Professional Documents
Culture Documents
Overview Agenda
1. HR Metrics An Introduction 2. What CEOs expect from HR 3. Becoming World-Class HR: Setting up measurements 4. Metrics for HR 5. Wrap-up
HR Metrics An Introduction
Case Study A CEO confides to the HR consultant that he is very frustrated with the HR Division of his company. There seems to be a steady stream of recruits being interviewed but the output and quality of work coming out of one of the companys critical departments is declining and there is a steady change in faces in the department.
HR Metrics An Introduction
Case Study The CEO is aware that HR is collecting information on absenteeism and turnover and is conducting exit interviews however nothing is reported back to him. The strategic and operational plan of the company is hinged on the success of the department in question. He is beginning to believe that HR is not supporting the strategic agenda of the company and is talking about changing the leadership in the HR Division.
HR Metrics An Introduction
Why should we care about HR Metrics? People costs can constitute half or more of a companys expenses but 57 percent of companies dont track the impact of HR on their business Metrics allow fact-based decision making Metrics can change behaviour when communicated throughout a company Metrics clarify what is important.
HR Metrics An Introduction
Why should we care about HR Metrics? HR should care about Metrics because CEOs and Senior Executives care about the impact of HR on performance and they care about numbers and tangibles. Metrics that are aligned with business objectives and operational capability are businessintelligence tools for HR Metrics track the impact of HR on the business and behaviour of people to improve performance.
HR Metrics An Introduction
Some reasons why HR hasnt been measured: We didnt have to Senior executives accepted HR as a soft unavoidable cost of doing business There was no sound metric starting point Although headcount, HR staff per 100, and costper-hire were considered common HR metrics, they dont stand up to hard business questions and challenges and therefore support the belief that HR couldnt be measured.
HR Metrics An Introduction
Some reasons why HR hasnt been measured: Cant measure strategy In the 90s, most metrics tried to measure strategy, which cannot be measured. Metrics should measure outcomes and results associated with objectives. Too complex Many of the HR metrics formulations developed were too complex to allow ongoing measurement.
HR Metrics An Introduction
A Primer on HR Metrics A Metric is using a number to enhance a story or argument an Accountability Tool HR was busy. We filled 45 out of 50 vacancies over a 6 month period. HR Programs are working. Company Turnover in the last quarter decreased from 8% to 6%. Absenteeism this month is 10 days versus 15 days last month.
HR Metrics An Introduction
A Primer on HR Metrics A better and more interesting story if the following questions are answered: How many of the 50 vacancies were key jobs? How long, on average, did it take to fill the jobs? How satisfied were the managers with the recruitment process and results? How many of the new hires reached performance level after 3 months?
HR Metrics An Introduction
A Primer on HR Metrics Metrics can be internal to HR with an Operational and Task Focus How HR Operates: This is the most common approach used today. Examples: We filled 45 out of 50 vacancies. We conducted 20 exit interviews this year.
HR Metrics An Introduction
A Primer on HR Metrics How HR impacts on the organization Strategic Metrics: Consider impact of HR initiatives across the organization and links Metrics to the Business Strategy Contribution of HR to make the business model a reality. Goes beyond activity-based measurements and focuses on metrics that are in synch with business goals. These metrics are reported to the CEO.
HR Metrics An Introduction
Example: Strategic Focus: Recruitment of best in marketplace
HR filled 45 out of 50 vacancies. After 6 months, 40 of the 45 passed probation and performance ratings ranged from Meets expectations to Outstanding. These metrics show that HR recruitment processes are resulting in quality hires for the company. 80% of managers surveyed were more satisfied with the recruiting process than last year as a result of quality hires and retention of top performers.
HR Metrics An Introduction
Example: Strategic Focus: Retention of top talent The turnover rate of our top 25% rated employees is below 5%. Employee Survey results show that the performance bonus system put in place to recognize top rated employees as well as flexible scheduling were the key reasons for the drop in turnover. When compared with our industry, we are well above our competitors.
Wrap Up
Questions?