Developing Metrics to Evaluate HRs Contribution to the Achievement of Organizational Goals

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Speaker: Dr. Christopher LeeAssociate Vice Chancellor, Human ResourcesVirginia Community College System

Moderator: Connie Costigan Director of Marketing CommunicationsHalogen Software

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Developing Metrics to Evaluate HR's Contribution to the Achievement of

Organizational Goals

• Presenter:

Dr. Christopher Lee, PhD, SPHR

© 2013 Halogen Software Inc. Confidential – Not to be used, copied or redistributed without Halogen’s prior written permission.

AGENDA

• Business Case• Business Strategy• Ask Business Related Questions• Checklist of Considerations• Tips to Deploy Metrics• Use Examples• Q&A


Albert EinsteinAny intelligent fool can make things

bigger and more complex... It takes a touch of genius - and a lot of courage to

move in the opposite direction.


Presenter

Presentation Notes

Definition of Metrics

A business metric is any type of measurement used to gauge some quantifiable component of a company's performance, such as return on

investment (ROI), employee and customer churn rates, revenues, EBITDA, and so on.

Metric = How to Keep Score


Business Case for Metrics

• It’s Strategic• It Matters• Enhances HR Credibility• Proof of HR Effectiveness• Helps to Improve Organization• It’s what business does


“Business” Case(How Do I Know HR’s Making an Impact)

• Reduce Costs• Improve Revenue• Improve Quality • Increase Customer Satisfaction• Contribute to Growth


Organizations measure what they treasure!~Anonymous

What gets measured, gets done.~ Peter Druker


STRATEGIC OPERATIONAL

Turnover of Key Positions Turnover

Revenue Per FTE Time to Hire

Profits Per Employee Absenteeism

Diversity turnover Employee Demographics

Intent to Stay/Go Results Employee Satisfaction

Engagement Score Results Number of Accidents

Labor/Operating Costs Lost Work Days

% Impact of Pay Increases Training Satisfaction© 2013 Halogen Software Inc. Confidential – Not to be used, copied or redistributed without Halogen’s prior written permission.

Data Metrics


Strategic Metrics

Impact Measures

Marrying HR Metrics with Business Data


IMPACT

We offer our engineers “20-percent time” so that they’re free to work on what they’re really passionate about. Google Suggest, AdSense for Content, and Orkut are among the many products of this perk.

~http://www.google.com/jobs/lifeatgoogle/englife/index.html


http://labs.google.com/suggestfaq.html

https://www.google.com/adsense/support/bin/answer.py?hl=en&answer=17470

Marry HR Data with Business Data

A core focus of the RBS HR function was to help business leaders utilize key people

measures such as employee engagement, turnover and leadership effectiveness. The

human capital strategy enabled the provision of this data side-by-side with business data,

such as customer service scores and business performance measures.

~The Royal Bank of Scotland Group: The Human Capital Strategy


Process

• Ask A Series of Questions• Get Others Involved• Draw Connections to Business• Compare with Standards• Share Results• Take Actions• Ask More Questions


We learn more by looking for the answer to a question and not finding

it than we do from learning the answer itself.

Lloyd Alexander


Why Does HR Exist?

A. To provide full employment for math-phobic professionals?

B. To provide for the ‘care and feeding’ of employees?

C. To help organizations meet their goals?D. To comply with appropriate laws/regulations?


Metrics


Concepts

• Correlation• Causation• Longitudinal/Trends


Preparatory Activities

• Know the “Business” of the Business• Interpret Environmental Scan• Produce data/reports for Decisions/Actions


Indira Gandhi

The power to question is the basis ofall human progress.


Presenter

Presentation Notes

Old Questions?What can we count?

What should we measure in HR?What metrics are most important to the

organization?

New QuestionsWhat is most important to the organization?

What can HR do to help the organization meet these objectives?


Questions?What is most important?Why is it most important?

What can HR do to help this most important thing?

Ask the 2nd and 3rd QuestionWhat happens next?

What do we do now that we know this?If this is what it is…?

What does this tell us about?If we change ‘x’, will it improve ‘y’?


So What?Will it helps us save money?

Drive Revenue?Increase customer retention?

Revenue, Costs, Quality, Customers!


Methods

• Dashboards• Key Performance Indicators• Balanced Scorecard• CBA/ROI• You don’t know Jack (Fitz-enz & Phillips)

• Index Card (Business Necessity, Strategy Focused)


Sources of Data

• Existing operational data sources• HR Data (compensation, benefits, training assessments,

budgets, etc.)

• Employee Satisfaction Surveys• Exit interviews• HR Technology systems• Interviews & Focus Groups


Sources of Data (2)

• Industry Benchmarking Surveys • (SHRM, World at Work etc.)

• Customer Data• Direct Observation• Business Reports


Organizational Competency Metrics


Presenter

Presentation Notes

Competencies are sometimes referred to as the "currency" or "language" of talent management. A strong competency model forms the foundation of your talent management processes allowing you to: ensure your culture and values are reflected in your talent management processes track performance over time provide a framework for building future leaders compare the talent and potential of your workforce This is an example report showing improvement of key organizational competencies over time to help HR demonstrate

Goal Achievement Metrics


Presenter

Presentation Notes

The ability to demonstrate whether individual goals which are linked to organizational goals are on or off track is a compelling HR metric that clearly links performance management processes to the achievement of organizational goals.

Bench Strength Metrics


Presenter

Presentation Notes

In succession planning the strategic insight of knowing which individuals are high potentials, which individuals are at risk of leaving is critical to building organizational bench strength and competing in the long term.

Training Effectiveness Metrics


Presenter

Presentation Notes

Development planning that is focused on improving key competencies should be measurable in terms of better outcomes.

Necessary But, Not Sufficient

Turnover Cost Per Hire

Cost of Turnover HR Staffing/# of Employees

Voluntary Turnover % Of Employee Complaints

Involuntary Turnover Healthcare Cost Per Employee

Average length of service Absenteeism Rate

Average age of employees Yield Rate

Time to Hire Internal Promotions Rate© 2013 Halogen Software Inc. Confidential – Not to be used, copied or redistributed without Halogen’s prior written permission.

Strategic Metric Examples

% Employees who feel mgmt supports their success

Increase productivity/Training(ROI)

% Increase in Pay for % in Performance

Training Costs/Revenue by unit

Intent to Stay % Employee Satisfaction/Training $

Turnover percentage by manager Avg Rating Group/Leader Rating

Compensation/Sales Ratio Staffing/Unit of Production

Rating/Sales Ratio Cost hire by position

Compensation/Rating Ratio


Happy Marriage

% Employees who feel mgmt supports their success

Department Performance,Sales,

Employee Satisfaction/By Unit Customer Sales/By Unit

Appraisal Rating Retention of Key Talent (& slackers)

Appraisal Rating Compensation

Recruitment, retention, source, etc. Diversity

Turnover Percentage by Manager Manager’s Rating

Employee Satisfaction Retention

Compensation Budget Total Operating Expenses© 2013 Halogen Software Inc. Confidential – Not to be used, copied or redistributed without Halogen’s prior written permission.

Metric Quality Checklist

• Strategic• Simple• Specific• Small Number• Actionable • Timely


Strategic

• Tied to . . .• Mission• Strategy• Goal• Initiative• (Period).

• Owner, Sponsor, Customer


Simple

• K.I.S.S.• Simple to

• Collect*• Communicate• Use


Specific

Related to target area of businessactivity, effort, or performance

Small Number

1 – 2 per HR area6-15 overall


High-performing companies take a radically different approach to HR. They put much more

effort than low performers into measuring workforce performance…,

— High performers actually focus efforts on fewer, carefully chosen HR projects, but they keep refining

and experimenting in these areas to make them stronger.

~ High-Performing Companies Make HR a Strategic Partner, Others Don't2010, The Boston Consulting Group (BCG) and the World Federation of People Management

Associations (WFPMA).


https://remote.hr.com/owa/redir.aspx?C=cb78b94a2e224236b3fed72049a96199&URL=http://www.bcg.com/

https://remote.hr.com/owa/redir.aspx?C=cb78b94a2e224236b3fed72049a96199&URL=http://www.wfpma.com/

Actionable

• Action taken based upon results• Decisions made as a result• Improve quality of business decision


Timely

• Regular interval• Just in Time• Alerts


Developing Metrics to Evaluate HR‘s Contribution

Though standards are evolving, simple figures will not necessarily provide enough information. Many companies track retention, for example, but to solve a turnover problem, HR needs to discover why people leave. HR adds value when professionals decide not only what to measure, but also how to interpret the data when compared to benchmarks and how to improve its methodology to get the kind of information the organization can use to achieve its overall goals.

~HR Measurement and Metrics: Gaining HR a Seat at the Strategy Table


Impact

In the very early days, Google got rid of all managers. Although they were later reintroduced, a belief persisted within the company that managers do not really make a difference.

So the analytics team looked at a combination of performance review data and employee surveys, where employees review their bosses to determine whether there were significant differences between the impact of the best and worst bosses. The answer from the data was a resounding “yes”.

~http://www.google.com/jobs/lifeatgoogle/englife/index.html


Technology Tools

Automates Data Gathering, so that you can concentration on …


Actions/DecisionsAsk Better QuestionsShare and Compare

Define MetricMake Information

Gather data© 2013 Halogen Software Inc. Confidential – Not to be used, copied or redistributed without Halogen’s prior written permission.

Cha’n Master Mingjiao

Accumulate learning by study, understand what you learn by

questioning.


Presenter

Presentation Notes

Tips Summary

• So What? Test• Impact, not information measures• Look Outward, Not Inward• Target audience is Operations• Merge HR Data with Business Data• Report cost of doing nothing• Recommend uses of metric w/ reports• Fewer, Better• Each metric has a customer


Review

• Identify Business Purpose• Ask a series of questions• Agree upon Metrics with customers

• Benchmark, where appropriate• Identify use of information before gathering information

• Refine and Repeat (?????)© 2013 Halogen Software Inc. Confidential – Not to be used, copied or redistributed without Halogen’s prior written permission.

Q&A

• Additional questions regarding the webinar? Contact:Christopher Lee- [email protected]

• For additional Halogen Software inquiries or to request a personalized demonstration, contact: Connie Costigan – [email protected]


mailto:[email protected]

mailto:[email protected]

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Developing Metrics to Evaluate HRs Contribution to the Achievement of Organizational Goals

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