Companies have an unquenchable thirst for customer insights – and HR functions should, too. An externally facilitated, data-driven evaluation of the entire function’s health pinpoints for HR leaders exactly how their internal customers perceive the maturity and value of the operational, strategic and consultative services HR delivers to employees. Leading HR functions typically perform these diagnostic exercises once every three years, more frequently when the company and/or function undergoes major changes. The success of HR “health checks” hinges on ensuring that they are sufficiently comprehensive, data-driven and collaborative.
When it comes to conducting self-evaluations, HR functions are uniquely disadvantaged.
Most HR teams are time-pressed and resource-challenged. Precious few can afford to reassign HR professionals muscling through 60-hour work weeks to diagnose the function’s overall health. And many CHROs understandably bristle when the board or their CEO charges another organizational function -- internal audit, say, or an operational improvement team -- to lift up the HR hood and rummage around. Fortunately, a better option exists.
Comprehensive, data-driven HR “health checks” facilitated by independent external experts can yield powerful, and often unexpected, insights about HR strengths and weaknesses. These revelations cover the function’s ability to achieve its own performance objectives, enable business strategy and optimize business performance during mergers and acquisitions, IPOs, geographic and/or product/service-line expansions and other strategic events. Health checks consist of three high-level steps: identifying future HR capability needs; identifying the current state of performance maturity across all HR functional areas; and crafting a plan to address capability gaps. Effective assessments (along with the improvement roadmaps and priorities the findings are used to develop) strengthen trust and satisfaction among HR customers while laying the groundwork for a more efficient and scalable HR function.
A facilitated HR evaluation model offers the best of both worlds. Their consultative nature ensures that the reach and execution plan for the evaluation is developed in a collaborative manner among HR leaders and the external experts. The independence of the external experts and the methodical, data-centric analysis of HR’s performance imbue the findings with more credibility while increasing the likelihood that subsequent improvement-related investment requests will be funded.
Newly hired CHROs often initiate self-assessments to get a feel for how the rest of the organization views their function’s services and value. Looming IPOs, mergers and major growth initiatives also trigger interest in performance-diagnostic efforts. The most successful checkups tend to be:
- Based on comprehensive assessment frameworks: An effective HR evaluation examines each functional area across all of HR’s operational, strategic and consultative offerings, including the people function, workforce planning, talent recruitment, total rewards, employee development, employee experience, organizational effectiveness and people operations. The scrutiny also extends to the sub-functions and processes in each of those functions.
- Data-driven and multi-dimensional: Again, the most effective assessments of HR performance are highly quantitative: data-driven assessments complement and strengthen qualitative observations. Examples of operational metrics used to assess how well HR delivers its “lights-on” operational services center on efficiency, accuracy and cost (e.g., cost per hire and time to hire). Strategic measures might include human capital return on investment along with employee net-promoter figures and other satisfaction scores. Consultative metrics often include satisfaction with strategic alignment, trust ratings and satisfaction with core HR services. A highly analytical approach also enables observations and metrics to be gaged across multiple dimensions, such as how important the area is to the achievement of business objectives and how much improvement effort is required. These types of cross cuts yield additional ah-has and help HR leaders prioritize improvements.
- Supported with ample process documentation: Convenient access to quality process documentation significantly boosts the ease and efficiency of the evaluation effort while keeping the duration of the project on the shorter end of the six to 10 weeks that most HR health checks require.
While the specific findings of each HR health check obviously vary, they tend to produce similar categories of insights. Most evaluations reveal significant gaps between how HR teams and the rest of the organization view HR effectiveness. Most evaluations also reveal shortcomings that HR leaders did not know existed. For example, an HR group may be so busy addressing current hiring requests and performing other operational work that it has only a vague sense as to whether the current maturity level of workforce planning is sufficient to enable the company’s five-year plan to double the size of the business.
In addition to uncovering risky blind spots, HR health checks equip CHROs with the data-based insights they need to reallocate their resources, reorder priorities and alter investment plans in ways that maximizes the value HR contributes to the organization. In this way, facilitated health checks more than offset HR’s self-assessment disadvantage.