When discussing productivity, efficiency or profit, an HR professional should try to incorporate formulas, ratios, and language, that is commonly used by the rest the organization’s business leaders. For instance, using ROI, or return on investment, is universally understood in the business world and everyone else on the management team. These types of measured numbers are called metrics.
When’s the last time you had people in the HR department saying what’s the ROI on that Admin person over there? HR must be an expert in identifying where a company is regarding its investment in human capital (its employees.) Where can HR best be allocated to meet the company’s goals? How about activities like hiring, development, and the retention of human capital so the company can stay competitive? How about a future strategy? In addition to metrics in these areas, HR must also cheerlead the company on any initiatives they have planned, or are working on, or have rolled out. Metrics can be used to do that too.
Metrics focus employees to take on the key issues. They also get people working towards goals. But, if an employee doesn’t know what is being measured or how they will be rewarded for meeting the numbers, (if they do) metrics won’t help.
Well Well Well – (I call this the Well3 Approach) Company goals and metrics must be well developed, well known and well paid for when they are achieved. Therefore, no secrets! – and goals and metrics should be widely distributed.
A good metric is one that provides decision makers with the data they need to make fact-based assessments. It’s interesting to note, people don’t complain as much when they are all working on the same goals and they all see the results of their efforts. Good or bad, they are in it together.
Let’s look at finding and retaining employees. Usually, if there are problems with employee retention HR gets blamed. We lost 10 people last quarter. That’s awful. Why? Whose fault was that? Did they quit or get fired? How do you know what the underlying problem was? Did the company use a more modern approach to HCM (Human Capital Management?) Is the business model in need of an update? Is the economy a factor? Have slow sales produced low wages? Does Cash Flow make things impossible? In other words do the retention metrics results really show the overall performance of others in the company – not just HR? It’s going to be hard for HR to be an equal if they don’t have an equal voice and speak about the same metrics common to others.
But in any case, if the people who left in our example were not top performers, then this may not be a bad result. Wait! They all came from the same department. Bad! The hardest thing to do is decide what you want on the dashboard to measure your company and why. Perhaps, the total time to fill a position is the responsibility of HR. Perhaps turnover should be a responsibility of a supervisor. But, if you know the data, you can at least start to investigate. You might even want an outside professional HR person to help to figure this out.
Some test metrics using four coordinated possible outcomes each one as important as the other (a causal nexus). For example, if they examined the impact to 1) Financial results, 2) Processes/Best Practices, 3) Best Customer Service and 4) Employee capability, they can grapple with the critical interactions of each of these critical areas… ahead of time. They will have metrics in each, but they realize some of these sectors are independent variables and some dependents. But they don’t overdo it. Alternatively, if you have a good HRIS (Human Resource Information System) you might be able to sense all this data more clearly. Then HR’s responsibility is to drill down and see why people left and how much impact there was (skill sets etc.). That works too, but, if HR is busy with collecting data, how do the HR people to contribute directly to the measurable bottom line as they slide into activity-based outcomes to provide all that data to help others.
Perhaps all the following hiring considerations may not be appropriate for a metric, but to some, they are all important measures of performance. Oh, doesn’t there have to be a measure of quantity like the number of employees who left the company? What about the number of employees hired, or the cost of benefits? Perhaps you will become a fan of SaaS HRIS to find out.
Metrics related to hiring might measure quality. They also might show how new hires were the right people to be hired. This could be measured by positive job performance after 1 year compared to all people hired.
In metrics its easy if you: