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MovingBeyondAbsenteeism&TurnoverStatsHRMetricsOverviewAgenda1.HRMetrics–AnIntroduction2.WhatCEO’sexpectfromHR3.BecomingWorld-ClassHR:Settingupmeasurements4.MetricsforHR5.Wrap-upHRMetrics–AnIntroductionCaseStudyACEOconfidestotheHRconsultantthatheisveryfrustratedwiththeHRDivisionofhiscompany.Thereseemstobeasteadystreamofrecruitsbeinginterviewedbuttheoutputandqualityofworkcomingoutofoneofthecompany’scriticaldepartmentsisdecliningandthereisasteadychangeinfacesinthedepartment.HRMetrics–AnIntroductionCaseStudyTheCEOisawarethatHRiscollectinginformationonabsenteeismandturnoverandisconductingexitinterviewshowevernothingisreportedbacktohim.Thestrategicandoperationalplanofthecompanyishingedonthesuccessofthedepartmentinquestion.HeisbeginningtobelievethatHRisnotsupportingthestrategicagendaofthecompanyandistalkingaboutchangingtheleadershipintheHRDivision.HRMetrics–AnIntroductionWhyshouldwecareaboutHRMetrics?•Peoplecostscanconstitutehalformoreofacompany’sexpensesbut57percentofcompaniesdon’ttracktheimpactofHRontheirbusiness•Metricsallowfact-baseddecisionmaking•Metricscanchangebehaviourwhencommunicatedthroughoutacompany•Metricsclarifywhatisimportant.HRMetrics–AnIntroductionWhyshouldwecareaboutHRMetrics?•HRshouldcareaboutMetricsbecauseCEO’sandSeniorExecutivescareabouttheimpactofHRonperformance…andtheycareaboutnumbersandtangibles.•Metricsthatarealignedwithbusinessobjectivesandoperationalcapabilityarebusiness-intelligencetoolsforHR–MetricstracktheimpactofHRonthebusinessandbehaviourofpeopletoimproveperformance.HRMetrics–AnIntroductionSomereasonswhyHRhasn’tbeenmeasured:•Wedidn’thaveto–SeniorexecutivesacceptedHRasa‘soft’unavoidablecostofdoingbusiness•Therewasnosoundmetricstartingpoint–Althoughheadcount,HRstaffper100,andcost-per-hirewereconsideredcommonHR‘metrics’,theydon’tstanduptohardbusinessquestionsandchallengesandthereforesupportthebeliefthatHRcouldn’tbemeasured.HRMetrics–AnIntroductionSomereasonswhyHRhasn’tbeenmeasured:•Can’tmeasurestrategy–Inthe90’s,mostmetricstriedtomeasurestrategy,whichcannotbemeasured.Metricsshouldmeasureoutcomesandresultsassociatedwithobjectives.•Toocomplex–ManyoftheHRmetricsformulationsdevelopedweretoocomplextoallowongoingmeasurement.HRMetrics–AnIntroductionAPrimeronHRMetricsAMetricisusinganumbertoenhanceastoryorargument–anAccountabilityTool“HRwasbusy.Wefilled45outof50vacanciesovera6monthperiod.”“HRProgramsareworking.CompanyTurnoverinthelastquarterdecreasedfrom8%to6%.”“Absenteeismthismonthis10daysversus15dayslastmonth.”HRMetrics–AnIntroductionAPrimeronHRMetricsAbetterandmoreinterestingstoryifthefollowingquestionsareanswered:Howmanyofthe50vacancieswerekeyjobs?Howlong,onaverage,didittaketofillthejobs?Howsatisfiedwerethemanagerswiththerecruitmentprocessandresults?Howmanyofthenewhiresreachedperformancelevelafter3months?HRMetrics–AnIntroductionAPrimeronHRMetrics•MetricscanbeinternaltoHRwithanOperationalandTaskFocus•HowHROperates:Thisisthemostcommonapproachusedtoday.Examples:Wefilled45outof50vacancies.Weconducted20exitinterviewsthisyear.HRMetrics–AnIntroductionAPrimeronHRMetrics•HowHRimpactsontheorganization-StrategicMetrics:ConsiderimpactofHRinitiativesacrosstheorganizationandlinksMetricstotheBusinessStrategy•ContributionofHRtomakethebusinessmodelareality.Goesbeyondactivity-basedmeasurementsandfocusesonmetricsthatareinsynchwithbusinessgoals.•ThesemetricsarereportedtotheCEO.HRMetrics–AnIntroductionExample:StrategicFocus:RecruitmentofbestinmarketplaceHRfilled45outof50vacancies.After6months,40ofthe45passedprobationandperformanceratingsrangedfromMeetsexpectationstoOutstanding.ThesemetricsshowthatHRrecruitmentprocessesareresultinginqualityhiresforthecompany.80%ofmanagerssurveyedweremoresatisfiedwiththerecruitingprocessthanlastyearasaresultofqualityhiresandretentionoftopperformers.HRMetrics–AnIntroductionExample:StrategicFocus:RetentionoftoptalentTheturnoverrateofourtop25%ratedemployeesisbelow5%.EmployeeSurveyresultsshowthattheperformancebonussystemputinplacetorecognizetopratedemployeesaswellasflexibleschedulingwerethekeyreasonsforthedropinturnover.Whencomparedwithourindustry,wearewellaboveourcompetitors.WhatCEO’sexpectfromHRHROrganizationalEffectivenessorStrategicMetrics•CEO’swanttoknowhowHRgivesthemameasurablecompetitiveadvantageovertheircompetitors.•Dr.JohnSullivan’sresearchindicates15commonkeyquestions.Arepresentativesamplearepresentedtoillustratethenatureofthesequestions.WhatCEO’sexpectfromHRCEO’sListofHRMetricQuestions1.Doweattractandhiretheverybestpeoplewecanafford?2.Doweretainourkey/mostproductivepeopleatahigherratethanourbestcompetitors/3.Arethepeoplewehavethemostproductiveintheindustry?4.Dowefixourproblememployeesrapidlyorgetridofthemiftheyaretooexpensivetofix?WhatCEO’sexpectfromHRCEO’sListofHRMetricQuestions5.Areouremployeessatisfiedanddoesthisimpactproductivityandretention?6.IsourHRdepartmentefficientanddoesitcontinuallyimprove?•HRcustomersatisfactiondata•ResponsetimetorequestsBecomingWorld-ClassHRSettingupmeasurementsforHR•ImportanttomeetandconsultwithmanagersandinternalcustomerstointroduceHRmetricsi