Your HR metrics say what’s important to HR, but is that
what’s important to the C-Suite? HR professionals need to be keenly aware of
the information they are providing to top management. Is it information that is
useful in strategic decision making? If not, how can that be changed?
Metrics let people make decisions based on objective
information rather than simply guessing or going by instinct. Metrics also let
people know what is important to the organization, since a metric that is
tracked will be analyzed.
HR metrics have historically often focused on the past. For
example, HR metrics often include things like turnover or time to hire. These
data are useful but look only at raw info depicting what has happened, as
opposed to assessing the “why” behind the data. Assessing the “why” is what
will allow business leaders to make decisions accordingly. This is where HR
professionals have an opportunity to change what metrics are presented and
really make a strategic impact for the organization.
Let’s take a look at some of the ways HR can take a more
strategic view with the metrics they present.
Transforming HR
Metrics: From Turnover to Strategic Hiring and Retention Data
Turnover metrics are one of the cornerstones of HR
reporting. Turnover figures are, of course, important. But HR can take a more
strategic view by moving beyond simple turnover data. For example, instead of
looking at turnover rates for the organization as a whole, consider breaking
turnover down into key roles and focusing on data for key roles. This move
alone can make the data more useful to decision makers within the organization.
Another way to move beyond simple turnover data is to begin
finding why people left and what programs make people stay. This moves the data
from quantitative to qualitative. One way to do this is to give current
employees surveys that ask about employee satisfaction. Let the employees rate
programs and give information on what programs or benefits they value. This can
allow you to make connections between the programs that affect retention.
Likewise, find out why employees are leaving. Conduct exit interviews to
discover what changes can be made to reduce turnover. Use these data in HR
reporting.
Transforming HR
Metrics: From Time to Hire to Time to Be Productive
Time to hire and cost per hire are common HR metrics, but
taken alone, they are difficult to act on. To take a more strategic view, look
at the time it takes for a new employee to become productive and start
contributing to company profitability. Look at the satisfaction level with the
hiring process and the caliber of new hires.
This change is both quantitative (focusing on time to be
productive) and qualitative (hiring satisfaction and talent level of new
hires). This change in focus lets management see whether current recruitment
programs are bringing in the right employees.
Here are some examples of the metrics that can be used:
Time to be productive (based on measures of employee skill
level at set intervals);
Percentage of new hires who stay beyond the probationary period
(shows fit with the organization);
Performance ratings of new hires after 6 months (or some
other appropriate time frame for your business); and
Manager satisfaction level with quality of new hires.
By moving to metrics that show the quality of new hires, the
metrics can be aligned with business goals and can help the business make
better hiring decisions.
Transforming HR Metrics: Include HR Metrics Related to
Revenue and Profit Goals
Traditionally, HR metrics
have focused on data related to turnover, absenteeism, and the like. The key to
being more strategic is to tie the information to business goals. For example,
a business may have a specific goal around annual profit levels or revenue
levels. If the HR department can present employee data that tie into these
company goals, the data will be more relevant and actionable. Here are some
examples:
- Profit-oriented HR metrics:
- Time to full productivity (Don’t forget trend data, too: Are you hiring more productive people now than in the past?).
- Profit per dollar of wages or vice versa—wages spent per dollar of profit generated.
- Revenue-oriented HR metrics:
- Revenue per employee.
- ROI on new programs or on training employees.
Remember to show trends in
the metrics so that you can see how the data change over time.
Transforming HR Metrics: Focus on Competitiveness
Another often-missed aspect
in HR metrics is competitive information. A metric is more useful when there is
a point of comparison or benchmark.
HR professionals have a lot
of options when it comes to including competitive data in employee metrics.
Here are a few examples:
- What salary level do you use compared to the market averages? Higher? Lower?
- How does your retention rate for key roles compare to the industry average or to your closest competition for talent?
- How does your productivity rate (or time to be productive) compare?
- What is your employee satisfaction rate? What is the industry average?
Moving to Metrics That Have Strategic Impact
To make this move to more
strategic HR metrics, the first step is to clearly understand the
organization’s goals and objectives. Then you will best be able to assess which
HR metrics can be updated to help make strategic decisions.
Once the right metrics are
chosen, be sure to get accurate data. The metric will be useless if it’s not
accurate because it won’t be credible, and the message will be lost (even if
the trend is accurate).
Next, find ways to
effectively communicate the metrics to the people who can use it in decision
making. If necessary, train people on how the data are presented so that
everyone is on the same page.
Finally, be sure to review
the metrics used on a regular basis. Talk to the stakeholders to ensure that
they’re getting the information they need, and update the HR metrics as needed
to reflect changing business realities and goals.
Picking the right metrics and
getting management’s attention—just one of the many challenges HR managers
face.
Source: HR
Daily Adviser
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