HR Metrics: From Data to Results

Today I had a really nice lunch with a friend who is a Director of Human Resources.  We ate at Mahoney & Sons, right down by the water at the edge of Coal Harbour.  It’s a sunny day today; perfect for enjoying lunch on a patio with views of Stanley Park and the north shore mountains.

Among the many things we talked about, we discussed some of the merits and pitfalls of “HR metrics”.  For the benefit of those readers outside of HR, HR metrics are often toted as the means by which to show the relevance and legitimacy of the HR function.

As a bit of background, HR continues to languish in this struggle to achieve the status it aspires to, among other areas of the organizations of which the functional group is a part.  Common complaints include:

  • HR’s lack of understanding of “the business”
  • A focus on transactional administration, rather than providing strategic leadership and advice to the business
  • A reactive, rather than proactive stance
  • An inability to communicate how what HR’s costs do to drive top line and/or bottom line financial performance

A popular article on this topic can be found on the Fast Company website: Why We Hate HR.

So, during the conversation with my friend she shared some stories of her experiences implementing HR metrics when she first assumed her role as the leader of the HR function.  As the Director of HR, she reports into the Chief Operating Officer and wanted to demonstrate her team’s ability to be a value adding partner to the organization.  A truly great idea!

However, she quickly realized that while the metrics she was able to capture and report were interesting, there was very little that could be done by HR to impact these measures.  This brought me to share my thoughts on the trajectory from data to results with her – and I thought I would take a moment to share them with you here as well.

Here’s how I see it…

1.  You start with DATA

This is the raw material you are working from.  You need to consider what data to capture, why this data matters and what it might tell you, who and how it will be captured, stored, and kept clean.  This could be qualitative or quantitative, however, the goal is typically to have quantitative HR metrics.

2.  You then analyze the data to arrive at INFORMATION

By looking for trends and patterns, doing statistical analysis, and comparing to other data sets you can start to arrive at new insights.

3.  You can use this information to make different DECISIONS

In most cases managers are looking for information that will allow them to make better decisions.  Or a cynic might suggest, managers are just looking for information that will justify the decisions they’ve already made.  Either way there is an opportunity for the data to tell a story when it becomes information – a story that can (1) increase the effectiveness of a decision or (2) decrease the effectiveness of a decision.

4.  Your decisions are sometimes followed by ACTION

Robert Kegan, Harvard Professor and author of Immunity to Change was in Vancouver recently to speak at a BC Organization Development Network event.  He started his talk, which you can see here (Video: An Evening with Robert Kegan and Immunity to Change), with a question: “If 14 frogs are sitting on a log and 3 decide to jump off, how many are left?”  Dr. Kegan encouraged us to resist the temptation to respond, “11!”  His point being that there is a big difference between deciding to do something and actually doing it.

In an organizational setting this is extremely common.  This issue is often labeled as an “inability to execute strategy” or a “failure to implement change”.

5.  Your actions will lead to RESULTS

Your actions will definitely lead to some kind of results.  Let’s hope they’re the kind of results you were hoping for!  When they’re not, we kindly call them “unintended consequences”, but really the outcomes may be disastrous in some cases – many executives have lost their jobs based on the results achieved being different than the results desired.

Linking this back to the topic of HR metrics specifically… if you are gathering HR data (e.g., turnover ratios, absenteeism rates) you should be aiming to be able to do two main things:

(1) move the needle on the HR results – to influence them in the desired direction

(2) demonstrate the link between moving the needle on these HR results and moving the needle on business results (e.g., revenue, profit) in the desired direction

How do you see it?

 

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