Dear Workforce What Areas Could Be Easily Measured in a Pay-for-Performance Structure For HR Managers

By Staff Report

Sep. 7, 2011

A Dear How to Pay HR:

Measuring performance is one of the most challenging issues HR has had todeal with during in the past 20 years. It includes not only figuring out how companies and the individuals in them should be evaluated, but how HR as anorganization should be measured. This is a critical issue, because it determineshow companies add value to the bottom line, as well as how it is perceived andrespected by senior management. And it is obvious that there have been no easy answers, since most companies still have incredible difficulties with quantifying HR measures. In some companies, pay-for-performance means verylittle, since measures are not really assessed and everyone receives the same average increase.

Fundamentally, HR needs to quantify performance, which means defining and assessing its impact on the company. HR’s natural role in any organization isto provide those services that effectively meet business needs. HR’s focus is to provide added value by supporting fully competent individuals and teamsoperating at a sustained level of high performance. This in turn creates competitive advantage for the organization. The challenge: figuring out ways toappropriately apply these concepts within our companies, and make themmeaningful through actual, measurable achievements. Performance measurement andprocess improvement must go hand in hand for any organization intent uponcreating competitive advantage.

One of the ways to implement this is to identify the outcomes we seek in anyprocess or project. Some companies use a balanced scorecard approach as a framework for identifying these outcomes. Many times, such as with retention, costs are hidden and need to be identified within other expense items. Simply telling top management that an HR initiative will save X amount of dollars intraining or recruiting costs, without being able to really measure those savings, isn’t good enough. Real dollars need to be brought to the surface, identified, tracked, and reported on. Start with the outcome and work back through the process to identify the measurement tools that will guide your progress. Once you have a vision for human resources, defined outcomes for your initiatives, and a series of specific, quantified internal measurements, you can develop an effective pay-for-performance program.

SOURCE: Bob Fulton, Project Consultant, The Pathfinder’sGroup, Chicago,Illinois, April 19, 2002

LEARN MORE: See Realignment Ties Pay to Performance

The information contained in this article is intended to provide usefulinformation on the topic covered, but should not be construed as legal advice ora legal opinion. Also remember that state laws may differ from the federal law.

Aska Question

DearWorkforce Newsletter

What’s New at

blog workforce

Come see what we’re building in the world of predictive employee scheduling, superior labor insights and next-gen employee apps. We’re on a mission to automate workforce management for hourly employees and bring productivity, optimization and engagement to the frontline.

Book a call
See the software

Related Articles

workforce blog


Minimum Wage by State in 2023 – All You Need to Know

Summary Twenty-three states and D.C. raised their minimum wage rates in 2023, effective January 1.  Thr...

federal law, minimum wage, pay rates, state law, wage law compliance

workforce blog


Exempt vs. non-exempt employees: knowing the difference

Summary Employees are exempt from FLSA requirements when they meet specific exemption criteria based on...

Department of Labor, exempt employees, Misclassification, non-exempt employees

workforce blog


California fast food workers bill: why it’s more than meets the eye and how to prepare

Summary: California signs bill establishing a “fast food council” that has the power to raise the indus...