role?

For any conventional non-strategic business role, there are a string of quantifiable parameters which are applied to arrive at the total impact created by the role and consequently by the employee performing the role.
HR Business Partnering KPIs: An unquantifiable role?

Time and again, questions have been raised about the effectiveness of a strategic HR Business Partnering role and the measurable parameters by which the impact can be ascertained. 

For any conventional non-strategic business role, there are a string of quantifiable parameters which are applied to arrive at the total impact created by the role and consequently by the employee performing the role. Primarily such metrics would have a focus on multiple parameters: quality, productivity, innovation, efficiency, etc. to name a few. It all simply boils down to two questions: How much has been achieved? How well has it been done? 

The metrics defined for the former could range from sales targets to volumes achieved by the employee in their respective area of expertise (based on the pre-defined performance indicators). The latter on the other hand could range from the rate of errors committed to even customer satisfaction scores. The underlying assumption in all the above KPIs is simple: an individual employee's excellence in achieving the above parameters would be directly proportional to the business excellence (external factors notwithstanding). 

Interestingly, if the same principle were to be applied to the standard HR Business Partnering role, the impact is not easily measurable; it also raises a very pertinent question which has been a constant debate across HR communities: Quantity or Quality? 

For example, if an HR Business Partner were to be measured by the sheer number of employee interactions/engagements conducted by them within a particular time frame, it would create a culture/ compel the HRBP to close the maximum number of discussions rather than focusing on the quality of those individual discussions. A 30 minute HR discussion might suffice for an already engaged top performer but a disengaged employee seeking an outlet for expressing their concerns might require an hour with multiple follow ups. In this example, by creating a volume based KPI for the HR Business Partners, are we compromising on quality?

An argument can be made about including common HR metrics to measure HR Business Partner effectiveness such as turnover rate, hiring cost, average remuneration cost for the organization, etc. or even business metrics related to the bottom line however, many of these parameters might not be directly attributed to an individual HRBP. For example, although attrition rate is a quantifiable HR measure and a very crucial HR measure, it is not completely dependent on HRBP effectiveness. It is possible for an HR BP to have a business span where the attrition rate is controlled and within the targets with minimal efforts while the attrition rate skyrockets in another HRBP’s span despite best efforts due to multiple factors (tenure of the team, niche skill set, multiple competitors in the region, etc.). 

According to a 2017 HBR article by Lindsay McGregor and Neel Doshi, ‘there are two types of performance: Tactical performance and Adaptive performance’. Tactical performance is how effectively an organization sticks to its strategy, it is a measure of focus and consistency. Adaptive performance on the other hand focuses on how effectively an organization diverges from its strategy. It promotes innovation and creativity. If we were to apply the same concept to the HR Business Partnering role, the ‘adaptive performance’ often overshadows the ‘tactical performance’ when the role has evolved into a strategic one and the landscape is continuously changing.

According to a 2016 study by Deloitte titled ‘Enabling Business Results with HR “Measures that Matter”, the HR metrics used to assess effectiveness are completely dependent on the evolution of the HR function and its current maturity. Taking a page from the widely popular ‘HR Model’ by Dave Ulrich, the spectrum of HR roles transcends from day to day/operational roles to future/strategic focused roles, the same is relevant even today for the HR Business partnering role. For organizations where the role is restricted to a higher number of transactions, volume based metrics can still work, however for organizations where the HR Business partnering role has transcended to a truly strategic role as an active advisor to the business, there is a need for qualitative metrics closely linked to the impact created on the business.

In reality, most HR Business Partnering roles are currently in a transition phase from operational to strategic in terms of maturity where it is always a major challenge to completely eliminate transactional activities (as in any other role) which presents a need to establish the perfect balance between quantity and quality. 

 

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Topics: Strategic HR, #GuestArticle

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