Tuesday, January 11, 2011

Where to Start the HR Metrics Journey?





Many times I have been asked by students, attendees and colleagues, "Where do I start with HR Metrics?"

I have answered that question in the past by saying, "Start with low hanging fruit, maybe with efficiency measures in recruiting like time to fill or cost measures in training like training cost per employee."

I still believe those are important EFFICIENCY TRACKING metrics, but I believe we are so past metrics like those. We need to be focused on those metrics that give us some INSIGHT into a decision, an issue, or strategic outcomes.

So my answer today, is quite different. I believe you start your metrics journey with your business strategy. It has to begin there. Leaders are looking for metrics that let them know how they are doing against their strategic objectives, what investments make the most sense (ROI) and what are areas that need improvement.

So, HR is key in this role, since approximately 60-80% of organizational budgets are tied to people related investments and/or costs.

Let's look at an example. Say your company has a strategic outcome to grow market share by 10% in the next 2 years. After cross functional team meetings the leadership team creates the following list of action items to accomplish the growth goal:

1) Reduce call center turnover in order to get new and retain current customers
2) Provide training to call center employees to increase product knowledge in order to increase sales
3) Increase employee engagement by 5% which leads to an increase of customer satisfaction leading to repeat business.
4) Increase sales hit ratios in order to close more business.

Here are my questions for consideration:

1) How do you determine which action item or combination of items is the right investment (s)?
2) Should the actions above be part of the HR scorecard?
3) Would metrics based on the business strategy be the metrics that the C-Suite would be interested in?

What do you think?
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