Evaluating a Successful Human Resource Management Plan

Evaluation of HRM refers to appraising the degree of success of HRM being performed in an
organisation. For a good evaluation, it is important to assess how well and how far employees
of the
organisation have been utilised in achieving the organisational goals. In order to achieve the
organisational goals, it is possible to
theorise that objectives, strategic goals and generic purpose of HRM need to be achieved
respectively through successful performance of specific HRM functions. Ideally each of the
HRM functions needs to be performed successfully and then objectives of HRM will be
achieved. Achievement of the objectives of HRM will lead to achievement of the strategic
goals of HRM that will lead to achievement of the generic purpose of HRM. If the generic
purpose of HRM, i.e. to generate and retain an appropriate and contented human force, which
gives the maximum individual contribution to organisational success and progress of
success is accomplished, the organisational goals can be achieved.

Dimensions of Evaluation
There are three aspects or dimensions of evaluation of HRM. First dimension focuses on
evaluating the quality and the quantity of each HRM function. Ideally each HRM function is
to be performed systematically and formally. Under this dimension, central
question is whether each function has been performed in the appropriate way. Second
dimension is attainment of the HRM objectives and strategic goals. This dimension focuses
on evaluating the degree to which the HRM objectives and strategic goals have been
achieved. Third dimension is evaluation of the department for human resources in the
organisation. It focuses on how well and how far the HR Department of the organisation has
performed. For evaluation, there must be a period that may be one year or six months or four
months. Doing an evaluation is important for at least one time per year.

Criteria for Evaluation of Efficiency and Effectiveness of HRM

Functions
Criteria for Evaluation of Achievement of HRM Objectives and Strategic Goals
Approaches to HR Evaluation

There are several approaches to human resource evaluation. The most prominent of them
are: audit approach, analytical approach, qualitative and quantitative approach, balanced
scorecard perspective, and benchmarking.

1. Audit Approach

A human resource management audit is a process of evaluating the effectiveness of the HR

function. The HRM audit, as its financial audit counterpart, possesses the following elements:

• Independence from the subject being audited

• Technical work in the form of a systematic gathering and analysis of data
• An evaluation of the HR activities, policies, and systems based on the evidence
• A clearly defined objective of the process
• Action in response to audit findings.

HR Audit-

Provides verifiable data on the human resource management function

• Clarifies the HR function’s duties and responsibilities
• Identifies critical HR problems
• Helps align HR strategy with organizational strategy
• Improves the status of the HR function
• Helps reduce HR costs
• Helps review and improve the HRIS.

HR audit may be partial or total. Where it is partial, HR audit covers a few areas of HR. for
example, the compliance of managers and supervisors with the established HR principle and
practices. In the comprehensive audit system, all HR activities such as HRP, employee hiring,
training and development, performance management, employee well-being, safety and health,
Industrial Relations, and the like will be covered. Better results from an HR audit will be
obtained where it is comprehensive.

 Approaches to HR Audit

Auditors may adopt any of the five approaches for the purpose of evaluation: (i) comparative
approach, (ii) outside authority approach, (iii) statistical approach, (iv) compliance approach,
and (v) Management By Objectives (MBO) approach. It may be stated that irrespective of the
approach, the data for assessment are provided by HR research.

In the comparative approach, the auditors identify another company as the model. The
results of their organization are compared with those of the model company. Often, the
auditors use standards set by an outside consultant as a benchmark for comparison of their
own results. This approach is called the outside authority approach.]

Statistical Approach.

The third approach is the statistical approach. Here, statistical measures of performance are
developed based on the company’s existing information. Examples of such measures-are
absenteeism and turnover rates. These data help auditors assess the performance.

In the compliance approach, auditors review past actions to determine if they comply with
legal requirements and company policies and procedures. A final approach is for specialists
and operating managers to set objectives in their area of responsibility. The MBO
approach creates specific goals against which performance can be measured. Then the audit
team researches actual performance and compares it with the objectives.
2. Analytical Approach

The second approach to human resource management evaluation is the analytical one. The
analytical approach relies on cost-benefit analysis, also called the utility analysis. Utility
analysis seeks to express evaluations in economic terms, which are more useful for decision-
makers. Several HR activities have been evaluated with utility analysis, including appraisal
systems, employee hiring, training, and turnover.

Although utility analysis has wide applicability and represents a quantitatively superior
means of evaluating HR activities, the process is difficult. Because of this difficulty, and the
number of resources and effort required for analysis, its use has been limited to only certain
specific situations.

3. Qualitative and Quantitative Indices

A number of quantitative indices or metrics are available to determine the effectiveness of

HRM. For example, one can calculate the cost of turnover, absenteeism cost, cost of work-
life programs, cost per hire, lead time to fill vacancies, HR expense factor, training costs, and
the like. Sears, Roebuck, and Co. applied behavior-costing methodology to study the
relationship between employee attitudes, customer behavior, and profits.

In retailing, for example, there is a chain of cause and effect running from employee behavior
to customer behavior to profits. The human resource management department itself can be
treated as a profit center. These and other indicators, when calculated and compared with
other firms, give a fair picture of the outcome of HR functions and activities. Excessive
reliance on quantitative indices to evaluate HRM effectiveness, however objective they may
appear may be dysfunctional.

4. Balanced Score Card

Developed by Robot Kaplan and David P.Norton, a balanced scorecard helps evaluate HRM
effectiveness. The balanced scorecard contains four dimensions: the financial performance of
an organization, its customer service, its internal business processes, and it’s capacity to learn
and achieve growth. Within these four areas, managers need to identify key performance
indicators the organization should track. The financial dimension reflects a concern that the
organization’s activities contribute to improving short-term and long-term financial
performance.

Customer service perspective measures such things as how customers view the organization,
as well as customer retention and satisfaction. Business process indicators focus on
production and operating statistics, such as order fulfillment or cost per order. The final
component relates to the human resource-its potential to learn and grow. This perspective
seeks to focus on how well resources and human capital are being managed for the
company’s benefits.

The balanced scorecard provides a balanced picture of current performance as well as the
triggers for future performance. The scorecard helps managers align their business units, as
well as their financial, physical, and human resources, to the firm’s overall strategy.
What needs emphasis is that the HR evaluation should not confine only to people dimension
of the scorecard. The HR professional should be judged on all the dimensions of the
scorecard. HR executives tend to believe that their success should be judged only by the
extent to which they meet employee needs. As the scorecard indicates, employee
commitment is only one criterion for effective HR performance, and HR professionals will be
held accountable for all the dimensions as other managers.

5. Benchmarking

Benchmarking involves employees learning and adopting the so-called “best practices” by

comparing their human resource management practices with those of other (more successful)
organizations. Benchmarking essentially involves that employees study the practices
followed in competing firms and evaluating their own practices with those thus collected.

Besides the evaluation of their own HR practices, benchmarking enables managers to learn
from other firms and adopt effective HR strategies. In addition, benchmarking can help create
and initiate the need for change because it identifies what an organization needs to do to
improve relative to the HR strategy in excellent companies

Benchmarking involves seven sequential steps:

1. Identify HR practices for benchmarking. Critical practices from the organization’s

perspective are identified for benchmarking.

2. Constitute a core or a project team to handle the benchmarking process.

3. Identify benchmarking partners-organizations from the same or different industry,

competitors or non-competitors, or international firms-who are known to have tried best
practices successfully.

4. Collect data from each of the benchmarking partners (for example, firms A, B, and C).

5. Analyze and interpret the data.

6. Prepare a comprehensive report based on data analysis and interpretation.

7. Develop action plans to improve HR strategy and practices.

HR audit

HR audit is an important management control device. It is a tool to judge organisations

performance and effectiveness of HR management. According to Dale Yoder, “Personnel

audit refers to an examination and evaluation of policies, procedures and practices to

determine the effectiveness of personnel management.”

It is an analytical, investigative and comparative process. It gives feedback about HR

functions to operating managers and HR specialists. It enables to know about the

effectiveness of personnel programmes. It further provides feedback about how well

managers are meeting their HR duties. It provides quality control check on HR activities. It

refers to determine the effectiveness and efficiency of HRM.

The essential features of HR audit are:

(1) The measurement and effectiveness HR management’s mission, goals, strategies, policies,

programmes and activities, and

(2) To determine the action plan for future in response to the results from such measurement.

According to R.D. Gray, “the primary purpose of audit is to know how the various units are

functioning and how they have been able to meet the policies and guidelines which were

agreed upon; and to assist the rest of the organization by identifying the gap between

objectives and results for the end product of an evaluation should be to formulate plans for

corrections or adjustments.”

Objectives of HR Audit:

(1) To review every aspect of management of HR to determine the effectiveness of each

programmes in an organisation.

(2) To seek explanation and information in respect of failure and success of HR.

(3) To evaluate implementation of policies.

(4) To evaluate the performance of personnel staff and employees.

(5) To seek priorities, values and goals of management philosophy.

Need for Human Resource Audit:

Though there is no legal obligation to have HR audit as in case of financial accounts but the

managements have realized its need and usefulness. Therefore they have taken up HR audit

voluntarily.

It is done to fulfill the following needs:

(1) The managements of organisations have realized the need for HR audit because of

powerful influence on motivation of employees at work due to participation of employees in

decision making.

(2) Growth of organisation needs HR audit. Large organisation requires continuous feedback

for improvement in performance of its employees.

(3) Mounting pressures from trade unions of employees and their participation in formulating

employment policy and questioning of managerial competence have raised the need for HR

audit.

(4) An effective two way communication system has also facilitated the need for HR audit.

(5) Many plants are located at large distances. This also made the HR audit compulsory.

(6) The HR audit becomes essential because of delegation of authority and decentralization of

power.

Approaches to HR Audit:

According to William Werther and Keith Davis, there are five approaches for the purpose of

evaluation.

These are briefly outlined as under:

(1) Comparative Approach:

Under this approach auditors identify one model company and the results obtained of the

organisation under audit are compared with it.

(2) Outside Authority Approach:

In outside authority approach a benchmark is set to compare own results. A standard for audit

set by outside consultant is used as benchmark.

(3) Statistical Approach:

Under statistical approach the statistical information maintained by the company in respect of

absenteeism, employee turnover etc. is used as the measures for evaluating performance.

(4) Compliance Approach:

Under compliance approach the auditors make a review of past actions to determine to see

whether those activities are in compliance with the legal provisions and in accordance with

the policies and procedures of the company.

(5) MBO Approach:

Under MBO approach specific targets are fixed. The performance is measured against these

targets. The auditors conduct the survey of actual performance and compare with the goals

set.

The HR Audit Process: A Model

The general process of conducting an audit includes seven key steps, each of which is
discussed in greater detail below:

 Determine the scope and type of audit.

 Develop the audit questionnaire.
 Collect the data.
 Benchmark the findings.
 Provide feedback about the results.
 Create action plans.
 Foster a climate of continuous improvement.

DETERMINE THE SCOPE AND TYPE OF THE AUDIT

To uncover the needed information, the audit team must determine exactly which areas to
target for review. If the organization has never audited its HR function, or if significant
organizational or legal changes have recently occurred, the audit team may want to conduct a
comprehensive review of all HR practice areas. On the other hand, if concerns are limited to
the adequacy of a specific process or policy, the audit team can focus its review on that
particular area.

DEVELOP THE AUDIT QUESTIONNAIRE

Whether conducting a comprehensive audit or an audit of a specific practice, the audit team
should invest sufficient time in developing a comprehensive document that elicits
information on all the subjects of the inquiry. HR must develop a list of specific questions to
ensure that the questionnaire is complete.

COLLECT THE DATA

The next phase includes the actual process of reviewing specific areas to collect the data
about the organization and its HR practices. Audit team members will use the audit
questionnaire as a road map to review the specific areas identified within the scope of the
audit.

BENCHMARK THE FINDINGS

To fully assess the audit findings, the team must compare them with HR benchmarks. This
comparison will offer insight into how the audit results compare against other similarly sized
firms, national standards or internal organizational data. Typical information that might be
internally benchmarked includes the organization's ratio of total employees to HR
professionals, ratio of dollars spent on HR function relative to total sales, general and
administrative costs, and cost per new employee hired. 

National standard benchmarking might include the number of days to fill a position, average
cost of annual employee benefits and absenteeism rates. See Benchmarking HR Metrics.

PROVIDE FEEDBACK ABOUT THE RESULTS

At the conclusion of the audit process, the audit team must summarize the data and provide
feedback to the organization's HR professionals and senior management team in the form of
findings and recommendations. Findings are typically reduced to a written report with
recommendations prioritized based on the risk level assigned to each item (e.g., high,
medium and low). From this final analysis, the audit team can develop a timeline for action
that will help determine the order in which to address the issues raised. In addition to a formal
report, the audit team should discuss the results of the audit with employees in the HR
department, as well as with the senior management team, so that everyone is aware of
necessary changes and that approvals can be obtained quickly.

CREATE ACTION PLANS

It is critical that the organization actually to do something with the information identified as a
result of an audit. The organization must create action plans for implementing the changes
suggested by the audit, with the findings separated by order of importance: high, medium and
low. Conducting an audit and then failing to act on the results actually increases legal risk. 
FOSTER A CLIMATE OF CONTINUOUS IMPROVEMENT

At the conclusion of the audit, HR leaders must engage in constant observation and
continuous improvement of the organization's policies, procedures and practices so that the
organization never ceases to keep improving. This will ensure that the company achieves and
retains its competitive advantage. One way to do this is to continuously monitor HR systems
to ensure that they are up-to-date and to have follow-up mechanisms built into every one of
them.

One approach is to designate someone on staff (or an outside consultant) to monitor legal
developments to ensure that HR policies and practices are kept current. Likewise,
organizations should keep track of the audit findings and changes made, turnover, complaints
filed, hotline issues, and employee survey results to identify trends in the organization's
employment-related issues. Identifying problematic issues, growth areas or declining problem
spots can help in the decision of where to allocate time, money and preventive training
resources in the future.

HRIS

What is HRIS? 

Human Resources Information System, or HRIS is a software that that collects, stores,
processes, and retrieves employee information quickly in a secure and cost-effective
manner. It is the integration of HR operations and information technology.
HRIS software contributes to all HR functions: Payroll, Time Off, Performance Management,
etc.
This system can be setup in two ways on-premises or cloud-based. Either way, the
centralisation of information offers companies a single source of truth while
providing employees with self-service features - thus taking away effort from the HR team.

What are the key functions of an HRIS software?

A good HRIS software will help you manage these 10 functions:
1. Centralized Information Storage
HRIS collects employee information at the time of recruitment and provides a central
repository of employee information to managers, HR professionals, IT team, Admins, and
everyone else who needs it. The information stored on the employee database includes:

 General Employee Information: Name, contact information, dependant details, data of

joining, etc.
 Organizational Information: Manager, business vertical, etc.
 Time off details: PTO availed, remaining balance.
 Payroll information.
 Performance score.

2. Onboarding Workflow
HRIS can take a lot of workload away from the HR team by automating
the onboarding workflow. This means, the team can automate emails, track candidate status,
keep management informed about the onboarding status, and connect new employees with
hiring managers.
The new employee will also have a good experience will all the processes streamlined. They
will get a complete picture in terms of organizational hierarchy and HR policies. Plus, they
will know whom to reach out to get answers to their questions. This means the onboarding
coordinator is not bombarded with questions ranging from documentation to saving plans, the
responsible authority will get those questions directly.
3. Job Training
Do you want to provide a specific set of training modules to each employee based on their
job role? HRIS can help you with that. It can integrate with your learning module and
streamline the training journey for each employee. It can also track the progress and remind
employees of approaching deadlines. An HRIS can also send you an email notification if
employees miss a training session or are behind schedule.
4. Time Off Management
An HRIS software can help you assign time offs to employees based on your time off policy
and keep a track of it. One of the main functions of HRIS is to help managers keep a track
how much time off each employee has availed and the balance left. The employee too have
this information handy.
Additionally, employees can quickly request for time offs and managers get a notification
immediately, thus avoiding a mail chain or a series of zoom calls. The whole workflow is
managed though a click of a few buttons. This way, HRIS promotes self-
service where employees can manage their data without involvement of an HR personnel.
5. Performance Management
Performance management is an important feature of HRIS, you can setup a framework for
setting goals for the employees and a mechanism for managers to give their ratings. The
software allows separate workflows for when the employees are planning deliverables and
when they are submitting for the annual appraisal process.
Additionally, HRIS helps you set up surveys and forms to capture information required for
ad-hoc purposes. For instance, if you want to send out goodies to employees, you can get
their preferences and relevant details through forms.
6. Employee Benefits
Be it life insurance details, medical insurance, information on dependents, or data related to
any other employee benefit, HRIS facilitates storage of everything. You can setup a
workflow where employees key in relevant information only at a specific time-period after
which the window closes.
With this level of automation, your employees shoulder the responsibility of entering details
in time to avoid a lockout. You HR team does not need to send individual follow-up emails to
get the details.
7. HR Analytics & Reporting
You need to analyze numbers related to HR before you plan any organizational change that
impact. An HRIS makes it very easy. For example, if you plan to reorganize your
development team under product managers, you need to know how many developers works
for you, what's their specialization, and which product managers should they be aligned to.
You can find all the data in HR reports dashboard. You can also analyze how your employees
use time offs, scope to save on costs, etc.
8. Payroll Management
Payroll is a critical feature of a Human Resource Information System. Payroll can be useful
to have in a human resources information system as it offers end-to-end
management assistance to the HR personnel. 
Compensation on an hourly/ weekly/ monthly basis is all provided in HRIS. Employee
Information like Bank Details, Role, and Appraisal, Time off are provided by the HRIS
system which enables payment of compensation easier, error-free, and fair.  
9. Employee Offboarding
You need to manage employee experience during the offboarding process to ensure they
become advocates of the company. An HRIS can help you automate offboarding and
communicate with your employees during their exit, and even after that.
A smooth offboarding makes the employee feel valued. HRIS comes with the feature to help
you create a positive experience which may result in employee returning to the organization
in the future.
10. Workflow Automation
One of the main features of HRIS is automation of workflow across all HR functions. We
discussed how automation can reduce HR teams workload during the recruitment,
onboarding, payroll, and the offboarding processes, but it goes beyond that.
HR team can automate internal communication workflows related to company policy
updates, organizations announcement, all hands calls, etc. With an HRIS, the team can target
employees effectively with lists and send relevant communication.
11. Mobile HRIS
Almost all HRIS systems now come with a Mobile App supporting both Android and iOS.
This feature makes all the above functions available in your pocket, with few exceptions, thus
enabling on-the-go productivity. 
12. Applicant Tracking System
Applicant tracking is one of those highlighting features of an HRIS. Ironically, not all
products that call themselves HRIS comes with Applicant Tracking.  ATS helps you bring
your whole hiring process to one place. 
From posting a job to sourcing candidates from different channels like Email, Job Boards,
interviewing, and executing the hiring process to rolling out an offer, and moving the
candidate to an employee, an HRIS with ATS can be really useful to help you bring in talents
seamlessly. 
Other common features of an ATS is to set a cooling period to avoid a repetition of
candidates, archiving good talents to the talent pool, etc.
HRIS benefits
HRIS software can breathe new life into a company's HR processes and procedures. While
the benefits may vary depending on the system a company opts for or the modules they
choose, the following are the key benefits of HRIS software:

 Expedites tasks. An HRIS enables the HR department to spend less time on clerical
tasks, helps ensure the accuracy of employee data and can make it easier for employees to
manage their information.
 Reduces paperwork. Having a centralized repository for employee data removes the
need for  storing paper files, which can be easily damaged, as well as the need to search
through large paper-based employee files to find information.

 Simplifies predictive analysis and visualizations. Depending on the type of HRIS

software, it may generate various reports, provide ad hoc reporting capabilities and
offer HR analytics on important metrics such as headcount and turnover. Modern HRIS
software also offers visualization capabilities for employee data, such as automatically
rendered organizational charts or nine-box grids.

 Empowers employees. Employees can directly access and make changes to their

personal information without the need to contact HR.  

 Improves productivity. When an HRIS offers employee or manager self-service, the

process for making employee master data or organizational changes becomes more
efficient and uses less time than paper-based requests. Approval workflows enable
changes to be approved or rejected, with the necessary individuals automatically notified.
An HRIS might also offer mobile capabilities that extend self-service and provide
additional flexibility for remote workers.

 Maintains compliance. HR tasks are highly regulated and there's little to no margin for
error. Many HRIS programs have monitoring capabilities and are designed with specific
compliance regulations in mind. This encourages organizations to stay compliant and
avoid legal issues, penalties and financial losses.

 Offers security and privacy. An HRIS also helps secure employee data and keep
information private. When using paper forms or spreadsheets, information can easily be
accessed by people who may not have the authority to access it. An HRIS can secure
information so that it can only be accessed by authorized individuals. Data security and
privacy are important factors when handling sensitive personal information, especially in
countries such as Germany and France, where works councils have a strong role in
protecting employee data. With the exception of a lock and key, protecting paper records
can be extremely difficult.