Sunday, February 3, 2019

HR Metric Are Meaningless

Photo by William Iven on Unsplash
I came across another article this week on HR metrics. Based on the title, "Which HR Metrics Will Matter in 2019?", I thought, "Great!" But once again, I was severely disappointed.

But first, what is a metric? If you look it up in the dictionary, it will tell you it relates to the metric system of measurement. However, as used in business, a metric translates data into some chart or graph that helps with decisionmaking. What were the Big 3 metrics cited in the article? Labor turnover (voluntary resignations), Absence rate, and Number of employees per HR staff member. ARRGGH!! The other measures mentioned in the article as useful are also not where we should be focusing our attention (although there are some good reasons to look at them on occasion.)

Most of the metrics I see in HR departments are busyness metrics--how much of something was done. Other metrics are efficiency metrics--how fast or how cheaply is a process done. I am not saying there is not some value in those, but the value is limited, and truly, the only people who should care are the people in HR. We should be concerned with reducing workload and being efficient with our resources. But from a company leadership viewpoint, I want to know impact. If the results aren't there, then I don't care how efficient the process is. If the results aren't there, I don't care how busy you are.

The problem with HR metrics is that it is very difficult to measure the impact of HR processes and generally, HR policies and practices do not operate in a vacuum, so it is tricky to try to isolate the impact of specific HR programs.

Fundamentally, HR is there to help the workforce be more productive and to leverage the talents of the people in the organization to help the organization achieve its objectives. Wouldn't you agree?

I can see a reason to track turnover. But the value in turnover is not the overall number. Personally, I like to see both voluntary and involuntary turnover. Voluntary turnover can indicate cultural, management, and compensation issues. But more importantly, who is leaving? Critical skill turnover is more important to me than turnover as a whole. When are people leaving? If shortly after hire, we need to look at our hiring and onboarding processes. Is there some other timeframe that seems to have a higher percentage of people leaving? Why? Involuntary turnover in good economic times can indicate poor hiring practices.

But I don't really care about the other two measures cited in the article. What might I look at instead? Every organization is different so I would expect the measures to be different. However, two that should be considered are Revenue Per Employee (this varies hugely by industry) and Employee Engagement. I look at revenue versus profit because although employees have a big impact on the revenue brought into the company, management determines how much of that revenue turns into profit. I would track employee engagement because study after study has shown higher engagement means higher returns.

There are other possibilities, but they should be based upon each business's unique niche and business objectives.

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