Do You Have Ineffective HR Metrics? 25 Reasons Why You Might

Recruiting, talent management, and HR professionals in general have been using metrics for many years now. More often than not, the story HR metrics tell is irrelevant or disappointing. Over the past three decades, I’ve compiled a long list of common metrics mistakes that you can use to assess your measurement efforts and improve your efforts to get the attention of your management and senior leadership.

25 Most Damaging Metric Errors

Following are 25 of the most damaging mistakes you can make when using metrics to assess or defend your performance presented in five categories.

If you want your efforts to be as effective as they can be, you cannot make a single one.

Factors That Make a Metric Less Compelling

Not tied to business goals — executives have a narrow agenda, so don’t forget to tie each reported HR metric directly to a business goal or problem (business problem not HR problem).

Not demonstrating revenue impact — no business goal is more “top of mind” with executives than increasing revenue. Although it is admittedly difficult, calculate the dollar business impact on revenue of the area covered by the metric (i.e. revenue decrease as a result of vacant positions). Work with the CFO’s office to ensure that the calculations are credible.

They don’t drive executive action — pretest each metric reported to executives to ensure that they are powerful enough to cause managers and executives to want to take action immediately. Non-compelling metrics get only a “so what” or “that’s interesting” reaction from executives.

Not forward-looking — almost all HR metrics are historical. Unfortunately, executives care more about the future, so focus on metrics that are forward-looking and that alert managers about upcoming problems and opportunities (e.g. key employee turnover will likely increase 8% next quarter).

Not tying rewards to metrics — merely collecting and reporting metrics can have a powerful impact on behavior. However, by failing to reward managers and HR professionals for producing superior metrics results, you are missing a powerful opportunity to further drive behavior and decision-making. Whatever you measure and reward gets done faster and better.

Errors in Selecting Metrics

Developing metrics independently — the CFO’s office is the undisputed king of metrics. So never begin a metric effort without directly involving the CFO to ensure upfront that each metric is useful, credible and relevant. You can avoid many metric selection errors by allowing senior executives to pick the metrics they want to see.

Voting on metrics — it is quite common but a major mistake to select your individual metrics based on a vote by the staff. Because everyone does not have equal knowledge or power, you need to weigh the inputs and the opinions of the individuals who provide advice.

Too many metrics — rather than developing metrics for every whim, limit metrics to one for every major HR goal and major people management problem or opportunity. Only report the handful that directly impact items on executives’ current agenda. That usually means the cost of poor hiring, weak retention, and a lack of leaders, and never cost per hire or training hours per employee. Mixing powerful metrics with low-impact ones can cause the best to be missed.

Focusing on tactical metrics — tactical or transactional metrics help you improve the operational aspects of a specific function or program. In contrast, strategic metrics highlight areas or opportunities that directly impact a major business goal. It’s a mistake not to use the 80/20 rule and spend 80% of your time and resources on the 20% of your metrics that are truly strategic.

Omitting quality measures — a common mistake in HR that does not occur in other business functions is the omission of metrics that cover quality. For example, listing the number of hires without a comparable statistic for the quality of those hires (i.e. on-the-job performance of new hires). Listing the number of training hours provided but failing to note the quality of training (i.e. the change in performance after training) is a common but serious omission.

Not supplementing with “why” metrics — most metrics serve a single purpose in that they tell you “what happened.” In order to fix a problem, you also need to know the causes or “why” something is happening. As a result, for critical strategic metrics you need to gather supplemental data that reveals the causes (i.e. turnover numbers can be supplemented with exit interview data on why people quit).

Metrics are too complicated — don’t provide metrics that are too complicated for the average executive to understand within a minute. If necessary, continually refine your metrics until they are easy to understand.

Follow-the-leader errors — a common error is to “over benchmark” to the point where the metrics that you select are merely a reflection of the metrics that every other firm is using. Unfortunately, because there is little connection between common metrics and effective metrics, copying can result in metrics that do not fit your organization and its problems.

Relying 100% on canned metrics — although many HR software packages, metrics providers, and consultants provide an excellent set of metrics, it is a mistake to rely 100% on them. It may be necessary to supplement them with a few high-value metrics and measures that fit your organizational needs and problems.

Errors in Reporting and Presenting Metrics

Not embedded in financial reports — strategic metrics can have no impact if they are never seen or read. Separate metrics reports are seldom read, so you must fight to have your most important strategic metrics embedded into standard financial reports that all managers receive. For example, having the costs of employee turnover read alongside the cost of inventory turnover can be very powerful.

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No indication that action is required — including metrics that require no action with those that do can lead to a lack of focus. Labeling individual metrics with action colors can help executives focus on the metrics that require action. Also report your metrics so that the ones that demand executive attention or action appear first.

No comparison numbers — recording a single number by itself might have little meaning, while including a benchmark comparison number might instantly excite them (e.g. our turnover is 9% but it was 4% last year and the industry average is 2%). Include a “failure, passing, and excellent score” for each metric. Other powerful comparison numbers might include the percentage change and the best and the worst within the firm and industry.

Failing to provide “more information” options — electronic metric reports are far superior to paper reports because you can provide the user with more information options. If an individual manager needs more detailed information, localized information, a formula, or a definition, it can be provided easily using a drop-down menu. This makes metrics easily scannable while at the same time providing any level of detail or depth that the reader requires.

Data or calculations are not judged to be credible — many HR metrics are ignored, discounted, or disregarded by executives because they doubt the accuracy of the metric or the supporting data. This can be caused by an overall lack of credibility but it can be exacerbated if you fail to provide in your background materials the source and reliability statistics for the data. Providing key formulas and definitions can also help minimize confusion.

Reporting metrics that don’t change — routinely reporting metrics that don’t vary much over time, that represent no major change, or that don’t require action actually waste executive time. Either omit them until they show a change or put them last in your report.

Errors Related to Enhanced Decision-making

Not designed for decision-making — the primary purpose of metrics is to improve the quality of people management decision-making. However, when you provide only stand-alone, year-end historical metrics, you are not supporting better decision-making because the actual problem might not have occurred at the very end of the year. By supplementing this static year-end metric with an alert or “heads up” warning system, managers can be made aware of the problem when it is actually occurring.

Not providing action guidance — even when your metrics have the desired effect of causing managers to want to take action, they may still hesitate or even take the wrong action. In order to avoid this problem, you need to provide decision-makers with guidance as to the most and least impactful actions that are available to them.

Errors Related to Data Collection and Metric Calculations

Failing to use sampling techniques — gathering data on every employee or instance is expensive and time-consuming. It is a major error to not use scientific sampling to get almost as accurate results faster and cheaper by using scientific sampling techniques.

Failing to weigh high-priority items — is quite common for HR to consider every occurrence to be of equal importance. However in many cases, some occurrences simply have more of a business impact than others. For example, when calculating turnover, the loss of a top performer or someone in a leadership position has a much greater business impact than the loss of an average employee. As a result, it is a major error not to more heavily weigh the data or opinions from high-impact items (i.e. from top performers, mission-critical positions, revenue-generating positions, regrettable turnover, high-margin business units, etc.).

Outside data is not integrated — almost all HR metrics come from databases owned by HR. Unfortunately, HR metrics would become more powerful if they were supplemented with data and information from other business databases (i.e. performance, productivity, quality control, business plans and forecasts, etc.). In some cases, external data including economic databases (i.e. local growth and population shift statistics) and industry benchmarks could supplement HR metrics with dramatic results.

Final Thoughts

HR professionals commonly ask why the single highest variable cost item in most corporations (i.e. employee-related costs) seems to gain so little senior management attention. Even though we know that the language and currency of business is based on dollars, data, and metrics, HR still garners much less than its deserved share of credibility, respect, and resources. My research and experience indicates that HR’s failure to effectively use metrics is largely to blame. I challenge you to use this checklist to assess your current metrics and see if your process doesn’t fail on more than half of them. If you find that your current metrics have failed miserably, you’ll know what is needed to change the situation.

Dr. John Sullivan, professor, author, corporate speaker, and advisor, is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high-business-impact talent management solutions.

He’s a prolific author with over 900 articles and 10 books covering all areas of talent management. He has written over a dozen white papers, conducted over 50 webinars, dozens of workshops, and he has been featured in over 35 videos. He is an engaging corporate speaker who has excited audiences at over 300 corporations/ organizations in 30 countries on all six continents. His ideas have appeared in every major business source including the Wall Street Journal, Fortune, BusinessWeek, Fast Company, CFO, Inc., NY Times, SmartMoney, USA Today, HBR, and the Financial Times. In addition, he writes for the WSJ Experts column. He has been interviewed on CNN and the CBS and ABC nightly news, NPR, as well many local TV and radio outlets. Fast Company called him the "Michael Jordan of Hiring," Staffing.org called him “the father of HR metrics,” and SHRM called him “One of the industry's most respected strategists." He was selected among HR’s “Top 10 Leading Thinkers” and he was ranked No. 8 among the top 25 online influencers in talent management. He served as the Chief Talent Officer of Agilent Technologies, the HP spinoff with 43,000 employees, and he was the CEO of the Business Development Center, a minority business consulting firm in Bakersfield, California. He is currently a Professor of Management at San Francisco State (1982 – present). His articles can be found all over the Internet and on his popular website www.drjohnsullivan.com and on staging.ere.net. He lives in Pacifica, California.

 

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13 Comments on “Do You Have Ineffective HR Metrics? 25 Reasons Why You Might

  1. A great selection of issues. I tend to describe good reporting as ‘moving from data to doing’ and the approach used spends far more time talking to users about what they want to do with the data, and what information would prompt them to take action. Then using a combination of lessons from research on how people comprehend visualized data and our usability testing we try and ensure that reports hit the mark.

    There are a few other issues I would like to add:

    Not developing reporting specific for stakeholder groups. One size-fits-all reporting usually means that it isn’t really suitable for any group. Research stakeholder needs, develop personas and design for key groups

    Not understanding flow. Dashboards are rapidly moving from data concentration to data comprehension. Part of this move is a consideration of how the user navigates the information, and how you guide their attention in an intuitive way to facilitate understanding. They should be interactive.

    We wrote a series of articles on HR metrics, the start of which can be found here: http://www.organizationview.com/hr-reporting-design-part-1-types-of-information

  2. Excellent article John. The outside data integration point is key- there is a whole related question of how enterprise data warehouses and BI are/will impact HR information silos: it’s happening and it will happen more.

    I think something else can be said that’s very important about metrics- they can have a huge impact on culture and lead to major unintended consequences, esp. when incentives are tied directly to the measures.

    Here is a classic case of that, where the price is real and ugly: http://www.villagevoice.com/2010-05-04/news/the-nypd-tapes-inside-bed-stuy-s-81st-precinct/

  3. Martin makes two excellent points. I have raised on several occasions concerns with industry efforts to standardize certain metrics as I believe that (a) they cause a tendancy to use certain metrics, even when they are not the most effective, but just because they are ‘official’ and (b) that in themselves they are liable to cause viewers to jump to incorrect decisions and conclusions (too often they are used without being framed with the right context). As noted incentivizing the wrong things can cause significant issues.

    As well as using other internal metrics there is much work left to be done with integrating with other external data. Sources such as Microsoft’s Azure Datamarket (https://datamarket.azure.com/) provide easy integration with a variety of economic data for example.

  4. ISTM that a company should feel free to gather, compile, and report as many metrics as it wishes to as long as the people spending more than 5% of their time doing so make $2.78-$5.25 hr- the cost of a data-entry related virtual assistant.

    Cheers,

    Keith

  5. What a great compilation of metrics from the “metrics guru.” This one is to be read over and over again.

    I would add that once we know what is to be measured, launch the measurement, report and analyze the results, it will all be a total waste of resources if not acted on. Gathering metrics for metrics’ sake makes no sense. Probably even worse, if the metric becomes a “report card” instead of an actionable measurement, the results will diluted to the point of being meaningless. For example, how many recruiters are tempted to cook the books rather than record the facts of a lengthy recruiting campaign in order to search for ways to improve methods.

    If something is worth doing, it is worth measuring. If it is worth measuring, it is worth analyzing to squeeze every ounce of meaning to apply to the business process.

  6. >Congrats on a very useful checklist for anyone planning to leverage metrics to gain impact for their talent management innovation or solution. And for those who aren’t, get mentally prepared for disappointment.

  7. As an alternative to replacing a recruiting staff with a horde of data entry folks and clerks, I once again suggest an alternative:

    Manifesto for Agile Recruiting
    (This was “sampled” from the Agile SW Development Manifesto. -kh)

    We are uncovering better ways of hiring people by doing it and helping others do it.
    Through this work we have come to value:
    • Individuals and interactions over processes and tools
    • Quick, quality hires over comprehensive documentation
    • Customer collaboration over contract negotiation
    • Responding to change over following a plan
    That is, while there is value in the items on the right, we value the items on the left more.

    Principles behind the Agile Recruiting Manifesto
    We follow these principles:
    • Our highest priority is to satisfy the customer through early and continuous delivery of quality hires.
    • Welcome changing requirements, even late in development. Agile processes harness change for the customer’s competitive advantage.
    • Deliver quality hires frequently, from a couple of weeks to a couple of months, with a preference to the shorter timescale.
    • Internal customers and recruiters must work together daily throughout the project.
    • Build projects around motivated individuals.
    • Give them the environment and support they need, and trust them to get the job done.
    • The most efficient and effective method of conveying information to and within a recruiting team is face-to-face conversation.
    • A quality hire which is on-time and within budget is the primary measure of progress.
    • Agile processes promote sustainable employee development.
    • The sponsors, developers, and users should be able to maintain a constant pace indefinitely.
    • Continuous attention to professional excellence and first-class service enhances agility.
    • Simplicity–the art of maximizing the amount of work NOT done–is essential.
    • The best requirements, processes, and hires emerge from self-organizing teams.
    • At regular intervals, the team reflects on how to become more effective, then tunes and adjusts its behavior accordingly.

    I challenge staffing organizations to adopt, implement, and maintain these policies and principles. Don’t know how? I’ll be happy to show you.

    Cheers,

    Keith Halperin
    keithsrj@sbcglobal.net

  8. Thanks for the article. In a nutshell, too many metrics measure activity, not results.

    I think most HR metrics and related processes and actions would be very different if they had to be linked to better key metrics. If a business leader set the requirement that “we need employee productivity to improve our business financial by 1%” no HR person in her/his right mind would ever do or present to others anything that was framed outside that requirement.

    I once heard that from a business exec, and it caused metric-mania in the HR organization I was with at that time. We actually lost productivity trying to create new metrics pointed at 1% in the most indirect ways possible.

    One way to look at it is that we simply needed to find ways to link or give back every employee back less than 5 minutes of time doing something other than internally focused busywork.

    The first things on the chopping block were any reports or activities that couldn’t link back to giving back 5 minutes of an employee’s time.

    Then we moved on to training and skills development activities that wouldn’t show immediate gains in efficiency or new capability.

    Long story short, ground metrics in how much is this going to cost me, make me in new revenue, or save me in reduced expenses.

  9. @Darryl:

    “Long story short, ground metrics in how much is this going to cost me, make me in new revenue, or save me in reduced expenses.”

    If I may restate:
    “Long story short, ground metrics in how much is this going to make me look good, make me in increased budget/power, or save me in reduced aggravation.”

    One needs to control the definition/calibration of the metrics so as to put you/your group in the best light.

    Keith “Machiavelli Masters Metrics” Halperin

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