If there is one thing to measure HR efficiency, then this would pertain to measuring HR performance - every single aspect that pertains to the HR department and its operations and functions.
HR performance is comprised of the effectiveness of human resource management. At first bat, measuring HR performance can seem difficult to do, and you are right to think so. This is indeed one of the hardest aspects that you can measure in terms of organizational performance. When you compare this to other aspects of the organization, financial aspect, for instance, you cannot really say that you would have a strict set of metrics and parameters to use as basis when measuring HR performance and efficiency. The financial aspect of any organization would inevitably have that. People management, which is one of the most important aspects in HR performance, is less strict and more subjective or relative, so to speak.
Efficiency
Although there is no official link connecting organizational performance and HR practices, there is still that link. It does not matter the lack of a physical connection, so as long as the connection does exist. Firstly, managing people the right way helps any organization achieve improved performance over time. When you manage your people well, your organization's performance will also improve over time. But if you want a more tangible basis for measuring HR performance and efficiency, then here are some commonly used metrics for that purpose.
HR management starts with selection and recruitment. When a company has vacant positions, it will look for applicants for that position, in the hopes of finding the best one to suit the job. The measurement dimension to look out for here then is the level of sophistication that the processes of recruitment are at. Are the selection and application processes up to par? Do they come with appropriate psychometric tests? Does the department make use of clear criteria when it comes to selecting qualified people from its pool of applicants? Are the interviews as structured as they should be?
The next process to look into is induction and training. Induction is the process of officially introducing newly hired employees into the company or the organization. Metrics here would still pertain to the sophistication of the processes being used. A relevant metric here would be the duration of the programs used for induction and training. The effectiveness of the procedures, meanwhile, can be an effective metric as well. This can be measured via the use of targeted surveys. Of course, the trainees would be the ones to take these surveys.
The last process to look into is performance management. This pertains to how the HR department supervises and monitors the whole operations of the HR department, as well as the rest of the people that comprise the organization's workforce. Performance management processes should be maintained as coherent as possible. this means that all of the processes should be organized and fitted into an orderly and logical fashion. A relevant metrics here could be the number of man-hours shelled out to performance management.
Measuring HR efficiency and performance is not really difficult, as long as you have metrics at hand. Just make sure the ones you have are relevant to your organizational goals and objectives.
The Effective Way to Measure HR Efficiency
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