The HR function is arguably the most critical department of any organization. The consistent struggle to handle the ebb and flow of employee growth and turnover is a domain presided upon by this department, making it the most effective one in an enterprise. HR professionals work in the best interest of both employee and the owner of the business and when the firm is making progress, the HR department is functioning at its best.

Here are the 5 signs to know if the HR function at your firm is effective or not :

#1 Improved Employee Retention

The fact that retention of a skillful and determined employee is crucial for an organization’s growth, is a fairly obvious one. Employee turnover, of course, refers to the proportion of employees who leave the organization and are replaced by new ones. Obviously, high employee turnover leads to an increase in expenses and generally has a negative impact on team morale.

A competent HR function has an eye on locating the right hires and offering them appropriate guidance to ensure a low turnover rate for the organisation. This of course, results in improved morale, elevated productivity, and a host of other related consequences. Improved employee retention is certainly a sign of a competent HR function.

#2 Growth in Employee Performance

Employee performance refers to the efficiency with which an employee executes out the jobs assigned to them. It’s measured on a range of factors – such as output quality, quantity, impact, and the behaviour (or values) they exhibit in the workplace.

The HR function ensures:

  • That employees know what is expected of them,
  • That it takes initiatives to boost employee morale, and
  • Handles appraisals well.

An HR function is also the force behind performance management and training programs – all initiatives designed to increase job commitment, and elevating productivity. Growth in employee performance can often be a consequence of well thought out policies and actions from the HR’s arena. This performance may not be all due to factors that have a direct impact on productivity at the workplace. Even seemingly stretched initiatives such as those on financial literacy have the indirect benefit of increasing satisfaction levels and improving work performance for employees.

#3 Easy Conflict Resolution

Organizational conflict, or workplace conflict, can be caused by actual (or perceived) opposition of needs, values, and interests between people working together. It is the HR function that is often saddled with the responsibility to resolve conflicts, and justifiably so. The function is specially trained to:

  • Handle difficult situations at work,
  • Minimise lost productivity, hassles, time and costs, and
  • Even reduce the risk of possible litigation in some cases.

A trend of easy resolution of conflicts in an organization is often telling evidence of an active HR department.

#4 Low Cost-per-Hire

Cost-per-hire is one of the most important and commonly used recruiting metrics. Of course, it encompasses more than just the cost of the staff involved in the hiring process –  there’s training costs, purchase of equipment, onboarding, administrative costs, benefits, and of course, opportunity costs.

With an efficient HR function, organisations should certainly see a reduction in cost-per-hire rates. This is of course, the result of well-organized, and sharp recruitments, with employee hire benefits surpassing total expenses.

#5 Healthy Workplace Culture

While culture is set top-down, it’s the HR function that ensures that important values, ideologies, perspectives are distributed across the workplace environment, or even beyond the confines of corporate offices. The management, leadership, and strategic organizational directions are the three primary factors influencing workplace culture by the largest degrees. Having a healthy workplace culture elevates teamwork, raises morale, increases efficiency, improves productivity, and enhances retention of the workforce. Job satisfaction is also increased. A positive workplace environment reduces stress in employees.

It’s not surprising to note that an active HR function can be the primary driving factor behind a healthy workspace. From collecting employee feedback on a regular basis, to conducting training programs, such as those on financial literacy, the function is responsible to a significant degree in employee growth – both professionally and financially.

All mature organizations are likely to feature an HR function that is proactive, engaged, and concerned. The function plays a key role in creating a healthy workplace and improving company productivity.

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