As we have discussed in the previous part, the strategic objective of any business is to “Have a positive flow of high-performing employee.” To be able to control this positive flow we need to understand:
- Whom we are looking for (how do we know that one is actually performing well)
- What are the factors of their loyalty (how to keep this people, e.g. keep the value of turnover KPI low)
- How to influence these factors (we want not just measurements, but action to manage the situation)
Measuring of an employee performance
Measuring of an employee performance is business-specific. While it is easier with sales people, it is a tough task for these employees who are not on the front line of the business. My general recommendation here would be to avoid “cliché” KPIs.
For example, for software developers such KPIs as the “Number of bugs per 1000 lines of code” is one of the bad KPIs. I was talking about measuring software quality at a Software Quality Days conference. Everybody makes mistakes and this KPI won’t give you any valuable information about employee performance. Why do software developers still use it? Because it is easy to measure!
Find KPIs that are really relevant to your business goals, not just to the work process itself.
Drivers of high and low turnover
Do a quick research for your business niche, but I’m sure that among top 5 drivers will be compensation plan and mysterious employee engagement. Thousands of articles are written about salaries, and I’d like to talk a little bit about employee engagement.
Engagement is a feeling, but still can be quantified and measured. What is more important we could find the drivers of high employee engagement link them to KPIs and action plans and try to work with them.
I’ve discussed this approach in details in “How to measure Employee Engagement – Solving an Impossible Problem.” The article discusses some researches and finally you will find a link to an Employee Engagement Balanced Scorecard project that you can use for your own HR tasks.
Ensure positive flow of high-performance employees
I assume that by now you know how to measure the performance of employee in your business. So now you know what people your business needs. Also, we discussed that one of the drivers of high turnover is employee engagement.
The article mentioned above  about employee engagement suggests some initiatives that can be introduced to improve employee engagement in your company. Add them to your action plan!
The result: HR part of the Balanced Scorecard
Let me summarize what you have by now:
- Strategy objective. You want to ensure a positive flow of high-performance employees in your business.
- Initiatives. You action plan to achieve strategic objective: improve employee engagement focusing on specific drivers of engagement.
- KPI: “High-performing employee turnover” that will tell you that you are on the right track.
These 3 important parts can be placed into the Balanced Scorecard.
The final formula for KPIs should be changed a little:
- High-Performing Employee Turnover, % = ((Number of high-performing employees who left company during the period) / (Average Number of Employees For The Period)) * 100%
I’ve added this KPI into the HR Balanced Scorecard project in BSC Designer Online. You can customize this project according to your needs.
- ^ “How to measure Employee Engagement”, Aleksey Savkin, 2013, http://www.bscdesigner.com/measure-employee-engagement.htm