Making metrics relevant
| DOI | https://doi.org/10.1108/14754390480000570 |
| Pages | 7-7 |
| Date | 01 November 2004 |
| Published date | 01 November 2004 |
| Author | Andrew Mayo |
| Subject Matter | HR & organizational behaviour |
7
Volume 4 Issue 1 November/December 2004
METRICS
,
The latest ideas on how to approach
measurement and evaluation of HR activities
Making metrics relevant
T
he desire to be more professional
in the area of measurement is a
growing interest for today’s HR
function. It has been stimulated from a
number of quarters. One of them is a
commercial drive by the suppliers of HR
software, who suggest to clients the
variety of indicators they can get from
their products. In the UK, another is the
publicity created by the DTI’s Accounting
for People Report1and the forthcoming
Operating and Financial Review.2The
CIPD has produced its own guidance
papers on external and internal
reporting. Finally, the almost universal
desire of the HR function for stronger
business partnership is a stimulus to be
more “business-like” – and that must
include a more numeric approach to HR
management.
Where’s the value?
All this adds up to some confusion as to
what will really add value and to
whom. There are two sets of
distinctions that can help. The first is to
distinguish between the HR scorecard
and people-related measures. The
former is about the efficiency and
effectiveness of the HR function – it
helps to keep this separate from
statistics and ratios about the workforce
itself. This scorecard is about service
levels and process measures such as
cost/recruit, learning plans implemented
or percentage take-up of self-service
options.
People-related measures embrace a
range of indicators about people in the
organization. Whereas HR should
influence these through its policies and
training, they are the result of
partnership with line managers. The
three that typically feature in a
balanced scorecard are attrition rates,
absenteeism rates and employee
opinion survey results. Added to these
is a host of statistics and ratios: actuals
vs budgets for headcount and employee
costs; training days per person;
percentage of people “highly satisfied”
– there are hundreds of possibilities.
Internal vs. external data
This brings us to the second important
distinction – who is going to take action
as a result of these indicators? The DTI
recommendations are aimed at investors,
both current and potential. Depending
on their belief in the importance of
people, they will be interested in
employment policies, and should see an
upside in good retention, investment in
development, attention to diversity, and
satisfied/motivated employees. What
they’re likely to get is a consolidation of
highly variable indicators from different
parts of the organization – but
nevertheless of some value.
Consolidated figures for senior
management however may be dangerous
as they hide variation, and it could be
that strategically critical areas have
problems. The top team should want to
see the indicators broken down by
subsidiary and department. The measures
they want to know about may not be the
same as those they are required to – or
are willing to – publish. The internal
framework will almost certainly be more
extensive than the external.
Metrics for managers
The real value however is in indicators
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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ANDREW MAYO
that relate to specific groups of people
influenced by a manager or management
team at the operating level. If we
recognize the truth of “people as our
most important assets,” surely it’s vital
that managers have some statement of
what’s happening to these assets on a
regular basis, alongside financial
statements. What managers need is to
see how these metrics link together and
influence each other. They also want the
measures to be relevant to their situation,
not a set which has been corporately
defined “in the interests of simplicity.”
It’s up to the HR function to facilitate
these measurement frameworks. Like
other support functions, HR has a
tendency to be internally focused and
anxious that it is taken seriously. It will
help to make a clear distinction
between HR’s “functional added value”
and the value that people throughout
the organization can add to different
stakeholders. Business partnership
requires that, amongst other things, HR
can provide managers (and
management) with sets of numbers that
tell them what’s happening with people
so they can manage them more
effectively and, in the end, achieve
higher performance.
Andrew Mayo is director of Mayo Learning
International and professor of human capital
management at Middlesex University.
andrew.mayo@mayolearning.com
References
1. www.accountingforpeople.gov.uk
2. www.dti.gov.uk/cld/financialreview.htm
Andrew Mayo is the author of The Human Value of the Enterprise
Nicholas Brealey Publishing,2001
© Melcrum Publishing Ltd. 2004. For more information, go to www.melcrum.com or e-mail info@melcrum.com
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