HR Measurement and Metrics

8/8/2019 HR Measurement and Metrics

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HR Measurement

and MetricsJames B. Avey PhD

Central Washington University


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Introduction This discussion is based on experience,

not necessarily research.

Tacit knowledge- subjective, knowledge ofexperience, practice

Explicit knowledge- objective, knowledge of

rationality, theory


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Agenda The role and application of HR Metrics

The role of IT in HR Metrics

Emerging research in HR Metrics


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But First

What are HR Metrics?...Take 20-30seconds, talk with a person next to

you, how would you answer thisquestion in a job interview?


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What are HR Metrics? HR Metrics

Resource Based View of the firm

Use data to manage Harden the soft information

Dollarize

Examples?


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1

2

3

4

5

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

ESI

2005 2006

Employee Satisfaction Index


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What are HR Metrics continued Who cares/Why are you showing me this?

How does it affect my business?

What can be done about it?

What are you doing about it?


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What are HR Metrics?- Simple Real

Example Stand up Meeting- Labor Loss

Weekly Report Dollarize

Partner with Business Management Opportunity Costs

Consequence 1: Executive of division gets fired up and says tomanage labor (firm value)

Consequence 2: Senior managers come to HR and ask what to doabout it (Coaching exchange between HR and Line)

Overall: Increased function credibility, increased visibility, increasedvalue, increased opportunities


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Why are we having this discussion? Reason #4: The timing is right

HR Problems Course

Ready to Hit the Market

Took me two years to learn these concepts

The rewards of learning it are still occurring today after 3 years out of the game

Reason #5: CEOs want this Optimize human capital or go home

They do not know how to do it

They want people who can do it (Pepsi example)

Reason #6: Knowledge of HR Metrics creates job security As a field HR is always asking for this. Even the HR Scorecard book lost 50% of the readers.

Tuff Storage- Management Trainee Program- how do we know it works?


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Why do we use HR Metrics? Metrics are used by all functions of the business

Facts and Data

Validation of strategies and exploration of trends

Example: how do you know you have developed someone?

You just know

How do you know if you should divest, take a partner or set upshop in Israel?

HR metrics are a fundamentally different kind of metricaleading versus lagging indicator

Annual Report

HR Metric


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Decreased

Satisfaction

Absenteeism

Turnover

Disengagement

Job Searching

Decreased

Individual

Performance

Poor Customer

Relationships

Reduced Quality

Decreased

Firm

Performance

Time 1 Time 23-12 months

Time 33-18 months

Time 412-36 months

Leading Indicators


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5 Rules of HR Metrics Discussion is designed for HR Professionals

Guiding principles

HR professionals have an outlet to highlight HRrelated information

Firm value can be affected by the strategic

partnering of HR professionals

HR Metric feeder information is available


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Rule #1

Dollarize everything you can A change in .1 of the ESI has a value. Calculate it

and dollarize it.

Turnover: Each person that resigns the company incurs a cost

hiring, training, lost labor time, drain on the team with newemployees, etcis anyone else looking at this?

ROD for all HR interventions

Credibility, respect, understanding, support


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Rule #2

Use the Language of the Enterprise Clearly relate what you are measuring to what the firm

leadership values

Mission/Objectives

Opportunity Costs

Example: The HR Schedule as the denigration of HR

Use what you must

Translate what you can

SHRM Whitepaper 2003


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Rule #4

Use meaningful metrics Valid and Reliable: The goal is prediction

Generate metrics from solid sources (Scholarly Research)

Know the limitations of research says and popular books-do not swallow the blue pill

Find out what outcomes are meaningful in your organizationand revisit meaningful.

Tracking satisfaction and commitment to target absenteeismand turnover

Embeddedness

Embeddedness quickly became more meaningful forturnover, but not necessarily absenteeism.


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Rule #5

Personally use metrics to manage Make decisions using facts and data

Do not track for the sake of tracking

Do not track so you have something to say

Use metrics to create firm value Example: Decrease in ESI

All managers meeting

Show decisions you are making

Show the effects (dollarize) of the decisions you have made


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Summary Dollarize everything you can

Use the language of the enterprise

Use consistent metrics

Use meaningful metrics

Personally use metrics to manage


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The role of IT in HR Metrics



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The role ofInformation Technology-

The human resource information system IT is the great enabler (Friedman)

Information leaks

Information expands as it is used

HRISs automate HR Metrics


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Data Warehouse

HRIS

(Peoplesoft)

Standard

Reports

Related

SystemsBusiness Management

Manufacturing

Sales

Ad Hoc

Reports

Scheduled

Reports


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The human resource information systemA quality HRIS:

Adds speed

Improves credibility (common databases) Reduces cost of HR Metrics

Provides a flexible tracking framework


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The role if IT in HR Metrics



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Next Steps in HR Metrics

Current Metrics Satisfaction

Engagement

Turnover/Retention

Absenteeism Replacement Cost

Employee Value to Firm

Training Benefit Realized

Labor cost percentage

Executive Retention Internal Promotion Rates

HIPO Retention

New Metrics: How can wepredict these metrics?

Research What predicts the

predictors?

Attitudes precedebehaviors


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Confidence, Hope, Optimism, Resilience

How do we validate as an HR Metric? (ALJ,

Kellogg, ANZ, Boeing, Heterogeneous Adults) Reliable and Valid

Performance, Satisfaction, Commitment,

Absenteeism

Causal designs

Conclusion: There is some causal relationship


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Dollarize: convert a single unit of PsyCap into a dollaramount in terms of performance outcomes.

Language of the enterprise: What objectives will PsyCap likelyinfluence?

Consistent Metrics: Decide whether or not to use this metric. Ifso, be consistent in its use.

Meaningful Metrics: Determine the extent to which PsyCap ismeaningful in a particular organization

Use PsyCap to forecast behavior and performance


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Summary Discussed HR Metrics

Discussed Emerging HR Metrics

Discussed the role if IT


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Documents

HR Measurement and Metrics