Measuring Organizational Effectiveness

Create key performance indicators and design a digital dashboard for metrics

By Matthew W. Burr, SHRM-SCP May 19, 2022

Organizational effectiveness comes from strong workplace culture, open communication, competent leadership, reliable succession planning and plenty of opportunities for growth. All of those factors can and should be measured. To begin setting goals in your organization and measuring their success, a great approach is to design key performance indicators and create a digital dashboard.

As an HR consultant, I have been developing metrics for organizations for over a decade. In one manufacturing facility, we created a dedicated "war room" that contained all monthly metrics, accessible to all employees. The information was not limited to HR-specific data, and thus it provided additional knowledge and insight across the organization.

Here's what you need to create your dashboard:

  • Leadership support. If any change initiative or approach is to be successful in an organization, leadership must support that evolution from within. To sell the idea of measuring organizational effectiveness to your leaders, communicate to them why and how it will benefit the organization. Emphasize that there will be consistent measurement and consistent communication over time—that the effort will not devolve into a "flavor of the month" management fad.
  • Align measurements. Every measurement should be paired with the specific needs and long-term strategies of the organization. General benchmarking of competitors and industry standards is great, but what does your organization need to be measuring? Every department should report on its specific metrics at least monthly—more frequently for some departments and metrics.
  • Garbage in, garbage out. Any enterprise resource planning or human resource information system is only as good as the information going into it. Ensure that the information going into your measurement system is accurate and timely. If the input has mistakes and inaccuracies, the output won't add value—rather, dealing with those skewed measurements coming out the other end will just become a new task to be tackled.
  • Communicate and evolve. Communication to the organization of the progress of a new effort is critical for its success, as it is for any change. Communicating the metrics on organizational effectiveness is likewise critical. Understand the base. Set smarter goals to make gains in a positive direction. Anticipate questions. Know that corrections and improvements will be necessary. Deliver as much information as often as you can. Ensure that the data on measurements are accessible to everyone in the organization.

The SHRM Body of Applied Skills and Knowledge (SHRM BASK) describes the knowledge, skills and abilities necessary to ensure that HR professionals partner with the organization in developing, using and applying effective metrics. The Business Acumen behavioral competency (and in particular, the Business Analysis subcompetency) is especially important here. Know what system works for your organization and build a dashboard to provide accurate and timely information to your workforce.

The SHRM toolkit on Benchmarking HR Metrics offers more specifics: a strategic benchmarking model, guidance on interpreting data, how to find external benchmark data, definitions and calculations, and additional resources.

Matthew W. Burr, SHRM-SCP, owner of Burr Consulting, LLC, Elmira, N.Y., co-owner of Labor Love, LLC, is an HR consultant, an assistant professor at Elmira College, and an on-call mediator and fact-finder for the New York State Public Employment Relations Board. He holds master's degrees in business administration and in human resources & industrial relations, and a Lean Six Sigma Green Belt.



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