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How do I Determine the Strategic Impact of HR Issues on Organizational Effectiveness?

Nowadays, it’s pretty common to find a human resources (HR) manager on a strategic planning team. It’s a reflection of just how critical a role HR—the department that handles issues facing an organization’s workforce—plays. How HR handles employee hiring and retention, for instance, can have a positive or negative long-term effect on an organization’s performance in areas such as growth, returns and even stock value.

Measuring HR outcomes, organizational outcomes, finance and accounting outcomes and capital market outcomes over a particular time frame is one of the best ways to determine the strategic impact HR issues are having on organizational effectiveness.


Things You’ll Need

  • List of departmental and company goals
  • Turnover and absentee rates
  • Job satisfaction surveys and exit interviews
  • Employee performance evaluations
  • Financial and accounting reports


10 Steps to Determining the Strategic Impact of HR Issues on Organizational Effectiveness

HR Issues on Organizational Effectiveness

1. Select a time frame.

This is the amount of time you will use to evaluate the current state of employee performance compared to the organization’s overall performance. The time period could be six months, one year or several consecutive years—this depends on the amount of time you can invest in the study.


2. Note all of the organization’s goals that had been set for the specific time period.


3. Analyze the turnover and absenteeism rates during this period.

Were they low? Were they high? Look at all job satisfaction surveys and exit interviews collected during that time period. What do they say about the company? What was the major area of discontent among workers who stayed and workers who left?


4. Look at employee performance evaluations conducted during that period for both existing workers and those who left.

How did supervisors rate each employee? What were the areas that needed improvement? Start spotting overall trends and take note of them. Are you losing highly rated employees and retaining those with lower ratings?


5. Review the organization’s financial and accounting records for the time period.

Focus on areas such as profitability and return on assets (or ROA), which give an indication of the organization’s performance.


6. Review the organization’s capital market outcomes for the time period.

Look at the organization’s growth trends, its rate of return and, if applicable, its stock price. How have these facets changed during this time frame—positively or negatively?


7. Compare employee performance (steps three and four) to the organization’s performance (steps five and six).

Are there any interesting parallels? For example, did profitability stall or drop during the months that experienced a high employee turnover rate? Take notes.


8. Revisit the organization’s goals for that specific time period (the ones you jotted down at step two).

Compare your findings to the goals. Were expectations met? What discrepancies were there? How did actual employee performance rank compared to the expectations set? Were the goals too lofty? Take notes.


9. Prepare a report with all of your findings.

Include recommendations to improve current problems.


10. Share your finished report with upper management.

Discuss your findings and determine what discrepancies, specifically the HR-related ones, had a direct impact on the overall organization. Discuss how these problems can be addressed through new, proactive strategies to improve organizational effectiveness.


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