Sunday, March 14, 2010

Making Your HR Metrics Matter?

As I prepare for a presentation to Dulles SHRM this Wednesday on "Making HR Metrics Matter, " I am reminded of a question that usually comes up during the presentation. Why should HR be concerned about metrics? At the HR Florida conference last year, that very same question was raised, click on the video below to hear the responses from that audience.




The next question I get is usually around "which metrics should I be using?" I respond to this question the same way every time. Although there are common HR metrics that most companies use like turnover or cost per hire, YOUR metrics are very dependent on YOUR company's strategy. So, in order to develop HR Metrics that Matter to your company you must start with strategy and make sure HR is aligned with the organizational strategy.

For example, if your company has a strategy to be innovative and develop new products, you would need metrics that measure how well you are doing against that strategy. So perhaps HR should make sure that ideas, suggestions, and successful product launches are rewarded and recognized appropriately in the performance management system and compensation philosophy. HR could then determine which metrics are appropriately linked to their people strategy. In this environment maybe metrics like # of new ideas per quarter, % of new ideas that are implemented, and satisfaction rating with new products.

Contrast the innovative environment just discussed with an organization that has a growth strategy. As you can imagine the metrics should be VERY different. In a growth oriented business metrics like revenue per employee, profit per employee, % of salespeople exceeding quota and market penetration measures would be important.

So, start with strategy to get to your Metrics that Matter...

What are you measuring in HR today? How do you know if your metrics matter?

6 comments:

Mick Collins said...

Cathy,

Thanks for the post and the great idea of using a video clip to share audience perspectives on metrics.

One of the attendees suggested that HR should use metrics in order to "justify our jobs".

My viewpoint is that using metrics will open up a multitude of new career opportunities for analytical HR professionals, especially if you agree with the following assumptions:

1. That the use of data in managing human capital will only increase, not decrease, over time.
2. That the capability for understanding complex business challenges, applying data to test related hypotheses, and communicating the "so what?" remains scarce within HR.
3. That talent management professionals will identify less so with HR (especially the transactional function) and more with business strategy/execution, thereby expanding the fluid roles they play across all facets of organizational development.

Under these criteria, the question will become less of "what metric?" and more of "what is the business issue?" and "how can we explain or solve it through data analysis?"

Cathy Missildine-Martin, SPHR said...

Mick:

Thanks for the kind feedback regarding the video and I appreciate you reading our blog.

I agree with your assumptions listed above as I truly believe that HR will have 2 major areas the transactional and the strategic. To be strategic yo have to have the analytical skill set...in my experience. I agree that you will have business issues that need analysis to solve but you also have that set of metrics that is used for tracking and trending and those are the ones I believe have to be linked to strategy as that is what we are executing. So, I guess I believe that you have metrics for different outcomes. Hope this makes sense and didn't muddy the water.

An HR Weaver said...

Cathy, Thanks for your post on metrics and the importance of execution. Metrics teach us to focus our actions on specific outcomes. Good metrics start with our strategic conversations with business leadership. When the COO says her priority is lower cost, and we show that savings could come from workers comp, then we have the starting point for a business metric that partners us with that COO in driving a systemic business solution that both improves the worklife for employees and saves a boat load of money!

Cathy Missildine-Martin, SPHR said...

Hi Nancy:

Excellent example thanks for reading and thanks for commenting. That is the exact process I think is key in getting to those metrics that matter. Obviously the one you stated would matter to the COO!

Cathy

Fatima Goines said...

Thanks for your timely article and video on HR metrics. As an HR professional in the government sector, which has endured drastic workforce and business changes within the last two years, it is critical for HR to have metrics that align with the business strategy and to “prove our value” in the organization.

Cathy Missildine-Martin, SPHR said...

Hi Fatima:

Thanks for reading and posting. Metrics in the government sector can be tricky, as we aren't typically looking at profit as much as we look at budget/cost savings. Hope to see you at the next SHRM event!

Cathy