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Article No.: 11-8

Article Title: I Hate Math

Author: Linda Gravett, Ph.D., SPHR, CEQC

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This may sound like a strange statement from a former accountant, yet I have to admit it:  I hate math.  It was the only subject I didn’t get an A in all through grade school and high school.  However, as I started looking around at colleges during my senior year and majors that made sense, I had to acknowledge that Accounting seemed like a good way to understand the fundamentals of a business.  So, armed with my calculator and a deep breath, off I went to get my Accounting undergrad degree and CPA license.
 
Even though the seven years I spent as an accountant weren’t completely fulfilling, I did learn the value of understanding the financial impact of activities, including employee behaviors, on a company’s bottom line.  I took this knowledge with me as I came over from the dark side to my true love, Human Resource Management.  I still hate math; however, there are some fundamentals about metrics that we can all keep in mind as we partner with line managers and executives to add value to our organization.
 
My Top 10 Fundamentals for Using HR Metrics:

  1. Tie any metric used to the business objectives of the organization.  So what if you interview 50 potential employees a month….if the interview process doesn’t result in bringing on board the right people, with the right skills, at the right time, that number is meaningless. 
  2. Demonstrate the impact of HR activities on revenue generation.  This makes CEOs and CFOs in particular very happy campers.  For instance, calculate the increase in revenue as a result of fewer vacant positions in key roles.
  3. Use forward-looking metrics.  Unfortunately, too many HR metrics are historical.  While there’s something to be learned from the past, the fact is that too much damage may already have been done.  Why not alert executives to potential problems and concerns, such as the cost of turnover in a critical department that you predict based on employee satisfaction surveys?!
  4. Limit the metrics you select to measure the success of major HR goals, such as minimizing a people-related problem or concern.  For example, look at the cost of a poor hiring and recruiting process and weigh that against the cost of potential solutions.
  5. Select strategic metrics that address a specific organizational business objective.  If the executive team is interested in leadership continuity and reducing turnover in mid-manager ranks, measure the success of HRD efforts as they relate to retention of key players. 
  6. Be certain that you have back-up data to support the numbers.  For instance, if you measure the cost of turnover, be certain you know why turnover occurred in specific areas of the company or seems to trend across certain demographic groups.  This is where focus groups and exit interview data can be helpful. 
  7. Use metrics that apply to your company, not benchmarked metrics from other companies.  Yes, you can benchmark metrics in your industry, and for similar companies in terms of size, product or service.  However, don’t be tempted to benchmark against Procter & Gamble if your company is a 500-employee manufacturing company. 
  8. Position your reported metrics with other important strategic metrics.  If you have stand-alone reports, such as cost of turnover, they may not have as much impact as if you join forces with Finance and combine your numbers with metrics such as cost of inventory turnover. 
  9. Report metrics that are actionable.  If you report metrics such as average cost-to-hire that don’t change significantly from quarter to quarter, executives will start skipping over your reports.  Measure and report metrics that demonstrate a change from quarter to quarter based on actions HR has taken, so you can show a return on investment for HR activities. 
  10. Instead of dozens of metrics, concentrate on high priority and significant numbers, such as the cost of losing a high-potential employee or adding positions that are high revenue-generating roles.

Once the metrics you’ve developed and report start generating credibility and an increased budget for your critical HR activities, you may hate math a little less.

If you have questions about this article, don’t hesitate to contact Dr. Gravett at lsg@justthebasics.com.  Or, use our contact form by clicking here

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