“Some HR managers keep 40 or more stats, virtually all uninteresting to their company’s executives,” says attorney James P. Greene, Esq. of the law firm Dykema Gossett, PLLC.
There is no single set of metrics that fits all companies, Greene says. HR managers need to step back and find out what management really needs. You’re looking for a few strategic, relevant metrics, he says.
The Three Levels of HR Metrics
Greene identifies three levels of metrics: personnel, human resources, and human capital management. Only the third level is potentially of interest to top management, Greene says.
Level 1—Personnel
At the first level are control and compliance stats that measure the efficiency of the HR department. Examples of this type of metric are:
- Time to fill critical positions
- Turnover rates
- Absenteeism
- Training costs per employee
- Cost per employee of wages and benefits
Level 2—Human Resources
At the next level, things become more qualitative, with stats on service delivery. At this level, HR is measuring the quality of its programs. For example:
Level 3—Human Capital Management
At the top level, Greene says, you find metrics that measure HR’s impact on strategy. These are metrics that are aligned with the organization’s strategic goals, and thus are the metrics that will be meaningful for management. For example, such stats might relate to:
Can’t Do It Sitting in Your Office
Greene says that the first step is to find out what the company’s most important goals and initiatives are. If you can’t find out directly from the top, ask to see strategic plans, read reports, and talk to people. “You can’t discover what’s really important by sitting in your office,” Greene says.
Once you know what’s important, figure out what you are doing or could be doing to contribute to that goal. And then find a small number of metrics that will help management understand how the things you are doing move their agenda forward.
Linking HR Practices to Valued Business Outcomes
To demonstrate how a meaningful business outcome relates to an HR deliverable, Greene offers a quick chart.
|
HR Practice |
HR Deliverable |
Business Outcome |
|
Recruiting |
Vacant positions are filled on a timely basis with quality new people. |
Productivity increases achieved by acquiring highly skilled staff. Improved organizational competitiveness. |
|
Training |
A training program is developed for sales personnel. A training program is delivered on the topic of harassment and discrimination. |
Sales increase from the sales personnel who have acquired new skills. Reduced risk of suits and complaints associated with employment decisions. |
In tomorrow’s Advisor, we’ll examine Greene’s “gotchas” for HR metrics, and explain how a unique ERI event can help you claim your rightful seat at the table.