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.


Michael D. Haberman, SPHR said...

An excellent point Cathy. Too often HR does measure its activity to show that they are doing something as opposed to measuring results to show that they have accomplished something.

Brent Churchwell, Strategist said...

I wholeheartedly agree. In a similar vein, I hereby challenge recruitment functions to look beyond patting yourself on the back for short-term requisition metrics (time-to-fill, favorable candidate perceptions and compensation containment). I am not necessarily saying these are unimportant. Additionally track long-term outcomes like quality-of-hire or incumbent-value-contribution to the business. That will indicate to some degree whether the recruitment processes, assessment tools and candidate decisions are ultimately effective -- supporting the business strategy. Don't be afraid to take a little ownership over retention and productivity.

Unknown said...

Brentano, I belieive you said the keyword OWNERSHIP for retention and productivity. IF HR doesn't own it....someone will.

Anonymous said...

I can hardly believe an article could get published that states "the number of employees who have attended diversity training" is a strategic metric. This is the sign of an HR function that focuses more on compliance than strategy. Good post, Cathy.

Unknown said...

Darci, my sentiments exactly. I was very surprised. I thought we had moved passed just counting bottoms in seats.

Gopi Padakandla said...

Excellent insight Cathy. Same metaphor and linkages need to be applied to the other areas of HR metrics as well – instead of just the numbers of accidents, the insight metrics like which facilities had more accidents and what is the impact of training in reducing the accidents should be used.

Also, just curious how successful are you in influencing your customers to adapt to this mindset?

Unknown said...


It sometimes takes awhile to shift that mindset, but when we start giving examples like training and safety and employee sat and retention and they see the IMPACT to the bottom line..our clients get there. HR metrics are hard to get to a they often deal with intangibles. Unlike accounting and finance where you are dealing with tangibles most of the time.