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Three key HR drivers for business success

Alessio Tanganelli

Leadership, performance management and engagement are seen as having the most impact on business success. Yet HR metrics mostly capture turnover, engagement and career & mobility. Leadership and performance score lowest on average metrics use. From Alessio Tanganelli, Regional Director UK of the Top Employers Institute.

Deep-dive research into 200 global companies has shown that leadership, performance management and engagement are the three HR drivers considered to have the most impact on business results, yet engagement is the only one that is measured widely. Least likely to impact business results are considered to be employee turnover and career & mobility yet are most commonly measured.

Companies were asked by the Top Employers Institute and Bright & Company, in joint research entitled Measuring HR Impact, what activities matter most to achieve business success. Almost seven out of 10 identified leadership in their top five most impactful HR drivers, with 35 percent ranking it first, the highest single scoring driver. Performance management and engagement were selected by approximately 60 percent each of the respondents as a top five driver, with 12 percent ranking them as having the highest potential impact upon business performance.

Yet, leadership is bottom of the scale when it comes to measurement, with just 32 percent doing so, below wellbeing (34 percent) and succession (38 percent). Forty one per cent measure performance. Staff turnover is measured by 65 percent of respondents, engagement by 54 percent and career & mobility by 53 percent.

A common characteristic of the leading drivers is their intangibility. Measurement is based substantially upon perception and subjective criteria rather than the more objective and calibrated figures applicable to other HR drivers. Although their influence is clear, can the magnitude of influence be determined?”

The Measuring HR Impact Study shows that the majority of organisations hardly use metrics or effect measures for the three HR domains. It provides advice on boosting measurement in the three key HR drivers:

Leadership: Several tools exist to gain insight in the way leadership is functioning, but not many organisations actively measure the way their leaders affect business results. Only top performers use all measurement methods available, while overall tending to favour subjective evaluations and rarely using return on investment to evaluate effectiveness.

Performance Management: Many organisations are reviewing their performance management processes, suggesting HR is looking for a new way to monitor and maximise performance of employees. In most organisations, data available has issues with reliability and quality.

Engagement: The value of annual measurement of employee satisfaction is increasingly under discussion. Critics may say that if employee engagement surveys aren’t predicting important outcomes then organisations may be wasting valuable time and money – and not impacting business outcomes. A way forward is to engage employees with short pulse surveys focused on the way they contribute to business outcomes.

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