Source: Robert Half and Careerbuilder.com survey of 3,000 workers
Bill Hewlett said it best: "You cannot manage what you cannot measure." Tracking metrics is the key to process improvement because, if you don't know what's not working, you can't improve it. Metrics are not just for statisticians and engineers -- Human Resources departments should also use metrics to manage projects and processes, and to improve organizational effectiveness.
HR leaders should not be making decisions based on their "gut" feelings, but should use metrics (facts and figures) to verify their choices. Metrics allow organizations to pinpoint their needs and determine if and to what extent they stack up against similiar organizations; metrics also serve as a chronological representation of an organization's performance over time which can illustrate whether or not they have improved in targeted areas.
What appears to happen, however, is that HR managers either do not track enough (or any) metrics, or track far too many. I have asked manager-level human resources professionals: "how is your employee turnover?" only to receive looks of confusion and uncertainty. At the other extreme, there are also HR leaders who recognize the importance of using metrics, but make the mistake of developing and tracking more than they can handle. According to Dr. John Sullivan, a well-known leader in Human Resources, it's best to focus on "between 8 and 12 really important metrics that demonstrate HR's impact on the business."
If an HR department really wants know how well it is doing, it needs to determine its workforce productivity. To calculate this, HR needs to evaluate the cost of the inputs (all salaries, benefits and HR department costs) as it compares with output values (production output value, revenue or profit).
Key metrics that organizations should definitely consider tracking include:
- Employee Engagement: engaged employees are not only more dedicated to the organization, which reduces turnover, but will be significantly more productive than their non-engaged counterparts. Organizations can use their employee opinion survey to determine how employees feel about their managers, their work, growth potential, and belief that their work contributes to the organization's goals.
- Turnover: measuring preventable turnover (using an exit survey to identify why employees left) and measuring turnover of top-performers are two important metrics for organizations to track.
- Overall Costs: determining the money spent in Human Resources can help the department determine whether or not they are spending on the initiatives and projects that drive engagement and productivity.
- Recruiting/On-boarding: 90% of employees make the determination whether or not they are going to stay at an organization within the first six months. Such early turnover creates a huge cost. As such, various metrics a company should consider include: turnover of new hires within the first year, average performance appraisal scores, the cost of a bad hire, and diversity hires. These metrics provide key insights into hiring and on-boarding practices. In addition, they can highlight the costs of a poorly executed recruiting and on-boarding process.
While the expression, "what you don't know can't hurt you" might be popular, when it comes to organizational performance, what you don't know most certainly can. Now, more than ever, it is crucial to continuously monitor Human Resources' performance and productivity and the engagement of its staff. With access to key organizational metrics, HR leaders will be in a much better position to make intelligent and informed business decisions.
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