Monday, December 29, 2008

A New Year's Resolution fof HR

Now more than ever companies need HR's expertise in the areas of efficiency and performance. The predictions for 2009 are not positive, so we know that we are facing many challenges in the upcoming year. Companies will have to make tough decisions about people and expenses. I believe this is a time where HR can shine. After all, in service related businesses the people costs can make up 60-70% of the overall costs in an organization.

So, forget about the table! Quit talking about the table. Don't worry about the table.

Just BE STRATEGIC...the times are demanding this from HR.

The next question is "what should I do?" I am re-reading one of my favorite books on the subject: Roadmap to Strategic HR: Tunring a Great Idea into a Business Reality by Ralph Christensen. This book is a great read, I highly recommend it.

The following items are my recommendations for HR professionals in 2009:

1) Are there processes that can be streamlined or that can leverage technology without negatively impacting the customer? (HR processes and company processes)
2) Are we getting the most bang for our salary buck? Is everyone performing at a "high-performing" level? If not, why and what is the game plan to get those not performing up to speed or out of the organization?
3) If a reduction in people expenses is necessary, HR should present every option to management with pros and cons and COST IMPACT of each option. (i.e. layoffs,. furloughs, shortened schedules, job shares, etc)
4) Is there training that can be delivered that will make the organization more competitive when the economy does pick up?
5) Can HR be restructured in a more cost effective, efficient way? (generalist vs. specialist, shared services vs. field personnel)
6) Are there tasks that can be outsourced both in HR and company wide to save money?
7) Review benefits philosophy and utilization to see where potential costs savings can be gained. Determine impacts of those decisions to the workforce. Make recommendations before management asks you to cut the benefits budget.
8) Make sure customers are put first in all decisions. Make sure customer service does not suffer from any of the above.

If HR can lead in these areas, you will truly be a business partner with a permanent seat at that table...

Monday, December 22, 2008

Here’s One Climate Change We Can Control!

Barbara Hughes, Co-Founder of ICC, authored this week's blog.
A company’s service climate is a function of its customer strategy and is strongly correlated with customer satisfaction. Measuring your employees’ perceptions of how strongly you execute service quality and service capability is predictive of customer behaviors. For example, when employees perceive they work in a positive service climate, customers report they experience a positive service quality and are more satisfied.

So, employee feedback is a critical resource to gauge what drives your customers’ satisfaction, intention to repurchase and refer you to someone else.

Managing the service climate is a tool that HR and other business units can use strategically for higher performance and financial results.

There are 8 core drivers of the service climate:

• Customer Orientation and Service Quality Emphasis

• Management Support

• Hiring

• Training

• Rewards & Recognition

• Teamwork

• Support Systems

• Customer Feedback

Not all of these drivers may apply to your organization. Soliciting feedback from your employees will determine which drivers have the strongest impact on your service climate.

In 2009, we will be discussing much more about service climate, linking employee and customer data for superior performance and the “how-to’s” of this critical organizational strategy.

Monday, December 15, 2008

It's a Good Time to get Your HR House in Order

I believe next year will bring even more challenges with our economy, layoffs and even new legislation that will impact our organizations.  With this in mind, it is a perfect time to make sure HR is aligned to the business.  Because I think once things do turn around and they will, BUSINESS WILL BE CONDUCTED VERY DIFFERENTLY.

I believe the new key words will be Performance and Accountability

So with that said, HR will be in a great place to make those two things happen by creating:
1) A true pay for performance system
2) Metrics that link to the organizational goals and objectives

Before you start on the two items above, I believe HR will need to make sure its house is in good order.  In other words, make sure that the basics are being done correctly like compliance, payroll, benefits, handbooks, and polices and then you can start on the strategic projects.

A good first step is to conduct a very thorough HR Audit to see where you stand.  The audit can certainly be handled internally but like any other audit, it is always good to get an outside, objective pair of eyes. 

View a sample Audit Form to see items that should be considered during an HR Audit.  After the audit is complete you can then prioritize the action items that resulted from the audit.  Action items should be results oriented and linked to the goals and objectives of the organization. 

Wednesday, December 10, 2008

Job Analysis: 5 Reasons to Start One


My colleagues and I have been working on an extensive job analysis project for the past few months. As we study over 200+ jobs I am reminded why this is such a great study for HR professionals to consider:

1) It is the best and fastest way for an HR person to understand the business.

2) It becomes crystal clear who the top performers are when you interview, observe and collect job data

3) Recruiting is much more effective because you know the knowledge, skills and abilities for each job

4) Inconsistencies within job titles and job families are uncovered

5) Job analysis data can then be used to CUSTOMIZE compensation redesign, performance management and training design

And let’s not forget that the major deliverable of a job analysis is up to date job descriptions. I believe that you should take a competency and skills based approach when performing this type of analysis. This approach works well with succession planning and career development.

The most important part of the job analysis process is the actual data collection. Our team has been scoring the jobs using the PAQ (Position Analysis Questionnaire) that has 195 scored items. You can imagine the detail for each job. In order to score each job we have been using several data points that give us rich information on each job;

1) Job questionnaires that are filled out by each incumbent

2) Job observation-certain jobs are observed to get a better understanding of that job

3) Current job descriptions

4) Manager interviews

By understanding the jobs and what makes individuals successful in those jobs is a good first step in making sure HR systems are aligned. If we don't understand the job then is makes it very hard to hire for that job, train for that job, appraise that job and set realistic expectations for the job.

Action Item: Start Job Analysis, January 2009

Tuesday, December 2, 2008

What to Include in a Cost Per Hire Calculation

I have been asked several times over the last few weeks about calculating cost per hire. In particular, what items to include in the calculation. I have seen many companies calculate this metric in many ways. My advice is to make sure you include everything that impacts the new hire and be consistent with your formula.

I think it is very hard to compare apples to apples when looking at this number. Many people include managers time for interviews, some do not. Some people include training costs, others do not. Here are the items I recommend:
  • Salaries including benefits (recruiters)
  • Salaries including benefits (managers)
  • Travel, lodging and related expenses
  • Contract recruiter or search firm fees
  • Advertisements
  • Job fairs
  • College recruitment
  • Employee referral award
  • Screening (background checks, pre-employment testing)
  • Training new employee
  • RAMP UP Costs (New hires time to get to efficiency)
I believe it is important to look at cost per hire by job category. Here are a few suggestions:
  1. Hourly
  2. Leadership
  3. College graduates
  4. Professionals
This metric is a great way to show efficiency in the recruiting area. It is easy to derive and you can definitely start measuring tomorrow!

If you would like an excel file that contains these fields with formulas please email me and I will send it to you.

Monday, November 24, 2008

A Metric That Matters to Me!

This week is about giving thanks and with this year of uncertainty and change, I have a wonderful story about some very kind people.

I sent an email last week to everyone in my Outlook database, about 800+.  The net of the email was about a charity in Atlanta, Samaritan House needing some assistance.  I am on the board for Sam House and over the past few years we have held a Christmas party for hundreds of homeless men and women.  We sing, we give out gift bags and we serve lunch.  This year, donations were down.  After I sent a plea to my contacts, in an matter of hours they donated toothbrushes, toiletries, hats, gloves, socks, underwear, etc.  We are very close to having our goal of 300 gift bags.

So, my initial goal was to have 300 gift bags, I thought that was the "metric" that mattered to me.  It was not.  The metric that matters to me is the number of big hearts people in this country still have when times are tough.  I have heard, "You know budgets are tight, but they are always those that need more."  And that is so true.  I have had people to donate a few items all they way up to 300 toothbrushes.  The sense of community and the sense of mission was almost overwhelming when all the emails and calls came pouring in.  I did not expect it.

Yesterday, I heard something that rings so true in this story for me.  "We are all just co-workers in the area of service."  I just want to thank all my co-workers in this effort!

I can't wait to see the faces of the men and women on the day of our party, December 19th.  I know we will make a difference in one of their lives.  Happy Thanksgiving!

Tuesday, November 18, 2008

Can HR REALLY be a Profit Center?

In recent discussions I have heard two schools of thought regarding how HR can be viewed as a profit center:
1) By reducing costs such as absenteeism, turnover, and bad hires, HR can add more to the bottom line
2) HR can add value to the organization by increasing revenue

I believe we are getting pretty good at number one and we must continue to do so and measure those efficiencies. My question is how does HR contribute to a revenue increase?

Consider this example by James Perry and Russell Lobsenz:

Let's assume that 2,500 staff members or 25% of a 10,000-person company consists of sales professionals. Now, assume that 10% of the sales force outperforms its peers by 100% and that the annual per person sales quota is $500,000. This means that 250 sales people would be selling $1,000,000 per year and contributing $125 million more in sales than their peers (250 top performers X $500,000 = $125 million). Assume that HR has the ability to differentiate the competencies or unique behaviors of the 250 sales people considered to be top performers. With this competency profile in hand, tools can be developed and used to predict future sales performance. This profile can then be used to optimize recruiting, selection, performance management, and training and development systems. If the number of top performing sales people could be improved by 5%, or an additional 125 sales people contribute $1,000,000 in annual sales, revenue would increase by $62.5 million ($500,000 X 125). Now, let's assume HR invests $2 million on interventions, such as software tools for improved performance evaluations to develop the next 5% of top performers. The ROI would be 31 times the $2 million investment! Is there a CEO or CFO anywhere in the world that wouldn't make this investment?
Now, that is a great example of how HR can become a profit center. 1) HR is aligned to the goals of the organization, 2) HR holds people accountable for results, 3) HR tracks performance, and 5) HR systems(training, performance, compensation, etc) are linked to each other and the goals and objectives of the company.

HR is now ready for their very own Human Capital Profit and Loss Statement.

What do you think?

Monday, November 10, 2008

5 HR Metrics that are MUST HAVES in This Economy

We are definitely in unchartered territory. I believe that the way we have done business is and will change forever. The words accountability and productivity will be key going forward.

What does this mean for HR? I am not sure how all of this will all play out, but I do know HR will need to be accountable like we have never been before. How can HR assist with accountability and productivity? One way is to be a metrics champion to show accountability not just for HR but enterprise wide.
Below are 5 metrics to add to your current HR measures. If you do not measure anything now, I would start with these 5 metrics.

Here are 5 metric "must haves" for HR:
1) Revenue generating employees/# Full time employees-This is a critical metric in this economy. This metric speaks to efficiency especially around organizational design and process.

2) Employee engagement index-This measure is critical to track especially in down times as when times are good, the unengaged will be the first to leave. I know many factors affect engagement, HR should own this metric and provide coaching to line managers on how to improve this metric. What if the unengaged just happen to be your top performers?

3) % of employees with favorable performance rating-This number is critical to know during a downturn as we may have to make staffing decisions if a layoff needs to occur. We need to make sure we are keeping the best of the best. After the lowest performing employees are let go, management needs to understand the impact of eliminating top performers.

4) Management/staff ratio-As layoffs continue to occur, you may need to understand what the best management to staff ratio is for your company. (span of control and efficiency)

5) HR Service Delivery rating-How is HR performing with its customer? Is HR delivering the services that its customer values?

I know some of these measures HR may not have direct control over. But, HR does have influence on all these measures. Are there others that you are using? Please let me know by commenting or emailing me. I am interested to see which measures are being used during these crazy times.

You will notice that I did not list days to fill or cost per hire or any turnover measures. I believe we have discussed those so much already and they are currently measured by most companies. HR needs to move past these measures and think about those that are important to the business. I am not saying to quit measuring those things, I am saying add value metrics to them, so that HR can show value and efficiency and a true understanding of the business.

Thursday, November 6, 2008

Show Me Your Performance

The elections are over and now it is show time. Obama has the daunting tasks of making a difference and performing on his CHANGE promise. We will all be watching in the coming months..gauging his performance.

Which brings me to employee performance...of course, I had to tie that in somehow. I think now more than ever performance is the new mantra for HR. With layoffs occurring on an hour by hour basis at some point we will have shed ourselves of our bottom performers. When this occurs how will we decide who stays and who goes?

It has to be:

• Who is performing the highest?
• Who is adding the most value: (as defined by the customer)

So, how will we be able to measure this or tell who is performing and adding value? We should say our super duper performance management system. We all know this is a very big lie.

In a recent Wall Street Journal article, (subscription needed) Samuel Culbert suggests, "Get Rid of the Performance Appraisal." Culbert suggests a "two-side, reciprocally accountable, performance preview." The emphasis is on PREVIEW which is based on the future. The premise is you will be setting an employee up for success not reviewing failures. I LIKE IT.

ACTION ITEM: Review your current performance appraisal system and determine if it is success focused.

Wednesday, October 29, 2008

From Chief People Officer to Chief PRODUCTIVITY Officer

I have had an excellent week having the pleasure of talking with many SMART business people that just happen to be in HR. It is so refreshing to have discussions that are not about open enrollment, having a seat at that table, and doom and gloom over the economy.

Smart business people know that "this too shall pass" and "who cares about the table" it is all about value and impact. I love it when a conversation with a top HR person starts off with "Let me tell you how we measure the success of our business" 1) market share 2) efficient processes and 3) revenue growth. Any by the way, "this is how HR will impact those 3 areas." that is cool.

Another discussion was around understanding how something subjective like culture, can be measured in an objective way and be tied to things like decrease in turnover, employee engagement, etc. Not that we have the definitive answer on the subject, but it is a good conversation.

I belive now more than ever, we should be talking about productivity, efficiency, value and effectiveness.  HR can and must contribute to increasing these areas.  More importantly, HR needs to measure its contribution to these areas. 

Maybe we need to change our title to, Business Analyst, Performance Consultant, or Chief Productivity Officer.

Friday, October 24, 2008

Can PDA Use Cost Your Company Money?

Is there a place left in the Universe where you do not see a PDA (personal data assistant) in use? People are on their Blackberry’s and Treo’s in the grocery store, in the Doctor’s office and even Church. This persistent need for connectivity proves that nothing is sacred anymore.

Does all this connectivity equal liability?

The issue of liability is very possible. Think about this scenario: You have a non-exempt employee, which is defined by the Fair Labor Standards Act as an employee who must be paid overtime for hours worked over 40 in a work week. This employee answers many emails on her company issued Blackberry over the weekend, even though she is not asked or required to do so. Because PDA’s leave such a detailed paper trail companies can be liable for overtime pay in situations such as these. According to Adele Nicholas in her article Pernicious PDAs, in Inside Counsel, “Over the past year, companies have seen an avalanche of wage-and-hour litigation from workers who claim they are owed back pay for uncompensated overtime.”

In a recent survey of SHRM-Atlanta members, sponsored by SHRM-Atlanta and Intellectual Capital Consulting, Inc, 89% of the respondents said that they DO NOT track cell phone usage during non work hours. 67% of those surveyed stated that they DO NOT pay non-exempt employees for PDA usage for non-work hours.

Companies with similar practices may need to reevaluate both of these policies in light of recent litigation. Prevention is definitely the key in this area of PDA usage.

According to Greg Hare, an employment lawyer with the Ogletree Deakins law firm in Atlanta, “companies should issue handbooks to employees, setting forth the guidelines and rules that employees must follow. For example, the policies should state that all overtime work must be authorized in advance by the employee’s supervisor. Thereafter, if an hourly paid employee presents a time sheet claiming that she worked 3 hours on Saturday (e.g., responding to email messages), the company can issue a warning to her for “working without authorization.” Of course, the company still must pay the employee for all hours worked, but by issuing the disciplinary warning, the company can prevent future instances of paying the employee for unscheduled hours.”

Another area of increasing liability as it related to PDA’s is workers compensation claims. Recently “Blackberry Thumb” has been recognized by the American Physical Therapy Association as an actual painful condition caused by typing repetitively with the thumb which is not typically used for typing.
94% of the SHRM-Atlanta respondents indicated that they had NOT had any workers compensation claims resulting from PDA usage.

Unfortunately, several recent news stories have shown that accidents are commonly caused by drivers who are distracted by their own PDA usage. It’s incredibly common to see drivers pecking away on their Blackberries while driving down the highway. Hare suggests that all companies insert a clause into their employee handbooks stating that phones and other PDA’s may not be operated while driving any company vehicle or operating any piece of equipment. By implementing such a ban, Hare says “the company is likely to accomplish two things: (1) the employees will be less likely to hurt themselves – i.e., reducing workers’ compensation claims; and (2) the employees will be less likely to hurt third parties – i.e., reducing general liability insurance claims.”

In addition to the above topics, a discussion regarding weekend and after hour PDA usage should be included in the company policy as well.
64% of SHRM-Atlanta members surveyed said they do have a policy for “Company-provided cell phone usage.
Having a well written policy is a good thing, but making sure everyone is aware and consistently following that policy is left up to our managers and supervisors. HR professionals can assist managers with making sure they are aware and trained on these PDA related issues.

And of course, during orientation, every new employee should sign an acknowledgement form, confirming that she received a copy of the employee handbook and policies, and agreeing to abide by all the company’s rules. Hare stated that in his litigation experience, these signed acknowledgement forms have been a vital piece of evidence, allowing the company to prove conclusively that “the employee knew or should have known what the rules were, and she was properly subject to discipline for failing to follow them.”

This issue effects productivity, costs, and liability all very important ccompenents of HR metrics. 

Monday, October 20, 2008

Value MATTERS Now More Than Ever

You can't turn on the TV or pick up the news paper without hearing more and more bad news. It is enough to make you want to jump out a window. Because companies are under intense scrutiny due to pressures on revenues and expenses, VALUE has to be the new criteria for evaluating almost everything.

1. What is the value the customer receives?

2. What is the value a particular vendor brings?

3. What is the value of this program or process to our bottom line?

4. What value does one employee have versus another?

5. How do we increase our brand value?

HR has been trying to defend its position by trying to prove value for many years now. I believe we have to quit trying and start adding value immediately. With job losses being reported on a daily basis, those that do not add value will be on the downsized list.

How can you tell if HR is adding value? A good first step is to complete an HR audit (see October 13th post). Another good way is to ask your internal customers. By conducting an HR Effectiveness Survey, you can uncover how you are performing in certain areas and determine what is important to your customer. For example, if customers score you high on benefits administration but talent management a low scorer, is what is most important to them, what do you do? Remember value is not determined by the provider but by the receiver. So, if your customer values talent management, you need to get busy focusing on delivering superior talent not benefits administration.

That sounds easier said than done, because HR in reality has to make sure both benefits and talent are handled in an effective and efficient way. By understanding where HR can impact the bottom line, the decision on what to focus on internally is easier. Benefits administration is one area that is very easy to outsource and many times more cost effective. (another opportunity to add value if costs are reduced).

ACTION ITEM: Conduct an HR audit and an HR Effectiveness Survey

Monday, October 13, 2008

It's a Great Time for an HR Audit

With pressures on the bottom line now more than ever, I am sure you are looking to be as efficient and effective as you can possibly be. The HR Department is no exception. An HR Audit can reveal if the department is performing at its highest and best level.

A HR Audit will determine if:

• HR Strategy is linked to the organizational goals and objectives thus providing the linkage necessary to be high performing

• HR Metrics are being utilized to track HR performance making sure HR is effective and efficient

• Policies and procedures are compliant and are being consistently implemented throughout the organization to prevent unwanted legal exposure

• The Performance management program is measuring the competencies that make your  organization successful

• Recruiting processes are yielding high quality talent based on your organizational competencies

By taking the time now to determine what can be done to save costs and improve productivity, HR can focus on adding value during this economic downturn.  The pressure of adding value to the organization will be heightened as top executives have to make sure that systems are streamlined, customers are served and profits are protected.  Now, more than ever HR must be focused on those activities that can add to the top line, protect the bottom line and increase productivity. 

Sunday, October 5, 2008

How to SELL HR Metrics

So many times after I conduct a seminar on "HR Metrics that Matter," I am asked the question, "How do I get Senior Managers support on starting a metrics project for HR?"

My answer is usually around starting small, getting some credibility by showing impact, and then you can go from there. 

In Al Adamson's, HR Executive Online article, Building Workforce Analytics, Adamson discusses 6 key challenges that must be overcome in order to continue a successful metrics program:

* Providing quality data and clearly defined metrics;

* Generating the initial deliverables and exhibiting their value;

* Understanding the requisite processes -- and time -- required to generate meaningful insight;

* Understanding the technology requirements, limitations and possibilities;

* Commanding the resources (internal and/or external) and appreciating their capacity; and

* Packaging and communicating insight in exceptional ways. No ordinary deliverable.

So, what can you do tomorrow?  If you are interested in starting a metrics project, find out what the real pain is in the organization and design your initial project on how to help with that pain.  For example, if in your industry, you are experiencing high turnover, high retirements in key positions, and growth as an overall strategy then identify workforce metrics that can help with these issues.  Start your analysis by trending turnover by age over time, add in known retirements for the same time period, forecast the number of positions needed due to growth and present a plan to obtain the necessary talent over the next 18 months.  You can add recruiting metrics into the project to show how efficient and effective the recruiting project was during the 18 months as well.

Now, this well get you noticed and build credibility by understanding the business and adding value at the same time.  Your next metrics project which hopefull will be an ongoing metrics project, will be a no-brainer and a lot easier sell!

Sunday, September 28, 2008

Which Metric can HR REALLY Impact?

In today’s chaotic environment with most of the economic metrics declining, which metric can HR focus on? Now more than ever performance matters. We hear about a different company laying off workers on a daily basis. It is critical that we keep our highest performing talent and that we hire the best performing talent.

So, this job is easier said than done. You have to start with a performance management system that is tightly linked to the company's strategy. While our economy recovers, this is an excellent time for HR professionals to dust off the old performance management system and make sure it supports the goals and objectives of the company.

A great performance management system:

1) Is linked to goals and objectives of the company

2) Is based on successful behaviors linked to organizational and job specific competencies

3) Is understood by managers and employees

4) Is administered fairly and consistently

5) Is focused on development and not punishment

6) Is simple

7) Is objective with a balance of qualitative and quantitative measures

I believe HR can have a direct impact on performance and creating a sound performance management system is one way to do that. Training, measurement, and process improvement are other ways HR can assist the company is getting a real bang for the buck!

One important factor in a performance based organization is that the CULTURE has to be performance based as well. Going from a culture where mediocrity and average is acceptable takes time and patience. (this topic is for a different blog, on another day! just felt compelled to mention it!)

With companies focused on the bottom line and trying to do more with less, performance is critical and I feel will be HR's focus for many years to come.

Saturday, September 20, 2008

Making Engagement Data Have Meaning

"Thank You" to the person who suggested this topic for me to write on.  I will have to admit we learned how to make engagement data meaningful the hard way.  In our early years as consultants we were convinced that more charts and graphs equaled better information.  Well what we know now, is that more charts and graphs equals a nap for our clients. 

I think the best way to make employee engagement data meaningful is to make it actionable.  Here are some tips on how to make the data actionable:

1) Ask questions that are specific enough so that you know what to do if you score high or low on that question.

2) Analyze the data so that you know exactly what DRIVES engagement.  This does require some extra statistical steps (correlations, factor analysis) but it is worth it.  These DRIVERS will enable you to focus on what is really important.

3) Report the data in a way that is meaningful to your audience.  Use the "killer slide" concept.  Tell the data story in one or two slides at the beginning of the presentation.  Spend the rest of the time ACTION PLANNING around what to do about the data. 

4) Use the right metric for engagement data.  Instead of using mean scores, because after all that is just an average, report data using % favorable instead.  Percentage favorable is the % of respondents that gave a question a favorable rating.  For example, on a 5 point scale, the respondents that scored a question a 4 or a 5, would be considered favorable.

5) You need to track engagement data over time to really make the data have meaning.  By understanding how scores move and why, you will be able to become predictive with your data.  By combining other data points like turnover and customer satisfaction your data becomes intelligence that is critical to the business.

Many times after a survey is completed, the engagement data is put away until the next time a survey is delivered.  I say take that data and use it, you will be surprised what you learn.

Monday, September 15, 2008

What does AGE have to do with EngAGEment?

The answer to that question is… everything! Does this scenario sound familiar in your organization?

The Veterans and Boomers that have been with your organization for 20+ years are quite frustrated with the “new kids” coming onboard. “They just don’t work as hard as we do.” “They aren’t loyal to this organization” “They have not paid their dues yet”
For this first time in history we have 4 distinct demographic groups in our work places:

1) Veterans
2) Boomers
3) GenXers
4) GenYers

With these very different generations, how do we keep them engaged and loyal to our companies? The first consideration is to understand how each group views the workplace. (double click on table for a larger view)

Just as we target our customers’ needs based on demographics, we will need to do the same for our employees. It is no longer “one size fits all” when it comes to careers, rewards, and job content. Companies with this mentality are going to find themselves without talent in a world where talent is in short supply. So, how will you think and act differently regarding the changing workforce? Is your Human Resource Department ready for this challenge?

The first step is to analyze employee engagement by generation and to understand the differences in scores. Then, like a detective search for root causes of differences so that you can take action based on that data. For example, if you find that Xer's prefer time off to a monetary bonus for a job well done consider giving employees a choice when it comes to rewards.

ACTION ITEM: Start analyzing your employee engagement data by generation!

Friday, September 12, 2008

The $6 Million Dollar Employee

What if you had the ability to predict the value of an employee over his tenure with your company? That intelligence sure would make employment decisions like hiring, firing, and training a lot easier.

For many years, marketing professionals have been calculating Customer Lifetime Value (CLV). CLV is defined as the present value (usually expressed in currency) of future profits that can be calculated based on current customer profits and customer behavior. There are many variations in models but most contain the following components:

• Time- period over which lifetime value will be calculated

• Interest rate

• Cost to attract, service and retain customer

• Revenues

To calculate CLV, sum the revenue, subtract costs, and take the present value over the specified time period. This information allows managers to determine if customers are profitable or not. This is a great way to get rid of your non-profitable, high maintenance customers.

Fast forward... over the last year, many articles have been written about using this same methodology for Employee Lifetime Value. Wow, wouldn't that give a new meaning to performance management?

By using a similar methodology as above for employees, companies can track employee value over their employment life cycle. For example, ELV may be lower in the first few years of employment due to ramp up and training but higher in the later years due to increased loyalty, commitment and deepened relationships.

HR can play a critical role in ELV. By learning to calculate and track employee value, HR can assist management in understanding how employees add value. HR can then focus on those VALUE enhancing activities like training, skills development, and career development. By calculating the ROI on these activities through a metric like Employee Lifetime Value, HR has a great way to show its own value!

Monday, September 8, 2008

13 "Must Haves" for Employee Surveys

According to, the use of employee surveys is trending upward. The following examples demonstrate real financial impact of strong employee engagement:

  • Data from Best Buy shows that stores where employee engagement increased by a tenth of a point (on a five-point scale) experienced a $100,000 increase in annual sales.

  • JC Penney has found that stores with top-quartile engagement scores generate roughly 10% more in sales per square foot than average and 36% more operating income than similar-sized stores in the lowest quartile.

So now that you see the WHY behind tracking employee engagement data, here are the 13 "Must Haves" when you start an employee engagement project:

  1. Shared goals-Make sure upper management is onboard with the idea and that the goal for everyone is continuous improvement

  2. PR-Communicate the upcoming survey to the employees explaining the reasons for the survey and to set expectations for the follow up of results, confidentiality, etc.

  3. Questions-Make sure you are prepared to take action based on the questions you ask. Even if that action is monitoring that question, make sure you know what you will be doing with the data.

  4. Delivery-Make sure respondents have access to the survey. Many times production and field workers do not have Internet access. Have paper copies available for those groups.

  5. Language-If you have multiple languages represented in your employee population consider survey translation. Meanings do get confused and you want to avoid survey error.

  6. Response rate-Monitor response rates and publish those to employees encouraging 100% participation.

  7. Data analysis-The data has to be analyzed in a way so that action can be taken. This means that the onion must be peeled back so that the data is meaningful to those taking action.

  8. Data story-DO NOT USE ENDLESS CHARTS AND GRAPHS. Tell an effective data story beginning with 2 killer slides that gets to the POINT in a succinct, understandable way. (see post: How to tell a GREAT data story)

  9. Communicate again-Be sure to discuss survey results with employees. Also, any action items that have been planned as a result of the data should be reported as well.

  10. Action planning-Don't stop the process after the last report out. Make sure you managers are involved with action planning to improve and/or maintain scores.

  11. Remeasure-After actions have been taken, go back and remeasure to track results

  12. Get predictive-Begin analyzing historical data and other relevant company data to be able to produce intelligence like Best Buys and JC Penny.

  13. Include engagement scores on HR scorecard and Company Scorecard

Action item: Talk to management about employee survey, 4th quarter 2008!

Wednesday, September 3, 2008

Don't Forget Your Intangibles

Jac Fitz-Enz has been working in the field of HR Metrics for over 30 years and is considered the guru in HR Metrics. In a recent article he co-authored, "Managing Tomorrow, Today." Fitz-Enz raises an excellent point about intangibles being a LEADING indicator for desired business results like profit and revenue.
"Intangibles are becoming increasingly important in business. Many of them are people-based because people are variable assets not subject to general accounting rules." Fitz-Enz

Many times we measure the things that are easy and popular. For example, we measure turnover because that is an issue for many companies. But if turnover is the problem, the metric that we use is a lagging indicator...turnover %. This metric has occurred in the past month, quarter or even last year. (note: turnover analyzed in a more granular way with other key data points can also be a leading indicator )

So what would the LEADING intangible metric that we should pay attention to in regards to turnover?
  • Employee engagement, satisfaction, loyalty (whichever one you use)
  • Customer satisfaction

Remember the Sears study, the "Employee-Customer Profit Chain," the premise being that employee behavior predicts customer behavior thus affecting the bottom line. It is important to understand the behaviors associated with positive employee engagement so that those behaviors can be measured and tracked. When we see a change in the intangible metric, like employee satisfaction, we then should then see a change in turnover, and other metrics as well. The key is to get predictive and take the data to the analytics level. Instead of reporting turnover DATA, analyze it further and report turnover INTELLIGENCE.

Action Item: Start tracking employee engagement NOW if you are not already!

Wednesday, August 27, 2008

Wouldn't it be Cool, if Employees had Baseball Cards

I think Major League Baseball has it all figured out. They really know which Metrics that Matter to their teams.

Picture this, instead of a resume, all employees carried with them a "Baseball Card" aka Employee Talent card. On that card, you have stats like:
  • % of goal attainment

  • % of revenue increase

  • % improvement in a specific competency from last year

  • # new accounts won and lost

Having information like this would sure make it easier to: 1) Acquire new talent (draft) 2) Trade non-performing or misaligned talent 3) Fire under performing talent

During the employment cycle employees can add to their Talent Cards by including things like:

  • Performance ratings last 3 years

  • Productivity numbers

  • Special project results

As in baseball, I can't imagine keeping an employee that gets up to bat time and time again without EVER hitting a ball. These cards could replace resumes and performance appraisals all in one swoop! (I mean crack of the bat!)

Monday, August 25, 2008

How to tell a GREAT data story

Many times we are asked, "How do I present my data (employee engagement, HR scorecard, customer data etc.) to management?"

I learned this lesson the HARD way. I can't tell you how many data-rich presentations I have given or listened to where managers were checking their email, drawing stick figures, or maybe even dozing off!

So, I decided it was time to get their attention at the beginning of the story. I simply moved the climax of the story right to the front. The reason being, we all know how long our executives pay attention to the spoken word and PowerPoint. If we are lucky maybe 2 minutes.

Based on our experience, we now start with a "Killer Slide." This slide tells the data story in one or two very succinct pages. For example, regarding employee engagement, management wants to know what drives it, how the company is performing in that area and what are we going to do to fix it or sustain it. Sounds like a lot for 1-2 pages, but it can be done. The rest of the story is just back up for the killer slides. Some managers will want all the details, some do not.

Another important element of a great data story, is the action plan. Give the team the facts in one to two pages, then unfold your well thought out plan for improvement. Even if the data is good, there is always room to raise the bar.

I know it is tempting to insert endless graphs, charts and verbiage. The goal of the exercise is to take action and to increase company performance not to showcase excellent Excel charting skills.

Remember who your audience is, they are not novel readers, they like the cliff-notes!

Friday, August 22, 2008

12 HR Metrics to START with

Many times over the last few months, I have been asked, "Which HR metrics can I start with?"

My standard answer is usually, those metrics are unique to your HR department and your company strategy. What I have realized is that some people just need a starting point. Because there are so many HR metrics to choose from it gets very overwhelming. So, if I wanted to start with just 12 metrics, these are the ones I would pick:

1) Revenue per employee (to see trends which will lead to asking "what happened there?")

2) Turnover/Retention by department, supervisor, performance, age, etc.

3) Recruiting: Cost per hire

4) Recruiting: Choose appropriate efficiency measure, response time, time to fill, etc.

5) Recruiting: Average new hire performance rating

6) Total HR expense/total revenues

7) Company and departmental level employee engagement scores

8) Compensation budget variance

9) HR service delivery satisfaction rating

10) Training spend per Full time employee

11) Training: Appropriate results based metric after training i.e. customer satisfaction score

12) % of strategic competencies available in organization

These 12 should get you off to a good start and will produce the classic follow up question, "why is that?" Answering the WHY questions will help you customize your HR metrics to your own company needs.

Friday, August 15, 2008

Turnover Analysis: Peel back the Onion!

So many times when we ask our clients what they are measuring In HR, we hear, "Turnover." I think turnover (some are now using the term retention) is a very good metric IF you analyze the data correctly.

We see a trend in our practice, where managers are looking for "root causes" regarding workplace issues. Turnover is no different. When you report turnover numbers to management, they want to know three things:

  1. Who is leaving?
  2. Why are they leaving?
  3. What can we do to retain them?

To answer those questions we need to get out our detective equipment and start digging. Instead of looking at turnover for the entire enterprise or by department, go a few steps further. Investigate turnover by:

  1. Tenure
  2. Supervisor
  3. Performance
  4. Age
  5. Location
  6. Engagement scores

By taking a more granular approach to analysis, you will find out some amazing information. For example, what if you looked at your high performers and your most highly engaged employees and found that turnover is 20% for that group? After, panic sets in, then you need to start understanding WHY they are they leaving. This requires looking at qualitative data like exit interviews, focus group data, managerial interviews, etc. The goal is CAUSATION so that you can make improvements to the work experience.

Age, is another interesting data slice. With four generations in our workforce it is interesting to look at turnover by traditionlists, boomers, Xers, and Yers.

Get out your magnifying glass and happy analyzing!

Monday, August 11, 2008

Carnival of HR

The Carnival of HR is a synopsis of 25 or so HR related blogs compiled by one blogger. This is the 40th post for the Carnival. It is VERY interesting reading and of course yours truly is mentioned.

Wednesday, August 6, 2008

Activity vs. Value Measures

I have just read an article on HR Executive Online, entitled, Barriers to Becoming More Strategic. Here is an exert:

"HR should also develop a strategic plan with measurable performance metrics to demonstrate how their work contributes to the agency's mission. Potential metrics, Davidson says, include:

* Cost and time per hire.

* Number of employees who have attended diversity training.

* Number of employees who were hired from a specific target group -- veterans with disabilities, for example. "

I will argue that the above mentioned metrics will be a huge barrier to becoming strategic. Those metrics are just about activities . They are important to track regarding productivity, costs and compliance. They are important for an HR Department to monitor. But my question is, "What was the result?" It is like having half of the story.

What really matters are the results. To be strategic HR must focus on the Value Metrics.

So instead of cost per hire and time to fill, focus on performance, productivity and revenue increases of new hires.

Instead of #'s of employees that attended a training session, focus on what business results what achieved after that new knowledge was obtained (ROI).

Instead of just looking at hires from specific groups, look at retention and performance of those groups as well.

Wouldn't you rather go to your CEO and say, "AS a result of our Customer Service Training...our customer satisfaction index increased 5% last quarter and we are ahead of last year's budget on new business by 14%, our CSR retention rate is 87% resulting in an increase of revenue per employee of $1200.


You could say, "We trained 142 employees last quarter." I am sure that will get you invited to the next Executive Meeting that you have been dying to attend.

Wednesday, July 30, 2008

It is Time to Measure what Drives the Business

With the recent layoffs, inflation, and economic indicators it is easy to see that we are operating in a very different business environment. Because this "slowdown" has lasted for longer than we have expected, businesses have more and more revenue pressures as the months go by.

With pressure on the top line, the bottom line is scrutinized even more. So, it is important to know what IMPACTS the top and bottom line and how. So for example, if you know that customer loyalty is driving your profits, and that retaining people drives customer loyalty, you then can focus on retention instead of training.

Another example might be in the HR area. Talent is on everyone's mind these days even in these uncertain times. We all know when the economy turns around, so will the supply and demand of talented people. What are the workforce planning models that HR can create now, that will assist managers when they have staffing issues in 18-24 months?

With resources being stretched like a rubber band, and economic measures swinging up and down, it is time to determine what drives your revenue and what measures you should be focusing on.

Thursday, July 24, 2008

36 Bloggers discuss HR and Having a Seat!

I am happy to announce that I have made it onto the prestigous Carninval of HR, joining friend and partner Mike Haberman and 34 other bloggers chatting about the "Mystical Seat at the Executive Table."

See what they are saying....HR Carnival Blog

Monday, July 21, 2008

Do you Have Your Employees' Heart?

So you thought having engaged employees was enough….well not exactly. Now, we know through research there are two types of engagement:

Rational: this speaks to the intellectual commitment people have to their organizations and the understanding they have of how they can help their companies succeed

Emotional: this speaks to that deep down connection people feel towards their organization. It also incorporates the fulfillment people derive from their jobs.

It is interesting to point out that in a recent study, emotional engagement is four times more valuable than rational engagement in driving performance and those that are committed perform 20% better and are 87% less likely to leave the organization.

What a financial impact! If you have employees that are emotionally engaged (committed) to your organization what would that mean to your bottom line?

So, it is about the heart over the mind……

How can you tell if your employees are emotionally connected to your organization and are performing at a high level?

Analyze your enagement and performance data will be amazed!

Wednesday, July 16, 2008

Predictive Metrics are in our Future

How would you like to be able to:

1) Determine the financial impact of customer or employee loyalty?
2) Determine the number of types of employees you will need in 2009?
3) Determine the productivity increase of a proposed training intervention?

Do you think you need a crystal ball?
The answer is no. Today, we are seeing more and more companies taking their metrics and data to the next level. The are becoming very PREDICTIVE using historical data to build models in order to assist managers in making better decisions.

This exercise is not for the faint at heart as it does require historical data and some higher level statistical testing, but the effort is well worth the business intelligence it creates. Using methods like linkage analysis, regressions, correlations, factor analysis, etc. statisticians can uncover root causes and outcome drivers so management can focus on what matters most.

The Burke Institute offers many workshops on these subjects. So throw out the crystal ball and start mining for data!

Monday, July 7, 2008

Drowning in Data?

Are you like so many companies that measure just about everything possible from number of pencils bought to number of customers served?

The questions I get from so many companies are, "What do I need to measure?" "Which metrics go on our scorecard?"

We see many clients tracking hundreds of measures, with each department tracking 20-30 measures each.

The question then becomes, "What are the metrics that matter?"

We believe the metrics that matter to your organization depends on YOUR desired outcome. Is your desired outcome, revenue, growth, profit, safety or quality?

You then must also look at what your strategic goals are to make that outcome happen. So, if revenue is your outcome, what are you doing to drive revenue?

You have to work backwards from your outcome. Most of the time we see clients picking metrics FIRST, based on the latest trends, books and benchmarks.

This approach will not give you the metrics that matter to your organization because you did not start with your own outcome and your strategies.

Customization is key when choosing size does not fit all.

How have you decided what to measure in your organizations? Please comment below!

Wednesday, July 2, 2008

7 Tips to Actionable Surveys

Many times we are asked in our consulting firm, what do we do with all our data. Our answer is, "Take Action!"

Sometimes that is easier said than done. For example, many times employee engagement data is so overwhelming we do not know what to do. You should be able to understand those things that drive engagement with your employees and make changes based on those drivers. But, so many times we get data points, benchmarks, and huge reports, that don't yield any real KNOWLEDGE.

Action needs to be the goal of any data gathering project. If it isn't, then why collect the data in the first place? Whether the data is employee, financial, operational or customer related, being able to tell the data STORY is key!

Here are 7 tips that will help you take action on your next data collection project:

•Step 1: Think with the end in Mind
•Step 2: Determine the Criteria You Want to Measure
•Step 3: Design Survey Questions
•Step 4: Determine the Best Analysis for the Data
•Step 5: Communicate Results
•Step 6: Action Plan
•Step 7: Monitor and Re-measure

Do you have a question regarding data and how to report it? Please let us hear from you.

Friday, June 20, 2008

Time to fill, Turnover %, Cost per Hire are not all the Metrics you Need!

So many times when I ask the question, "What are you measuring in HR?" I receive the following list of measurements:

  • Time to fill
  • Cost per Hire
  • Turnover %
  • Recruiting sources %
  • EEO recruiting %
What I don't hear is the linkage to business strategy with these metrics.

For example, take "time to fill", OK great, it took you 30 days to find a new employee. Where is the measure that shows that the new employee wasn't qualified and left in 120 days? Make sure when you calculate time to fill you also include quality of hire. What is their performance rating at 90 days?

Does it matter if your cost per hire is below the national average when you analyze new hire data and find that management satisfaction with those hires is low and that turnover with new hires is 50%? How does that impact revenue?

Turnover is a universal measure. I see a trend in looking at turnover in more granular way. For example, analyzing turnover further by engagement level and by performance rating. What would you do if you found out all your most loyal and highest preforming individuals are leaving at a rate of 50%? What impact would this have on customers and productivity?

By looking at these types of measures you can play detective and get to causation, which will allow HR to solve business problems and impact the bottom line!

Friday, June 13, 2008

Who should measure HR?

That sounds like a very simple question with a very obvious answer.

Over the last few months working with clients, I have noticed that when we as consultants go into organizations to discuss metrics something very troubling has been happening.

When we have discussions about HR metrics more times than not, OPERATIONS and CUSTOMER SERVICE management are leading those efforts.

Why is that?

Why is HR not leading the metrics projects? If we are in charge of people and their performance why can't we also measure the people and performance?

I have my own opinions, but please post your comments below!

Wednesday, June 11, 2008

Why Measure the Effectiveness of HR?

In today's economic conditions, I believe it is critically important for HR professionals to show value to organizations. We have heard "seat at the table" and "business partner" and "credible resource." I say, "Who cares!" What matters is that what your are delivering is adding value to the business. Value is either an increase in revenue a decrease in cost or risk reduction.

So, how do you know if you are adding value to the business? ASK THE BUSINESS LEADERS.

I am worried about our profession. I think we are at a critical juncture. We have been talking so long about being strategic, and sitting at the "table", that we have not focused on results.

As Sue Meisinger, retiring SHRM President and CEO, stated, "Stop asking for a seat in the executive office and instead ask yourself: How can I leverage what I know about Human Resources to help shape and serve the strategy of my organization?

In our experience, when you ask business leaders about how HR is performing they are not shy about giving feedback. Use this feedback and set metrics for your department. Monitor those closely and communicate RESULTS. Maybe then we can stop asking for a seat and actually get an invitation!