Five steps to effective metrics
| Published date | 01 March 2005 |
| Date | 01 March 2005 |
| DOI | https://doi.org/10.1108/14754390580000599 |
| Pages | 7-7 |
| Author | Yves Lermusiaux |
| Subject Matter | HR & organizational behaviour |
7
Volume 4 Issue 3 March/April 2005
METRICS
,
The latest ideas on how to approach
measurement and evaluation of HR activities
Five steps to effective metrics
G
athering, analyzing and presenting
pertinent information to upper
management is the single
strongest means HR has to provide critical
input on strategic business issues. Talent
management processes and performance
optimization based on powerful
intelligence drawn from good metrics will
deliver proven value and real ROI – and
make you a valuable strategic player.
The utilization of metrics in your
talent management process requires a
commitment and resource allotment, so
it’s important to do it right. However,
there are some common errors in the
design and use of metrics, namely:
•Metrics for the sake of metrics.
•Too many metrics (no action).
•Metrics not driving the intended action.
•No record of methodology.
•No benchmark.
•Underestimation of the data extraction.
We use metrics to base decisions on and
to focus our actions. To be effective and
reliable, the metrics we choose should
have the following five characteristics.
1. Aligned with business strategy
In a Corporate Leadership Council
survey, 62 percent of respondents cited
“to better align HR strategy with
corporate strategy” as their number-one
goal. More than half the respondents in
a Towers Perrin study considered
“shifting HR’s role to help address
critical business issues” as the most
significant challenge for HR leaders.
Clearly, HR alignment with business
goals is a priority, but it’s also difficult
to achieve. First, corporate business
targets (i.e., the direction set by the
CEO) and HR strategies need to be
synchronized, and then translated into
tactics implemented by HR.
2. Actionable and predictive
A good metric must provide
information that can be acted on. Too
often HR measures for the sake of
measuring without really asking, “what
do I do if the metric is lower or
higher?” Metrics must trigger
appropriate action. A metric that
merely measures finite or completed
actions, not ongoing activity, is only of
retrospective interest.
The issue with many data points is
that they are usually lagging indicators,
or in other words, show what
happened in the past. Data that, when
analyzed, can forecast the direction
actions should take in the future is
what provides true power. Presenting
these leading indicators that drive
aligned action is where strategic HR
should be going.
3. Consistency
A good metric is consistent in what it
measures. Cost-per-hire, for instance,
has been a popular HR metric. Yet a
SHRM/EMA study identified more than
a dozen components included at widely
varying degrees by different companies
to calculate cost-per-hire. Make sure
that the data included in any metric
you use is defined at the outset, and
remains consistent, otherwise the value
of its comparison is useless.
4. Time trackable (internal benchmark)
A good metric must be trackable over
time. It’s not a snapshot of an activity at
DEPARTMENTS AT A GLANCE
STRATEGIC COMMENTARY
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e-HR
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HOW TO…
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PRACTITIONER PROFILE
METRICS
HR AT WORK
REWARDS
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RESEARCH AND RESULTS
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iLOGOS RESEARCH
one moment in time. For example, the
number of job applications received per
week can be tracked and graphed to
see both the weekly trend – as well as a
monthly, quarterly or longer interval –
and forecast a shortage.
The frequency of reporting for a
metric varies with different metrics. We
recommend that the time-to-fill metric
for instance, should be reported weekly.
Metrics addressing longer-term
evaluations such as hiring manager
satisfaction, and new hire performance
could be tracked quarterly or annually.
5. Peer comparison (external benchmark)
In addition to analyzing internal
performance, good metrics should be
compared to external benchmarks
among a peer group. That peer group
may be another business unit within
your company, another company
similar, for instance, in size or location,
or an industry benchmark.
A metric viewed only as an internal
measure may not reveal the need for
improvement until tracked against an
external benchmark. Conversely, that
metric may show superior performance
when viewed in a wider context.
Benchmarking by quartile can be
another beneficial indicator of relative
performance.
iLogos, a division of Taleo (www.taleo.com),
is a specialty research and consulting
practice focused on business analytics that
tie staffing technology and process
improvements to financial results. Contact:
Yves Lermusiaux, yveslerm@ilogos.com
© Melcrum Publishing Ltd. 2005. For more information, go to www.melcrum.com or e-mail info@melcrum.com
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