Developing good HR metrics is the key to the success of Human Resource initiatives of any organization. This, in turn, may help organizations to study the trends of their businesses in the past, present, and future, through the use of appropriate tools along with HR Analytics.
Why develop good HR metrics and give them a fair trial?
In the present day world, good metrics are the key to knowing the strengths and weaknesses of any business, not alone in the area of Human Resource Management.
However, the matter has become complicated, owing to the fact that large flooding has taken place in the field. Not all of them fulfill the requirements of good metrics. Many of them are nonspecific, not so effective, and unrealistic. Sometimes, some of them also prove to be incapable of measuring the performance of human resource initiatives, and in turn of organizations.
Copying the HR metrics of an organization, similar to yours, without understanding the basics of your own organization, may prove to be a grave error.
On the other hand, consulting an expert may emerge as a costly proposition, and also, may not be fruitful in the long run.
Also, a set of metrics, which we have developed, may prove to be ineffective in due course, due to change in business realities over a period of time.
Hence, making a long term plan is the best option.
Further, we should never anticipate that HR metrics may solve all your problems in one go.
We must bear in mind, that any paradigm shift in the organization takes time. Incremental improvements are the key to success in creating a paradigm shift in any organization.
In view of the above, the author has formulated 8 tips to develop good HR Metrics for any organization.
Essential tips for developing good HR metrics
1. Ask critical questions before developing HR metrics
Asking critical questions like Why, What If, and How, concerning your business, organization, or people, may prove to be the bane of developing good HR metrics.
As per wabisabilearning.com, critical questions can reinforce viewpoints, facilitate discussions, prompt, and help us to see things from a new or detailed perspective.
Also, these questions may belong to any of the following.
- Human capital
- Resource availability
- Costs involved
- Locational aspects
- Cultural aspects of the workforce
- Workforce distribution – Talent-wise & Skill-wise
- Past experiments, which you made in the organization with respect to HR metrics and results therein.
- Skill mapping in the organization.
- What others have done with respect to these aspects, and how they could solve the problem?
- Do you face a critical situation, and are you sure that only totally new HR metrics may solve the problem?
You should also try to understand, under what category the HR Metric should come, keeping in view the problem. HR metrics that we develop, thus, may belong to any of the following:
- Team performance
- Employee productivity & performance
- Learning & development
- Recruitment & hiring
- Employee engagement
2. Understand that good HR Metrics enhance the rate of success of the organization.
Since the HR Metrics deal with HR functions, and they are connected to people, they ultimately lead to success being achieved by organizations.
This is possible due to the following reasons:
- Management of people including tackling the areas of talent acquisition, motivation, nurturing creativity, and many other facets help in this.
- Organizational goals are the key focus area. In good HR Metrics, overall organizational goals and strategic targets must be explained in clear cut terms. This helps organizations being successful. The realization of this particular aspect makes you extra careful.
For understanding in a better way, why you should be careful in selecting HR Metrics, please refer to the blog, which, CHRMP has published earlier, as follows:
3. Avoid the common mistake in developing the HR Metrics
If we see the literature, we find that researchers have done a lot of work in identifying and avoiding ineffective HR metrics. As per reference, hrdailyadvisor.blr.com, two common errors are there which make HR metrics totally worthless. As per Dr. Sullivan, these two errors are:
- Metrics in vacuum
- Too many metrics
The reference, www.ere.net, lists 25 reasons why you might have ineffective HR metrics.
Smarter workforce institute of IBM in their article, ‘The secret to reducing hiring mistakes’, elaborates on HR metrics, organizations are trying to use for hiring. Their opinion is as follows:
- Efficiency metrics are easy to measure, but the quality metrics are more effective
- Not all metrics are created equal
- Strike a balance between quality and quantity
- Provide attention to what you want to measure through HR metrics
- Give a top priority to metrics, which are being used
The reference, apexgloballearning.com, in their blog, ‘Common HR Metrics you should avoid’, lists the following mistakes, which we unknowingly commit.
- Not telling the stories behind the numbers
- The disconnect between the metrics and business goals
- Letting vendors do the work
- Having too many metrics
- Only focusing on recruiting metrics
- To not make your metrics count
4. Determine the organizational goals
It is the distinct opinion of the author that the most important step in developing good HR metrics is determining and being fully aware of overall organizational goals. This may be done through the following:
- Preparing a detailed strategic & business planning document
- Detailed & participative discussions with organizational stakeholders
Thus, SMART (Specific, Measurable, Achievable, Realistic, Time-Bound), some of the organizational goals will be developed. Some of the organizational goals may be as follows:
- Sales or revenue targets
- Customer satisfaction index
- Reward & recognition goals
- Net profit of the organization
- Cost reduction index or plan
- Productivity improvement index or plan
- Organizational output targets
The role played by HR professionals should be visualized & decided by the organizational stakeholders. This is one of the most important facets of developing good HR metrics.
5. Align the HR Metrics with organizational goals & set the metrics targets
As per the procedure in section 2.4, we have fixed the organization goals and also determined the role played by HR professionals. We may, now, develop the HR metrics keeping in view the organizational goals and stipulated role of the HR department. This process consists of the following 4 steps:
STEP 1: Determine the organizational goals. They must be SMART.
STEP 2: Assess & decide the HR support required to achieve SMART organizational goals.
STEP 3: Determine HR metrics.
STEP 4: Set specific, measurable, realistic & quantifiable targets to the HR metrics after discussion with all concerned.
In the reference, www.forbes.com, Dan Fries, avers that the following 6 HR metrics which matter most in today’s business environment are:
- Time to fill & turnover costs
- Absence rate
- Engagement & job satisfaction rate
- Employee tenure
- Improvement of new hires performance
- Percentage of performance goals met
6. Communicate HR metrics to team & management
The reference, compensation.blr.com, suggests that HR metrics must be communicated to the team & management, through the following ways:
- Make it clear
- Don’t double-dip
- Keep it simple
Involving each & every member of the team & the management is the most vital prerequisite to their successful implementation.
7. Create and strengthen a strong emotional culture in the organization
7.1 Taking care of people is very important
We must bear it in mind that taking care of people is a very important facet in the prosperity and wellbeing of the organization. If you scan the literature, you may find an enormous amount of information on how to nurture a sense of belongingness among employees and how to motivate them.
However, the author is of distinct opinion that repeating the same cock and bull story, utilizing old age motivation techniques, may not serve a better purpose.
7.2 Creating and nurturing emotional culture in the workplace is very important
However, applying an entirely new concept of creating and nurturing emotional culture at the workplace may prove to be a great breakthrough in taking care of people.
We, at CHRMP, have done a good amount of research on the following facets of emotional culture creation and its nurturing at the workplace:
- Improving employee engagement through emotional management
- How to manage negative and positive emotions in the workplace
- Managing your own emotions and the emotions of others
- Creating and building a strong emotional culture in the workplace
- The methodology of measuring it
The following blogs, published by us, may help you a lot, in creating and strengthening a strong emotional culture in your organization. It may also help in improving the participation and contribution of employees.
It is the distinct opinion of the author that creating and sustaining a strong emotional culture in the workplace is the ultimate key to flourishing and achieving astounding success.
With respect to HR metrics, this is equally important. Please remember that unless people are made an integral part of any process including HR metrics, it is bound to fail.
8. Give it a fair trial, followed by stabilization
Before giving a fair trial to new HR metrics, please ensure the following:
- Data sources are identified & data quality fulfill the requirements of CARE (Consistent, Accurate, Reliable & Efficient)
- Measurement methodologies are in place
- The composite action plan has been made, listing the steps & individuals responsible for the tasks
Also, it may never be construed a limited or short-term affair, rather both the short & long term strategies must be in place. If your trial is successful reinforce in further. However, if HR metrics fail to deliver, do a SWOT analysis, and come out with modified or totally new metrics.
If you are looking to upgrade your skills in HR Analytics, you might want to consider a certification in HR Analytics by CHRMP. To learn more click here.