Quantify HR Success with Helpful Metrics

The most significant difference between the best human-resources departments and the average ones is that the best have developed extensive research and people-measurement efforts to track the effectiveness of programs.

Failing to utilize metrics is the primary thing that has kept HR out of the 'big leagues' and under the CFO's budget-cutting scrutiny for years.

Measuring the value of HR processes and showing the return on investment to the organization places the department on a path of continuous improvement and positions it as a business partner.

The 'Metric' System

A metric is an accountability tool that makes it easy to see if the company is producing results. With such measurements, competitive HR departments are able to build the business or economic case for their own work.

Most metrics have six elements: measurements of quantity, quality, time, money and satisfaction, as well as benchmark comparisons.

Metrics can change behavior by driving action to change. "What is measured gets done" is an often-repeated phrase used to underscore how numbers provide impetus to direct behavior. Metrics can be used to build competition among employees and create pressure when one department is shown to not achieve at the same levels as others.

There are three criteria for selecting metrics:

1.      Companies should ensure the metric fits the corporate culture of what is deemed important. For example, measuring the level of customer service would be important for a company. If a company's culture emphasizes speed or being the first to market, it would select metrics related to time.

2.      A metric should echo the critical success factors that make a company's product or service successful. HR, for example, might choose to measure the satisfaction of managers and applicants.

3.      Metrics should focus on issues that are likely to be reported to the chief executive officer. HR should select strategic output metrics that have the most impact on profit, revenue or product development. In recruiting, for example, cost per hire doesn't need to be reported to the CEO. Instead, HR should measure the performance of new hires, because that has a direct impact on productivity. Other types of measures related to hiring are the new-hire satisfaction rate and dates that reflect on a company's ability to meet deadlines.

HR can use data the company's information-technology and human resource information systems already have available, and draw measures of progress from this information.

Boiling Things Down

With metrics in hand, HR can compare its findings with standards through benchmark information provided by participants of self-initiated surveys or HR associations who are willing to share this information to others.

Comparison numbers for particular companies can be obtained, but asking other employers for this valuable information isn't always successful, Instead, HR pros should ask to trade information with them, provided the companies aren't competitors. Suppliers and customers might be more willing than other companies to make such exchanges

  

Sample HR Performance Measures

Percent of employees who leave during the first year	Number of days to answer suggestions
Number of suggestions resubmitted and approved	Turnover rate due to poor performance
Number of grievances per month	Percent of employment requests filled on schedule
Number of days to fill an employment request	Time to process an applicant
Average time a visitor spends in lobby	Time to get security clearance
Time to process insurance claims	Percent of employees participating in company-sponsored activities
Percent of complaints about salary	Percent of personnel problems handled by employees' managers
Percent of employees participating in voluntary health screening	Percent of offers accepted
Percent of retirees contacted yearly by phone	Percent of training classes evaluated excellent
Percent deviation to resource plan	Wait time in medical department
Number of days to respond to applicant	Percent of promotions and management changes publicized
Percent of error-free newsletters	Personnel cost per employee
Cost per new employee	Management evaluation of management education courses
Opinion survey ratings