10 Questions for Aligning HR Metrics with Business Goals

HR metrics are only helpful if they're measuring the things that matter. The HR metrics need to be aligned with the big picture: they need to help the company achieve its strategic goals. To do that, the HR team must fully understand the strategic goals and direction of the business. Next, the data must be presented in a way that makes the most impact for the people who are using it.

10 Questions for Aligning HR Metrics with Business Goals

How do you ensure that you're presenting HR metrics in a way that is consistent with the business goals? You start by thoroughly understanding the business strategy and goals. Here are 10 questions to get started:

1. How does your organization produce revenue? This answer is not the same as knowing what the company does – you need to know how the company makes money and how it works. Just asking this question causes you to think differently about the HR role and what metrics are important. (As a side note, revenue is important for non-profits as well – how do you generate funds from fund raisers based on your people and efficiencies?)
2. How does human resources add value to your organization? How is HR value added to the revenue production? This could be hiring the right person, training people well, etc. Look at how your activities impact company revenue directly and indirectly.
3. Are HR activities and employment practices aligned with your organization's strategic and business goals and objectives? How do human resources impact these objectives? Are your activities aligned? If not, what do you need to change?
4. What are your organization key business measurements and metrics? How does your organization measure success? What's on your organization's scorecard? Remember the general rules of metrics:
   • Organizations measure what they treasure.
   • What gets measured gets done.
   • Critical metrics have an owner. (This one often gets ignored, which causes problems).
   • To have value, metrics should have a target to be compared to (a benchmark).
5. How do human resources impact your organization's key business measurements and metrics? If there's no direct impact, consider whether the activity is important.
6. What are your organization's business imperatives? In other words, what distinguishes your organization in the marketplace? How do HR activities and employment practices impact these imperatives?
7. What are your organization's risks and opportunities? How do HR activities and employment practices impact these risks? (For example, if turnover of key employees is a major risk, what can HR do? As a result of these answers, what does that mean HR needs to measure?)
8. What decisions do you want to influence? Turnover? Compensation levels? You have to take a step back to decide what to focus on.
9. Can you connect the dots between the HR metric and decision making? "If we have metrics that we develop, but we can't connect the dots to decision-making, then the reality is they're not effective metrics and we need to develop different metrics to match the decision-making." Ronald Adler told us in a recent CER webinar. What do we need to evaluate?
10. What happens if your organization misses the target? If nothing happens, maybe this wasn't a good target. This should be evaluated at the strategic level—think of the implications of the targets.

Answering these questions should show HR clearly where actions should be focused to be aligned with organizational goals, and will lead to answers on what HR metrics will be useful for the organization.

For more details on HR metrics, order the webinar recording of "HR by the Numbers: Use HR Metrics to Measure and Maximize Your Workforce's Strategic Value." To register for a future webinar, visit http://store.blr.com/events/webinars.

Ronald Adler is the president and CEO of Laurdan Associates, Inc., a veteran-owned human resources management consulting firm specializing in HR audits, employment practices risk management, HR metrics and benchmarking, strategic HR, and unemployment insurance cost management issues.