“You get what you inspect, not what you expect”
– Business Proverb
We’re almost a quarter of the way into the year 2012 but it seems like only yesterday we were counting down the seconds until the New Year and lining up our goals for 2012 and beyond. Individually we made goals to lose weight or join more clubs and corporately we made goals to retain more professionals, get more bang for our buck in our corporate overhead and more.
If you’re like most people, you wrote your goals down or at least kept a mental note of them…
…but just how good can our goals be if we’re not measuring them? Is HR afraid of the scale?
Metrics, metrics, metrics. One of my favorite roles in HR Consulting is establishing and tracking HR Metrics. Measurements used to determine the value and effectiveness of HR strategies. Typically includes such items as cost per hire, turnover rates/costs, training and human capital ROI, labor /productivity rates and costs, benefit costs per employee, etc.
Metrics are the foundation for growth. If you don’t know where you are, how will you know what it takes to get where you are going? If you are driving from your town to the next major city, that experience is full of metrics. You’re measuring the time and distance that it takes with your GPS. You’re looking at your gas tank to see if you have enough gas. And you’re even probably going to take a bathroom break to make sure you don’t have to “go” before you get to your destination! Why is Business any different? We make goals but do not take inventory of statistical data that helps give us a clear picture of where we stand and what it takes to get where we want to be.
Fighting monsters in the dark. What happens when you drive for growth but do not take into account the metrics surrounding the move? It’s like boxing in the dark. Sure you may be able to identify some key general areas that will always improve as a result of changes but you can hardly know how effective your decisions are and that can be a time and financial drain. The best planning involves calculated investments of time and resources into the areas that matter most. Metrics help in this a great deal.
What are some common HR Metric formulas?:
|Absence rate||# days absent in month ÷ (average # of employees during a month x # of workdays)|
|Benefit or program costs per employee||total cost of employee benefit/program ÷ total # of employees|
|Benefits as a percent of salary||annual benefits cost ÷ annual salary|
|Compensation as a percent of total compensation||annual salary ÷ total compensation (salary + benefits + additional compensation)|
|Compensation or benefit revenue ratio||compensation or benefit cost ÷ revenue|
|Cost per hire||recruitment costs ÷ (compensation cost + benefits cost)|
|Engagement or satisfaction rating||percent of employees engaged or satisfied overall or with a given aspect of the workplace|
|Percent of performance goals met or exceeded||# of performance goals met or exceeded ÷ total # of performance goals|
|Percent receiving performance rating||# of employees rated under a given score or rating on their performance evaluation ÷ total # of employees|
|Revenue per employee||revenue ÷ total # of employees|
|Return on investment (ROI)||(total benefit – total costs) x 100|
|Time to fill (average)||total days taken to fill a job ÷ number hired|
|Training/development hours||sum of total training hours ÷ total # of employees|
|Tenure||average # of years of service at the organization across all employees|
|Turnover (annual)||# of employees exiting the job during 12 month period ÷ average actual # of employees during the same period|
|Turnover costs||total costs of separation + vacancy + replacement + training|
|Utilization percent||total number of employees utilizing a program/service/benefit ÷ total number of employees eligible to utilize a program/service/benefit|
|Workers’ compensation cost per employee||total workers compensation cost for year ÷ average number of employees|
|Workers’ compensation incident rate||(number of injuries and/or illnesses per 100 full-time employees ∕ total hours worked by all employees during the calendar year) x 200,000|
|Yield ratio||percentage of applicants from a recruitment source that make it to the next stage of the selection process|
Leadership Takeaway: Metrics are not to be used as a tool for micro-management but they are a tool to be used for effective leadership and guidance. Jumpstart:HR offers a unique year-long HR Outsourcing/Advising service to it’s costumers that allows us to chart metrics and for your organization and recommend growth strategies that are both measurable and cost-effective.
Human Resources Takeaway: HR is constantly asking to prove itself by the value added contributions that it brings to an organization. If you’re having trouble communicating your value to Senior Officials then it may be time to consider Jumpstart:HR as a trusted Strategic Partner. Work with us to define your specific HR goals and manage them in a long-term plan.
Professional Development: Dead-end jobs are found in organizations that don’t track metrics that a relevant to your career growth and development. When interviewing for a position, ask what kind of tools the organization uses to track staffing and career development. If your organization doesn’t do such things then it may be time to hire your own personal HR Department. Jumpstart:HR offers personal career development coaching sessions to help you get the most out of your career.