Frank Hobson Consulting

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HR by numbers - useful metrics

HR by numbers - useful metrics

I posted comments on my blog (http://tinyurl.com/42rsxc) when the CIPD launched their toolkit on Human Capital Management. My post was a bit of a rant about the terminology of HCM (to paraphrase the Prisoner TV series, I am not a piece of capital I'm a person) and criticised the toolkit for trying to put far too many disparate things under this heading and using too much HR babble. But I was complimentary of much of the actual content and suggested that you pretend it is entitled "Useful Workforce Measurements" and choose the ones that are useful for you. So here I want to expand on that and talk about HR metrics that might help you demonstrate the importance of your contribution.

What data, if any, does your organisation use to run the business? Most commercial businesses will use one or two high-level workforce ratios that provide a rule-of-thumb guide to how the business is doing. It might calculate profit or sales per employee or per £ of employment costs. In production-based businesses it might link output to employee numbers or hours worked. Service companies might monitor the ratio of fee earners to support staff. Whatever they use does HR 'own' it or is this seen as a management tool? Does HR link any of its statistics to that ratio? If your organisation does not rely on ratios of that type why not start a discussion about developing suitable ones?

What about the more traditional HR metrics on turnover, retention, absence, age distribution, etc, - all that stuff you learned on your CIPD course all those years ago.? Are you using all the ones you should and are you taking the lead in interpreting them? All too often HR gets into disputes, usually, with Finance about reconciling HR statistics with payroll statistics. There are often good reasons why they differ but HR comes off worse because it has not set up sufficiently rigorous recording and analysis processes to justify its own statistics and take the high ground.

Then there are all the activities that are essentially HR-run processes. Recruitment, training, performance management, reward, exit interviews, succession and promotion and many more. If you are seen to be running these in a business-like way with good numerical data and success criteria from which you feed useful information to managers the greater the chance that HR will be viewed as a front-line contributor and not just a service function.

Recruitment is one area where everyone loves to criticise HR's performance. Especially when the delays occur because they could not be bothered to send you a JD and person spec. on time. So set up some serious monitoring statistics and get your retaliation in first.

The benefits of training are notoriously hard to validate but activity is easy to analyse and report on. Do so regularly and, at the very least, you will not have to panic next time the CEO asks how much we spend on training. Try linking training costs to other metrics such as recruitment, turnover, appraisal or competency scores.

Appraisal statistics - compliance (coverage and timeliness), distribution of ratings, quality of, and performance against, targets - are all areas where data adds quality to activities which are susceptible to uninformed attitudes. I have written before about the need to analyse your salary structures to help with budgeting and planning but why not relate them to changes in engagement scores from your annual employee survey, if you do one.

A word of caution: HR tends to attract entrants from the woollier side of academia who, despite coverage on CIPD courses, do not always have a good grasp of statistics and mathematical logic. Give extra care to ensuring that your conclusions are logically sound and that all the tables cross-reference and total properly. There will be those at the management meeting who will spot anything that is not correct and your argument will be shot from under you.

Frank Hobson

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