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HR metrics aim to assess the HR function’s effectiveness in addressing “people issues” and are a direct application of the age old management aphorism “What cannot be measured cannot be improved”. An example of the impact of the HR function on the organisation can be seen from a Hewitt research that states that a 10% increase in attracting and retaining pivotal employees adds approximately $70 to $160 million to a company’s bottom line.
The Way Forward
The challenge for HR in the present scenario is to move up the value chain and transform itself into a “Business Driver”. The focus areas for achieving this goal would be:
- Human Capital R&D: Identifying new business insights by taking the lead in advanced data mining and predictive modeling of human capital processes
- Talent Engine: Ensuring a ready supply of top talent for the organisation by redefining and expanding focus in the areas of talent by managing a seamless “human capital supply chain”
- High Performance: Taking accountability for driving performance at the organisation, team and individual levels
- Organizational Steward: Assuming a renewed role in building a sense of community, trust and integrity, and even spiritual meaning for the organisation.
Next Generation Metrics
The four focus areas mentioned in the previous section involve a lot of “people processes” and to strive for continuous improvement a reliable set of metrics are required which can measure the effectiveness of these processes, the outcomes generated and ultimately the impact on the business performance due to these improvements.
The processes have been divided into five broad areas as illustrated in the figure. Some measures which can be used to critically evaluate these processes are:
TALENT SUPPLY |
This encompasses all recruitment related processes beginning from forecasting to the actual recruitment process.
Some company specific metrics:
- Forecast accuracy
- Applicants per opening
- Number of qualified candidates per open position
Some cross company metrics:
- New hire separation voluntary rate
- New hire performance rate
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HIGH PERFORMANCE WORKFORCE |
It is now a sine qua non to have a workforce which is high performing rather than have a few high performers in the workforce.
Some company specific metrics:
- Manager capability index,
- Top performer retention
- Critical skills readiness
Some cross company metrics:
- Reward differentiation
- Talent stock
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LEADERSHIP & KEY
TALENT CAPABILITIES |
The quality of leadership and the key talent that an organisation possesses is a source of competitive advantage and it is important to constantly assess this area to take corrective action on a timely basis.
Some company specific metrics:
- Succession plan depth
- Leadership/key talent voluntary separation rate
Some cross company metrics:
- Leadership engagement
- Bench strength
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EMPLOYMENT RELATIONSHIP |
This area involves the various processes related to the tenure of an employee and the strength of the employer-employee bond arising as a result of the overall experience.
Some company specific metrics:
- Top three engagement drivers
- Career advancement opportunities
- Information gathered from exit interviews
Some cross company metrics:
- Absence rate
- Engagement
- Benefits competitiveness
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