By: Paul Davis on April 25th, 2018
How to Successfully Establish HR Metrics that Last
HR metrics are measurements intended to be aligned with business and HR strategic goals. Metrics can be mathematically very simple and the most effective ones are typically those that can be easily understood and communicated. This blog details the process to follow to ensure that the HR metrics that you’re creating and using are of use to the business and achieve the results that you’re intending. Since the impetus behind the creation of metrics can vary widely, keep in mind that this is mainly from a general standpoint.
Why Create HR Metrics in the First Place?
The answers to that question fall into three main categories:
- To gain insight into past performance
- To compare internal metrics to external organizations
- To reduce uncertainty when attempting to predict and influence the future
These three reasons can be extremely important to businesses and HR departments in their own right, and there are a lot of commonalities between them. The following sections break down the steps to take in order to create metrics that meaningfully measure important HR-related aspects of an organization.
Step 1: Planning and Needs Assessment
The reasons metrics projects are initiated vary widely. The items listed below don’t comprise an exhaustive list and they’re not all mutually exclusive of each other, but they give an idea of how metrics projects can vary:
- Create a dashboard of historical information for recurring or on-demand reporting
- Measure the effectiveness of an employee, initiative, team, or department
- Measure return on investment
- Create metrics that will be used with predictive analytics to enhance HR programs
- A general mandate to ‘create HR metrics’
- A specific mandate to measure specific pre-determined areas (benefits utilization, etc)
While you’re going to need to do significantly more planning if you’re the person responsible for deciding what metrics to create, be sure to use the following steps to get your HR metrics project started in the right direction:
Identify the goal of the HR metrics.
Why are your creating HR metrics in the first place? Since the HR strategy is based on the business strategy, it’s important to not create the goals for the metrics project in a vacuum. Work to engage key stakeholders so that the goals of your project are tied to outcomes that are meaningful to the success of the business.
Define the scope.
Consider the items listed below when you’re planning for your work before you begin any heavy lifting:
- Is the focus of this metrics project within one department, one organization, or will it be a comparison across organizations? If you’re going to be comparing data across departments or organizations, ensure that the definitions of the metrics that you’ll be using are identical, or as close to identical as possible. For example, if you’re comparing your recruiting department’s ‘time to fill’ metrics against that from other organizations, make sure that the formula used by the external organizations matches what your company is using.
- What resources are needed to collect the data? Identify whether you or other departmental staff will be able to pull all of the data required for the metrics project. If you will need the assistance of other departments to pull data, make sure you’ll be able to get that data in the frequency that you need it, and that you’ve accurately set the parameters on the data you’re requesting.
- Set up a time to meet discuss your needs and the nature of the data that you’ll be receiving. Include those who are entering and working most closely with the data as they will be great sources of information.
Determine what the end product will look like.
If your project is set up to report on historical data, you will (likely) be creating a standardized template with tables of information and corresponding charts and graphs. Yet, if your project is set up to apply predictive analyses to the metrics, your final product will be in the form of a written paragraph style summary of your findings with accompanying insights and supporting data.
Step 2: Obtaining Buy-in
There are a few areas specific to metrics that you’ll want to make sure to hit on when working to get buy-in from key stakeholders:
- Research the history of previous metrics projects. Try to find out what metrics were preferred over others and why. If previous metrics projects were considered failures, understand the reasons so you can avoid a repeat outcome.
- Know beforehand what inconsistencies in data might arise and explain on the front end that minor fluctuations should not impact related decision making.
- Confirm that the measures and categories used for the metrics align and resonate with the audience. If you’ll be categorizing ranges in the values of metrics (e.g. ‘good, ‘high’, ‘efficient’, etc.) you should confirm that your interpretation of the value of the metrics matches that of your audience.
- If you’ll be using metrics that can be compared to external organizations, be prepared to discuss differences in your organization’s process that will impact metrics. For example, you may know on the front end that your recruiting process has a few additional steps and corresponding have a longer average time to fill positions compared to comparable organizations because of features specific to your company that are purposefully integrated into your recruiting process.
- Stress that the project is flexible in the sense that the metrics used can be adjusted based on the needs of the end users.
- Create a report template to show to stakeholders and get their input so the formatting of your report matches their expectations.
- Know what other organizations are doing.
Step 3: ‘Running’ the Metrics
Creating the metrics that you’ll be using consists of a few basic steps that you’ll be following on a recurring basis. Begin by creating a walkthrough so that the process is consistent, accurate, and repeatable. Even if your project consists of a one-time report, it’s still a good idea to document your process so you can explain how you arrived at your calculations. There is also a good chance that you will be asked to create ad hoc reports on the same metrics in the future; without a clear process for creating the metrics, it greatly increases the likelihood that you will incorrectly run the report in the future.
One other item to point out before going over the process is that once you have created a metrics report, save the base data in a location so that you can go back to that base data and pull specific subsets as needed. This is important because there will likely be a lot of questions regarding your metrics that you won’t be able to answer without looking at the base data.
After creating your first report, use the following steps as a guide to create future metrics reports:
- Clean up and address any inconsistencies in the previous report. If you’re maintaining a repository of the data used to create previous reports, make sure those are correspondingly updated so that you’ll be able to recreate previous reports or tie back to the data.
- Pull all of the data needed for the report.
- ‘Clean’ the data. This is necessary if data needs to be reformatted, re-categorized, or is known to have quality issues and should be double checked.
- Create the report based on the directions for creating the report.
- Compare it to the previous reports to identify any inconsistencies and any other recurring reports where they may be an overlap in data.
- Either correct the inconsistencies if they’re errors or be ready to address them out as points of interest.
Step 4: Presenting the Metrics
By the time that you’re ready to present the metrics, you have hopefully already gotten a good idea of what the key stakeholders are expecting as far as the format of your presentation. At this point, you want to share the metrics internally with the functional team(s) whose data is in the report so that they have a chance to review the metrics and are prepared to address and follow-ups that will be directed at their department as a result of the report. If the presenter is someone other than the person who has created the report, make sure they connect before the presentation. The individual running the data will likely have some insights useful to the presenter.
Step 5: Acting on the Metrics
At their most basic level, metrics are just composed of variables. If these variables go up or down, the results are either going to be ‘good’ or ‘bad’. The easiest way to identify actionable information from the metrics is to look at specific variables whose value you either want to increase or decrease to produce a ‘good’ result.
Once you’ve reported out on the metrics a few times, you should have a decent idea as to what data points are outliers and what trends have developed. With that information, you can begin to look at all of the metrics and try to identify target areas for action. In effect, you’re going to create an experiment based off of educated guesses that you’re hoping will have a positive and measurable impact on the company. The ever-changing environment at your company is going to make it impossible to set up a perfect test-control environment to isolate the causal effect of your intervention, but you should be able to make a good case as to whether it had an effect or not.
Once you’ve identified variables that you want to influence, start by coming up with a list of actions that you believe will move the value of the variable in the direction that you want. Share these ideas with the functional team(s) that are stakeholders regarding the impact that you’re attempting to cause. Based on the feedback you receive, come up with a plan to attempt to positively impact the organization.
When creating the plan and discussing your approach, keep in mind that you’ll want to track what you’re doing and have a way of quantifying your actions. This is important because you may have opportunities over time to increase or decrease the level of your actions. This should then be compared to the results of those actions so that you can fine tune a solution.
Step 6: Evaluating the Metrics
While this is listed as ‘Step 6’ you should be evaluating your metrics on a recurring basis. It’s easy to get in the habit of reporting on the same metrics, and it’s essential to assess whether the metrics that you’re using are still believed to be effectively setting up company leadership with the information they need to be able to take actions to improve the organization.