Metrics have become and will continue to be an indispensable tool when it comes to managing any corporate function strategically. Unfortunately, like many things in life, not all metrics deliver the same value. In part one of this series, I discussed five differentiators that set exceptional metrics initiatives apart from average ones and offered up a number of ways that you could improve your efforts with formal planning and a compelling presentation format. In this part, my attention turns to improving the visibility, relevance, and emphasis of your efforts.
- Imbed metrics in standard business reports — this is the most important action among the 25 listed here. HR metrics are traditionally presented in independent HR reports, which are rarely widely distributed or read. Reports emanating from the CEO, COO, CFO, and business unit leaders are more likely to be widely read and therefore the best place to embed a few powerful HR metrics. Many business leaders inherently accept that things like vacant positions, quality of hire, turnover, and absenteeism negatively impact their business, but are used to discussions about each being silo’d as HR issues, not business issues. Partnering with business leaders to identify workforce-related risks and embedding information about each in relevant business communications will make the connection more clear.
- Alerts and forecasting — the vast majority of HR metrics being reported today reveal little change from period to period, making paying attention to them akin to staring at a rock and waiting for it to dance. If you want managers to pay attention, stop reporting nothing and start alerting managers to things that are changing or that will likely impact their business.
- Include an executive summary — if you must push out a lot of information, keep in mind that like you, busy executives don’t have the time to read an entire report, so be sure to include an executive summary highlighting the problems or opportunities that your metrics point out.
- Continue the story — in addition to reporting your successes through metrics, use other communications to further spread your message. One approach is to write up your HR “success stories” in a narrative format and then integrate them into regular communication mechanisms like newsletters, web sites, blogs, videos, and internal presentations.
- Get some metrics in the annual report — the most widely distributed business report is the annual report. Getting a few of your critical metrics in it increases both your visibility and status and may result in external analysts commenting on your successes.
- Give them input in selecting metrics — the metrics you report on might seem irrelevant to your managers because they were not involved in selecting them. Ask your target audience “what people-management metrics would help them make better decisions?” If they select a weak metric, educate them about better metrics that may present a more accurate story.
- Always include ROI — the return on the investment of budget dollars (or ROI) is the single most powerful metric. As a result, include the estimated ROI ratio of people-management, which compares all labor and HR costs to the revenue generated by your firm’s employees. If this ROI percentage (also known as workforce productivity) is high, you should directly compare it to other business functions.
- Drop metrics that are ignored — if you deliver your metrics online, use web analytics to determine which metrics managers are paying attention to and drop those they are not. If you are not relying on electronic distribution, ask them.
- Avoid tactical metrics — even if executives and managers request them, it’s often best to omit tactical or operational metrics that cover process efficiency. Focus on strategic metrics that directly relate to or directly impact primary business goals (i.e. revenue, profit, product development, customer service and sales).
Emphasizing Dollar Impact
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- Include revenue impacts — the Holy Grail in management is to increase revenue and/or profit. It is a major mistake to assume or hope that executives understand the connection between HR metrics and corporate revenue. It is essential that you convert all of your strategic metrics to their dollar impact on revenue. Like it or not, dollars are a common language and allow easy comparison of problems and opportunities across all functions and regions.
- Work with the CFO’s office — because HR isn’t always credible in the financial area, collaborate with the CFO’s office in order to develop a process for assessing the revenue impacts of common HR metrics like turnover, quality of hire, position vacancies in revenue jobs, and reduced workforce productivity.
- Compare yourself to other business functions — present your impact on revenue in relation to that of other business functions like marketing, finance, production, and customer service. Doing so can help reposition allocating budget dollars in short supply to HR as investments.
- Get managers to focus on people management results — managers don’t pay attention to HR metrics because they are not directly measured or rewarded for producing excellent people management results. If you add people management to their bonus criteria, they will pay more attention to your metrics. You can also stir up internal competition among managers by distributing people-management metrics ranking all managers with regard to their performance. Appearing at the top of any positive list excites managers, and appearing at the bottom encourages them to do something different.
I hope that this article has spurred you to reconsider the metrics you report and the process you use to do so. It’s a true shame to be capable of delivering great metrics but never actually do so. Any argument you offer up indicating that you can’t deliver great metrics is truly nothing more than an excuse. The tools needed to deliver great metrics are cheaper than ever (some are free), data is abundant, and the demand for actionable intelligence is feverish. If you think your data isn’t perfect and therefore a barrier, I’ve got news for you: rarely is anyone’s data ever perfect, so get over it.