Do you track any human resources metrics?
Back in the heady days of summer 2010, we began a series of polls on human resources management systems (HRMS) and metrics. In July, about one-third of respondents said they already use an HRMS and just over one in ten said they were considering it. In August, one-third of HRMS users said it makes their jobs easier, while the rest said the system offered no improvement or actually made things more difficult.
Then in October, we asked Do you track any human resources metrics (e.g., productivity, absences, turnover, etc.)? Out of 184 responses, 140 said yes (76 percent) and 44 said no (24 percent). We'll be looking at HR metrics in greater detail in future polls, but these results seem to indicate that organizations are interested in using human resources data to inform organizational strategy, even if they're only in the early stages of measurement and analysis. To be clear, tracking HR metrics means collecting and analyzing diverse personnel information and measuring it against measurable organizational goals, profitability being the most fundamental.
It's important to note that this poll asked a pretty general question, because tracking a human resources metric might simply mean counting each time an employee is absent, or keeping semi-detailed reports of terminations and resignations and then interpreting the information in some (presumably) worthwhile way. By this standard, chances are the majority of organizations do in fact track HR metrics. For example, records might show that employee absences have declined by five percent over the past year.
But these simple measurements don't offer organizations the information they need to truly analyze working conditions, aid in strategic decision-making and improve the bottom line. That is, these metrics don't tell how the organization is performing and how HR is helping. For example, a simple record of employee absences doesn't include information about why employees were absent, and therefore can't provide any insight on what the organization might do to reduce absenteeism.
And that's the key: using information to improve strategy, tying HR achievements to profitability through concrete data analysis. That might sound like a tall order, but an effective HR measurement program will add value to all areas of your business. Consider these questions:
- How well are your new and recent hires performing?
- What is your employees' work output?
- What is causing employees to be absent from work?
- Why do people join or leave?
- How long does it take for a new employee to reach her or his peak productivity?
- How are these factors affecting your organization's profits?
These are some of the basic metrics that good information can provide. But even at a basic level, you can see they go deeper than simply saying that, for example, employee turnover declined by five percent last year. The potential strategic value of this information involves the quality of the employees who left, which departments were affected, how well the organization has fared without them, and how much the organization has spent, earned, gained, or lost because of the turnover (among other things).
And with a little help, this kind of analysis doesn't have to be out of reach. It's possible that the human resources association in your jurisdiction offers resources and helpful information online. For example, the British Columbia Human Resources Management Association publishes the HR Metrics Interpretation Guide, a general guide to HR measurement and analysis, and HR Metrics Standards & Glossary, a straightforward outline of many metrics including descriptions, examples and formulas of varying complexity. They cover compensation, HR efficiency, learning and development, productivity, recruitment, retention, and workforce demographics.
The association states:
The purpose of [HR Metrics Standards & Glossary] is to allow HR practitioners to quickly and easily review a common set of HR metrics and choose those that best fit their organization. Alongside this individual support, we are providing a common standard for measurement that allows organizations to compare their scores with others using the same standards.
These metrics don't apply only in BC. The Human Resources Management Association of Manitoba and the Human Resources Professional Association of Ontario also accepts them “as the single source of truth for HR metrics”, and any organization can use them for its purposes.
You can find a list of HR associations on HRinfodesk in the Links section of the website under Agencies Websites and under the specific jurisdiction.
Another thing to remember is that tracking HR metrics doesn't require fancy dedicated software like a human resources management system, although when used correctly such an application can perform difficult calculations and offer detailed reports with little effort. Nonetheless, in many cases, the measurements and reporting you require can be done with spreadsheets or existing database applications.
As I mentioned, we'll be posting another poll on HR metrics in the not-too-distant future, and I'll be back to talk about it, too. Let me know if you have any questions about HR metrics.
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