3 Questions to Answer When Creating Metrics

Jun 9, 2010

Anyone who has been in management of HR or recruiting has struggled with the issue of measurement. To be taken seriously in a business world ruled by numbers, we have to get our own numbers right. But, despite all of our hard work gathering data and calculating ratios, it doesn’t seem that HR’s numbers ever have the credibility that measures from finance or operations do. To help rectify this situation, use the following three questions as you develop your metrics. 

Why Measure?

Every decision we make when choosing metrics has a consequence. What we measure says a lot about how we are managing our business. As an example, measuring the number of applicants per posted requisition is a common recruitment measure. However, this metric has no linkage to actual outcomes. It doesn’t tell you if these applicants were qualified or led to a hire. In fact, you could have a large number of applicants per requisition and not have a single qualified applicant. This is a measure of activity only. If you choose to make activity metrics like this a part of your scorecard, you are sending a message to your organization that you don’t really understand what matters and that you are more focused on activity than results. If you want to be taken seriously as a business partner, your metrics should reflect that you understand how business works. Commit to metrics like quality of hire or vacancy rate, as these are outcomes that the leaders within your organization will care about and value. These things are much more difficult to measure, but the effort to do so sends the message that you “get it.”

Who Cares?

The creation of metrics seems like an operational activity that should be squarely rooted in analysis and process improvement. But, like everything else inside an organization, metrics are also political. As I demonstrated above, the metrics you choose says a lot about how you manage your business. And, if our metrics are going to speak for us, we need to consider who we are speaking to. As you build your metrics, ask the following questions:

  • Would the CEO see value in this measure?
  • Would the CFO agree that this metric is valuable to track?
  • Would my internal customers easily understand how this measurement helps us deliver better service to them?

If the answer to any of these questions is no, go back to the drawing board and keep working. If you are unsure, then go find a few business leaders you trust and get their opinions. Keep working until you can answer all three questions with a resounding “yes!”

So What?

This final question might be the most important of the three. How do these metrics affect the action you take in managing your function? It should be obvious for most of your metrics that up is good and down is bad or vice versa. You will have goals set, but what do those goals mean? How much variance is too much variance? At what point do you have to take action?

Take the “time to hire” metric that most of us measure as an example. If your goal for time to hire is 30 days, would you make changes to your process if your actual result was 31 days (a 3% variance)? What about 36 days (a 20% variance)? What action would you take? As we construct metrics, think through these “what-if” scenarios to have a clear understanding of not only what we are measuring, but also what we will do when the result varies from the target.

Once you’ve run your metrics through these three questions, you are ready to measure and report. However, you are not out of the woods yet. The biggest mistake that most HR and recruiting teams make happens at this point in the process. You must ensure that your data and calculations are perfect. All it takes is one scorecard with one measure where the wrong number was used or the calculation was done incorrectly to kill the credibility of the entire set of numbers. Remember that everyone already thinks you are bad with numbers if you work in HR, so don’t prove them right. Double- and triple-check your numbers. If a result seems a little off, dig in and check your data to ensure that it’s not a mistake. It would be a shame to get this far and destroy all of your hard work with sloppy math.

Having great metrics isn’t the silver bullet to gaining credibility with your organization, but it can be an important step in the right direction if you do it right.

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