HR metrics

Many HR practitioners appear to be more effective at collecting information than at using it for the benefit of their organisations. The challenge is to go beyond the role of a number-cruncher to produce information that is clear, concise, provides a basis for decision-making and enables the effectiveness of HR practices and strategies to be evaluated in meaningful ways.

‘Metrics’ is a more recent terminology but the practice has been in use for a long time, perhaps referred to as ‘HR measurement’, ‘HR performance indicators’ or similar.
 
Despite its logic and obvious importance, many HR practitioners appear to be more effective at collecting the information than at using it for the benefit of their organisations. The challenge for you is to go beyond the role of a number-cruncher to produce information that is clear, concise, relevant, timely, supports business cases and requests for resources, provides a basis for decision-making and enables the effectiveness of HR practices and strategies to be evaluated in meaningful ways.
 
Some commentators argue that these outcomes are essential to enable HR to converse with senior management in ‘the language of the business’.
 
How do you get started?
 
Jamie Barber, a Consultant for IntroNet, a UK eRecruitment firm (with an Australian subsidiary), has outlined ‘nine steps to metrics excellence’ in an article published on IntroNet’s website ‘The Numbers Game: Nine Steps to Making the Most of Your HR Metrics’). These steps are summarised below.
 
1. Re-examine the strategic business objectives
 
The main priority should be to meet the needs of the end customer (either external or internal), rather than to justify functional silos. While each function needs to measure its own performance, keep the bigger picture in mind.
 
2. Assess contribution, utilisation and productivity
 
Only collect data that does at least one of the following:
  • makes a contribution to overall business objectives
  • provides insight into whether resources are being used optimally
  • makes an assessment of productivity that could lead to greater efficiency or other improvements
3. Keep it simple
 
Some commentators argue that information overload is a bigger threat to HR effectiveness and credibility than failure to measure. Managers tend to ignore lengthy or complicated-looking reports. Start with about five key metrics that focus on high-priority areas.
 
4. Decide what types of metrics to use
 
The three main types are:
  • historical (‘looking in the rear view mirror’) which can provide a general indication of organisational health, but should not be solely relied upon
  • real-time (current) — snapshots that can provide warning that something is starting to go wrong, such as a fall in job applicants
  • forward-looking, which project trends into the future to enable contingency planning.
The best approach is usually a mixture of the three types.
 
5. Set a benchmark
 
Establish a starting position, for example by benchmarking against other organisations, survey results, etc.
 
6. Integrate data collection
 
Arrange for data to be collected automatically (eg via tracking systems) wherever possible. Otherwise employees will resent the extra workload and give it insufficient attention.
 
7. Allocate adequate resources for analysis
 
Aim for graphics-based presentations with short text summaries. Rigorous analysis of much of the data will be required to get there, but avoid ‘paralysis by analysis’.
 
8. Be able to act on the results
 
HR needs to be able to act on the findings. For example, if results suggest that increased performance bonuses would improve retention rates, it must have the authority and resources to implement the necessary changes.
 
9. Periodic review
 
Build in a review process when setting up the system.
 
Barber suggests that while most organisations can see the logic of having HR metrics, many still fail to capitalise on their strategic potential.
 

WantToReadMore

Get unlimited access to all of our content.