Welcome!

HowBigisMyFish?HRMetricsandtheTaleoftheTape

Agenda• Conceptual Overview

• Common Errors• Terms

• Types Metrics• Descriptive/Predictive

• Strategic Focus• Good Measurement• Benchmarking• Communicating Metrics• Have some fun• Free Metrics!

One hour expectations!• Will

• Additional insight• Critical thinking

• Direction & Focus• Useful terminology

• Business acumen• Additional resources

• Communication• Metrics Super Hero

As business writer Peter Drucker stated, “What gets measured gets managed,” so implementing an HR reporting system should be carefully planned.

CurrentState?• 14%ofHRdepartmentsareusinganalytics(Deloitte2014)

• Comparedwith• 77%ofoperations• 58%ofsales• 56%ofoperations

• Why• TendencyforHRtooverrelyonsurveys,intuitionandexperience?• Notgiventechnicalresourcestocrunchdata?• Drowningintransactionalissues?• HRProfessionalslackstatisticaltraining/experience?• HRProfessionalsaremoreorientedtowardspeoplethanprocessandmetrics?

“They’re working so hard to get stuff done that they’re not taking advantage of the systems yet,” Jayson Saba, VP Ceridian

WhyMetrics?

•Peoplecostsrangebetween35to60%•Nearlyeverythingcanbemeasured•Productivityiskey•MetricsprovideevidenceofHR’sstrategicimpact!

ConceptualOverview

SiloMetrics

Quantity!

1. HRobjectivesandstrategiesarealignedwiththebusiness(C-Suitediscussions)goals.

2. Identifyhow HRwillachievethesegoalsandthemetricsneeded.1. Weightmetricsinorderofimportance(C-SuitenotYou!).

3. Define eachHRmetricanditsformula(notallformulasarethesame).

4. Determinewhatdata isneededanhowitwillbecollected.5. DeterminehowoftenHRmetricsshouldbecollected.6. Choosetheformatofthereportandwhowillreceiveit.7. Reevaluate onaregularbasisofwhatisbeingmeasureandhave

thegoalschanged.

Metricsvs.

Measures

Metricsvs.

MeasuresA measure is“an amount or degree of something, the assignmentof numbers to properties of objects basedon a set of rules”

A metric is“a standard of measurement, or the outcomeof the measurement, big, value, effectiveness, etc.”

In our case we’re really interested in knowing how Bigis our fish, correct?

CommonMetrics

1.CostPerHire2.RevenuePerEmployee3.AbsenceRate4.BenefitCost5.Satisfaction6.Turnover

5.Vol/Invol,Perf,Dept.,Sup,Tenure,Demographics

7.Tenure8.TurnoverCosts9.WorkersComp10.TimetoFill

SampleWorkforceMetrics

• Production• Output/Inputs• Loss• Processedorders

• Sales• SalvesVolume/Revenue• MarketShare• CostofSales

• Service• Quality/unit• Satisfaction• CustomerTurnover/Retention

• Profit• Margin• Profitabilitybycustomer• ROI• Costtoincomeratio

DescriptivevsPrescriptive

DescriptiveMetrics

• HRsystemsnowproducemountainsofdata• Examiningthisdatainhindsighttoseewherethecompanyis(orwas)isdescriptive.

• Hasvalue,butgenerallyinatacticalsense• Let’syouknowifyouhavemetgoals(laggingindicator)• Dangerousifyouextrapolateintothefuture

Example: Measuring Turnover and Sick Leave Utilization

PredictiveMetrics

• Predictivemetricsgiveinsightintothefuture(leadingindicators)

• Measuresdriversofkeyperformanceindicators• Oncemodelsaredeveloped,futurelevelsofKPIcanbeinfluenced

• Greaterstrategicvaluethandescriptivemetrics

Example: Identify the traits that make for successful performance in a particular job, or the most effective method for delivering training to employees of a certain age in a specific working group.

Analytics

• Analytics is a framework of logic that is used to gather, organize, and interpret data for the purpose of assessing the probability of upcoming events

FromMetricstoAnalytics

1. Recordingourwork(e.g.,#ofhires,costperhire)2. Comparingourresultstoothers(benchmarking)3. Relatingtoourorganization’sgoals(e.g.,quality,

innovation,productivity,andservice)4. Understandingandcommunicatingpastbehavior

andoutcomes(descriptiveanalytics)5. Predictingfuturelikelihoods(predictiveanalytics)

Right tool, wrong focus…

StrategicMeasurement

• Askyourself“whereismymetricfocus”?

• MajorityoforganizationshaveaninternalHRfocus

• Silomentality

• Possessedwiththepast

Peoplevs.HRMetrics

• HRmetrics(e.g.costtohire)haveatacticalfocus• Canbestbethoughtofasintermediatemetrics• Justifyingourexistence

• Strategicfocusispeoplemetrics• Theyimpactthemissionoftheorganization

• Engaged,StateofReadiness,Performanceculturethatdrivesquality,innovation,productivityandservice

• Ifyouwanttohaveavoice,youneedtoknowthelanguage

• Needtogetinsidetheheadofyourexecutives

ConceptsvsMeasures

Concept Measure

Deficiency Contamination

GlobalMarketShare

SMARTStrategyMap

SalesCustomerService

Strategy Map

Good metrics are about measuring important organizational attributes and the relationship between those attributes

Engagement CustomerService

TrainingLeadership

Engagement CustomerService

PerformanceFeedbackCommunication

JobResources

JobFactors .35 .56

.35 .56Sales

Sales

Training

Engagement

PerformanceFeedback

Turnover Productivity

.45.65

.35

.38

StaffingLevelsProductionOrders

ServiceQuality

-.38 .45

Costperhire JobFitCustomerService

.27 .30

EngagedSupervisor

EmployeeRetentionRates

Productivity

-.38 .45

LengthofService

KnowledgeofJob

CustomerService

.27 .29

GoodMeasurement

Right focus, wrong tool/bait…

After identifying what needs to be measured (conceptually) and why, we then need to find a tool with good measurement properties.

DesirableMeasurementProperties

• Measuresusedtoassessmetricsmustbeconsistent:

• Acrosstime

• Acrossraters

• Withinmeasurementtools

• Reliability

DesirableMeasurementProperties

• Mustmeasurewhatweintendedtomeasure

• Issueofdefinitionandoperationalconsistency

• Shoulddemonstratelogicalrelationshipswithothermetrics

• Shouldalsopredictrelatedoutcomes

• Constructandcriterionvalidity

Causation

• Verifyingthoselinksinthechaincanbetricky

• Twoconceptscanberelatedbychance

• Mustshowthatleadingindicatorcauseschange

• Temporalprecedence

Career Development (+) Customer Satisfaction Scores

Career Development (-) Turnover

Correlationmadesimple

Salary Levels (+) Performance Level (causation?)

Vendorsandshinymetalobjects

• “Everythingthatcanbecounteddoesnotnecessarilycountandeverythingthatcountscannotnecessarilybecounted.”

- AlbertEinstein

• AvendorclaimingametricpredictsoverallOEshouldbeviewedskeptically

• ReliabilityandValiditymustbedemonstrated

• Specifictoyourcompaniesstrategy

Thingsyoushouldhear…

• “Whatarethetop3-5peoplemetrics?”

• “Itdepends…tellmemoreaboutyourbusiness”.

• “Whatspecificoutcomesdoyouwishtochange?”

• “Canyoutellmethe#1priorityofyourbusinessunits?”

Benchmarking

• Against“aspirationalpeers”…?

• Comparisonsaresometimesinvalid

• Needtoknowalotaboutthecomparisoncompanies

• Canyieldviewsofbroadtrendsacrossindustries,however…

• Strategicdecisionsarebestinformedbyinternalmetrics

1 2 3 4 5 6 7StronglyDisengaged

Disengaged SomewhatDisengaged

NeitherEngagednorDisengaged

SomewhatEngaged

Engaged StronglyEngaged

1 2 3 4 5 6 7StronglyDisengaged

Disengaged SomewhatDisengaged

NeitherEngagednorDisengaged

SomewhatEngaged

Engaged StronglyEngaged

1 2 3 4 5 6 7StronglyDisengaged

Disengaged SomewhatDisengaged

NeitherEngagednorDisengaged

SomewhatEngaged

Engaged StronglyEngaged

“If you can't explain it simply, you don’t understand it well enough.” - Albert Einstein

CommunicatingwithExecs

• Communicateearlytopartneronmetricdecisions

• Getoutoftheweeds

• Makethepeoplenumbershavebusinessmeaning(m =3.5?)

• Beagoodtranslatorandstoryteller

• Turningdataintobusinessintelligence

Measurementisnotanendinitself

• Ithasvalueonlyiftheresultsprovidemeaningfulinputintosubsequentdecisions.

• Therefore,asyouthinkaboutthechoiceofaparticularmeasure,stopforamomentandthinkcarefullyaboutwhatyouwoulddowiththeseresults.

• Imaginereceivingyourfirstreportsummarizingthismeasure.• Whatkeydecisionswilltheseresultshelptoform?• Willanothermanager,particularlyoutsideHR,considerrecommendationsbasedonthismeasuretobepersuasive?

• Ideally,you'lldevelopameasurementsystemthatletsyouanswerquestionssuchas,howmuchwillwehavetochangeaantecedentordriver inordertoachieveourtargetchangeinouroutcomevariable?

Summary

• Conceptual Overview• Strategic Focus• Descriptive vs. Predictive Metrics• Good Measurement• Benchmarking• Communicating Metrics

Questions?

ThankYou!

JimGalloFloridaInstituteofFishing150WestUniversityBlvd.MelbourneFlorida32901

1(321)674-8383jgallo@fit.edu