Using Metrics to Assess Organizational HR Efficiency, Effectiveness and Impact

By Nonprofit HR
In June 18, 2018

 

Your people are the backbone of your nonprofit, and in turn, its mission. So, your human resources team must be strong enough to support those people. How can you be sure your HR practices are fully meeting the needs of your team? Keeping track of HR metrics will help strengthen your nonprofit’s talent sustainability and overall sustainability in the long run, allowing your team to further your organization’s mission.

Just as you would monitor general staff key performance indicators (KPIs) and overall organizational impact, you should use metrics to assess your nonprofit’s organization’s HR efficiency, effectiveness and impact as well. According to John W. Boudreau and Edward E. Lawler III in their article “How to Measure HR Effectiveness”:

  • Efficiency is “the amount of resources used by HR programs, such as cost-per-hire.”
  • Effectiveness is made up of “the outcomes produced by HR activities, such as learning from training.”
  • Impact is “the business or strategic value created by the HR activities, such as higher sales.” In the nonprofit space, this would translate to success of programs and initiatives or the achievement of mission goals.

You can track your nonprofit’s proficiency in these areas using quantitative and qualitative metrics, the same way you would track metrics for your other organizational goals.

Keeping track of HR metrics will help strengthen your nonprofit’s talent sustainability and overall sustainability in the long run, allowing your team to further your organization’s mission. Click To Tweet

What are the most important HR metrics to track for nonprofits?

HR metrics may vary by each individual organization’s needs and challenges, but overall, we find retention, satisfaction and engagement, and ROI metrics are most important for nonprofits to monitor.

Changes in retention over time

Unfortunately, organizations face turnover at higher rates than for-profit companies. If your organization does not already keep track of turnover, it is absolutely crucial for the health of your organization to ensure HR initiatives are focused on retention. Conducting exit interviews can help glean insights about your organization’s turnover and how to hold on to high-performing team members longer.

Ask yourself and your exiting employees these questions to identify weaknesses and make improvements:

  • What organizational changes could have caused changes in retention rates, like a change in leadership or management structure?
  • Are employees leaving to go work in the for-profit space or for another organization?
  • Why did they make that choice?

Changes in employee satisfaction and engagement over time

To ensure honesty and openness, conduct anonymous surveys with your team and assess third-party sources like GlassDoor, Indeed, Great Place to Work and others and to get a read on your employees’ level of satisfaction within your organization.

Once you’ve established employee satisfaction benchmarks, ask yourself these questions to determine where you should make shifts in HR initiatives: What were the contributing factors to changes in satisfaction? Has this been a gradual change, or sudden? Is this satisfaction specific to a certain department or manager? Are employees feeling disconnected due to a lack of cultural cohesion?

ROI of talent initiatives

Consider the resources your HR team is contributing to talent and compare metrics with costs associated with those resources and programs. For example, for every $1,000 spent on HR salaries, team benefits or other talent programs, has there been an improvement in employee satisfaction, engagement or retention? From there, prioritize your programming and consider re-allocating funds for less effective talent initiatives toward other, more impactful ones.

ROI of employees and volunteers

Most nonprofits engage multiple types of workers and volunteers, including full-time, part-time, temporary and remote team members. Consider the pay, benefits and resources devoted to each category of team member, and compare that to their satisfaction, engagement, productivity and retention levels, assessed through employee reviews and two-way feedback.

Based on your findings, consider revisiting your employment strategy to promote volunteer or part-time staff to full-time, incorporate a higher volume of part-time or temporary staff during peak months or some other solution to ensure your talent is achieving maximum mission impact.

How can your organization’s HR function gather these metrics?

Your HR function’s primary responsibility is to take care of your organization’s people. So, communicate directly with them to gather these metrics. Conduct surveys, schedule HR feedback interviews and assess third-party employer feedback portals to gauge success of HR and improvements over time.

The best way to track HR effectiveness specifically is to compare progress over time. If you don’t already track these metrics, start immediately. Implement an HR dashboard or scorecard to regularly log and benchmark any changes.

Further steps to take to improve your organization’s HR efficiency, effectiveness and impact metrics

  1. Strive to make your HR function more strategic and aligned with your organization’s overall goals and strategies.
  2. Communicate with your entire team about what they need to succeed in their roles, and actively take steps to accommodate those needs.
  3. If your people managing human resources are divided among responsibilities and departments, consider hiring an individual whose role is devoted to HR, or engage a firm with specific understanding of nonprofits’ HR needs.
  4. Advocate for HR representation among leadership, perhaps through the implementation of a Chief Human Resources Officer (CHRO) or Chief Talent Officer.

While of course HR programs and initiatives are a key driver of mission impact, simply having those team members and programs in place do not guarantee organizational success. That’s why measuring HR efficiency, effectiveness and impact metrics is absolutely critical.

To learn more about HR metrics for nonprofit organizations, you can access our recorded webinar on this subject.

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