No single department has more tools to influence a business than the human resources (HR) team. But, all too often, inefficient methods of evaluating its own performance mean this vital department is not used to full effect.

As any manager will tell you, sales-team performance can be measured simply by comparing actual sales volume to sales targets, while marketing teams can be measured by tracking consumer awareness or market share. And while finance teams are measured on cash-flow analysis or accuracy of planning, and manufacturing teams can be assessed in terms of achieving production plans, how is the performance of the Human Resources (HR) team measured?

HR teams tend to be "program-oriented." They implement a new Performance Management System or a new employee communications system on the company intranet. And, of course, they administer the files and personnel actions of the employees.

But seldom does management hold HR teams accountable for corporate performance. Other functional teams get more priority because they are more directly related to corporate success. Yet no organisation can exist and succeed without people, and HR is all about employees.

This article addresses some of the ways HR performance can and should be measured. The ideas expressed come from considerable interaction with many companies in Russia and Eastern Europe. If you are an HR professional ask yourself these questions: Do I take responsibility for the successes and failures of the company? Do my annual performance objectives directly contribute to the achievement of company objectives? In most cases the answers to these questions is "no."

In a sales-oriented company, the HR director should spend considerable time with the sales director. HR professionals should go on sales calls to learn the business and how to positively impact it.

If it is a manufacturing business, the HR director should spend time with the plant manager and production manager assisting in meeting production plans. Members of the HR staff should work a day in the factory to learn the business there also. No company can succeed without people, and no one group has the ability to impact performance more than the HR team.

Before setting annual performance goals, the HR team should carefully review corporate objectives to determine which ones HR can impact. Sales can be enhanced, for example, with variable pay systems that motivate peak performance. Training can also assist sales teams in achieving better results.

HR can play a significant role in the recruitment and retention of good sales people. Good HR teams understand that sales people who leave the company voluntarily cause reductions in sales until replacements are found. They solve this problem by "continuously recruiting," with a standard of filling all vacant sales positions within two weeks.

One valid measurement could therefore be the number of days that sales positions are vacant. Another measurement could be employee turnover. HR should track the reasons employees voluntarily leave the company to determine if other companies compensate better or provide better leadership or training. These are areas HR can and should have an effect on. HR should also track involuntary turnover — employees who are fired — because it reflects on the recruiting process.

The above analysis focuses on the quality of recruiting. But HR should also be evaluated regarding the cost of recruiting. A mature HR program will make sure that employees are trained and developed as part of a succession management program, thus ensuring there is always someone available to be promoted and take over the job of a staff member who leaves. This permits companies to promote from within and recruit at the entry level — a much cheaper and more effective strategy than hiring employees at higher levels. The recruiting process tends to be much shorter at entry level and the costs are significantly lower.

Many companies have all-employee surveys — another area involving HR departments. These measure the perceptions of employees regarding company leadership, the working environment, communications within the organization, compensation and benefits and other factors.

HR has a direct impact on many of these factors and should be held accountable for improving employee perception from one year to the next. This is particularly true if employee perceptions are inaccurate, since it means that programs or reality within the company are not adequately communicated.

Meanwhile, HR should not only contribute to revenue targets but should also ensure that expenses are managed properly. Cell-phone and car expenses are especially prone to grow out of control. Office supplies can also cost companies lots of money if not properly controlled.

HR should in many cases take the initiative to renegotiate lease arrangements. To do this properly HR should carefully consider the sources for all externally provided services and create "requests for proposals" for vendor companies. Submitted proposals should be carefully reviewed so that the company receives the very best products or services at least cost. HR should be held accountable for these kinds of expenditures

In another important area, HR should control the compensation budget. This means that HR controls the headcount and makes final decisions on salaries for new employees and promoted employees, while considering the recommendations of the functional supervisors of these people. If functional supervisors make compensation decisions, salary structures are easily violated.

In conclusion, many HR teams are not considered to be as important as teams in other functional areas. This is normally the case when HR focuses merely on programs or administration and does not add value to the business. The successful HR director should be the best friend the sales director has. After all, HR is responsible for recruiting the right salespeople, motivating them with pay systems that reward peak performance, training them to perform better in the marketplace and developing them to assume more responsibility over time. The good HR professional takes the initiative to discover the sales director’s needs and designs actions to satisfy them. This is accomplished in similar fashion in manufacturing companies.

If HR wants respect, it needs to earn it by being accountable for business results. After all, no other single department has more tools to influence the business. And no other department focuses on the company’s most important asset — people.