Yesterday’s Advisor featured consultant Rick Buchman’s take on how to connect HR metrics to meaningful company goals; today, key considerations for world-class metrics.
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First question: Does the metric align with company performance?
Many HR metrics are process and performance measures (e.g., training hours on specific subjects, attendance, performance appraisals, recruiting cycle time, grievances, turnover). Those are reactive metrics, says Buchman, who is president and CEO of Hayward Enterprises, Inc. and co-author of the Balanced Scorecard Strategy for Dummies.
What’s important is directly aligning HR metrics to strategic goals, objectives, and business performance metrics (e.g., profitability, cost control, cash, capital, ROI, OBIT/OBITA, Market Penetration), says Buchman, who offered his metrics tips at a recent BLR-sponsored webinar.
For example, says Buchman, we know there are relationships between:
- The right staffing and optimal performance
- Low turnover and profitability
- Technological competency and market leadership
- Smooth value stream performance (good handoffs, no rework, short cycle times) and logistical market dominance
- Competitive benefits and attraction/retention of high-potential performers
HR’s Opportunity
Always question about future goals. Is new technology coming? New products or services being planned? HR needs to jump in here to be seen as a strategic resource, says Buchman.
“I can see the process side—what we want to do and why, but let’s think about the challenge of HOW the organization is going to achieve these goals. What competencies do we need our employees to have to make that happen? And what steps must we take to develop/hire people with those competencies?”
Jump at the Paradigm Shift
If you have done this kind of forward thinking, says Buchman, when there is a major change, you and your organization will be ready to jump on it. A paradigm shift is a golden opportunity for an organization to become a leading player, because everyone goes back to zero. And that’s a golden opportunity for HR.
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Building Better HR Metrics
1. We must bridge HR metrics with business performance KPIs, and integrate total capability with results.
2. We must be integrally involved in defining BOTH the business processes AND the knowledge, skills, and abilities required to perform them.
3. We must go beyond on-boarding new employees, in measuring career competence and progression, not just to enable growth, but for critical position succession planning and sustainment (high early turnover is an important indicator).
4. We must continually solicit feedback and survey to capitalize on critical thinking and broad perspectives about how the company is doing, how well our workforce is involved in key decisions and continual improvement, and what we can do better. The customer perspective is important, and the employee perspective is critical.
5. Ultimately, we must implement KPIs and metrics that provide forward-looking insight into how we can capitalize on best practices, reduce/eliminate poor practices, and flex our workforce to support business needs of the future.
Where to Start
Buchman’s question for HR managers:
Can you Identify what information would be useful to have, in advance, and what decision processes need to be in place, in order to best leverage the information available to the advantage of the business, in both the short and long term?
Buchman says that a great way to begin to answer this question is to start with the desired end result: a capable, competent workforce, highly involved in continually improving the quality of work performed, enabling higher than expected levels of performance in cost, quality, and delivery, along with growth and impact.
Then, ask what KPIs and metrics can provide evaluative intelligence about how well this is planned and executed over time.
Caveat
As you start relying on your metrics, says Buchman, don’t forget to ask: How good is your data?
Keeping your data so that it’s easy to access and use is critical to meaningful use of metrics. You’re not going to get very far if you are still stick with the manual labor of HR spreadsheets. You may have even considered kicking your spreadsheet habit, but you just can’t get past the “maybe” phase. Someday you’ll make the switch to software, but not quite yet.
Still stuck in the muck with spreadsheets to track HR metrics? Read this free download HR best Practices Report—Overcoming HR Spreadsheet Hurdles. Download now.
Just imagine a world where HR software takes care of the tedious and menial parts of your job and leaves you just the stuff you love! You could get back to the meaningful parts of HR—hiring, developing, and retaining awesome people.
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The 8 Excuses of Slow Adapters
Excuse 1: “I’m not ready to make a decision.”
Excuse 2: “But spreadsheets are free.”
Excuse 3: “I’m afraid to make such a big change.”
Excuse 4: “If I buy HR software, I might lose my job!”
Excuse 5: “I don’t want to learn to use a new system.”
Excuse 6: “I’m too busy now to even think about HR software.”
Excuse 7: “My boss would never okay the extra spending.”
Excuse 8: “My company is small. I don’t need HR software yet.
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