You may access to my presentation entitled "Value Added Metrics in HR" explaining why metrics matter, how you can set up your metrics list and some of the key metrics that should be considered.
Hope you will find it useful.
Starting from the 1980's, measuring HR is a hot topic for HR practitioners, researchers and academic members. There are lots of theoretical research as well as objective data showing the impact of HR practices, policies, functions on the business performance. The truth is, where we are as HR professionals, is far behind the empirical evidences. We still do not or can not (as we may don't have the full ability or knowledge about how to do it) show the effect of HRM to the business value.
One reason behind it, is that we try to come up with some measurement criteria or some data that no one can understand inside the Organization. Or, we use too many complicated formulas so that no one is interested to even hear about it.
Value creation can come if and only if, the consequences of your suggestions come along with actions that enhance, drive the business performance. If your insight triggers some other ideas, or even causes behavioral changes; then it means you are creating value rather than sitting on the C-suite table, watching Finance,Sales,Marketing teams' shows.
Yes, business is some sort of a show business. You have to impress your audience, you have to let them get something out of your words, your thoughts. In order for HR to be successful on that, the key is to be able to measure the people side of the Organization. Successful people management is directly correlated with powerful people data management. And HR is not the supporting actor in that show business at all; it is and must be the leading actor.
Here i will be stressing on the efficient use of metrics for HR. What does that mean? It's simple:
Everything starts with Business strategy of the Company. It sets the direction, the key priorities, what to do and what not to do. HR Strategy follows, aligned with business direction so that, when business is going in a way, so does HR go in the same path.
For successfully implementing the HR strategy; here comes the efficient use of metrics: That is the ability to extract key data from multiple sources, transforming it into meaningful information in order to be able to get insight out of it. And then turning this insight into an action. Action that will help business to improve its performance. Below is an illustration of my understanding.
As HR professionals, unless we do not show, present the impact of our activities, the impact of our People, then we will always be treated as a seat that can easily be sacrificed.
Try to remember the key: Always use measures that will cause an action. Otherwise, it means that you are creating "messtrics" rather than the efficient use of metrics.
The survey that I have conducted through this website is finalized and results have been extracted. I would like to thank to all 167 participants from different continents of the World.The aim of this survey was to come up with a benchmark across different industries and locations, related to the HR department effectiveness based on its headcount size.As it is also mentioned in the report, that this metric is not showing the value received from the department and should not be considered as an indispensable strategic metric. But rather it gives an idea what should be the size of an HR department considering other things being equal.Some key points from the Report are:
Detailed report of this survey can be found in the attachment below.E.K, 09/2012
- Total participant is 167; 45 percent with 500+ headcount
- 68 companies participated from North America followed by Asia and Australia with 37 and 24 participants respectively
- 21 different industries represented
- Global metric average is calculated as 113 employee per HR headcount
- Retail industry has the highest average with 275 employees per HR, followed by Healthcare with a result of 203
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In the attached file, you may find the detailed results from my Global HR Metrics Survey Report conducted in May-June 2012. First of all, I would like to thank to all contributors, without their participation the report would be meaningless.
In total 160 global companies shared their practices from 7 continents. Majority of the Organizations were based in Asia, North America, Europe and in Middle East.
Key findings are;
- 55% of the participants are reporting on monthly basis, whereas 25% are reporting on quarterly.
- There were 15 companies which were not reporting metrics to senior management.
- The most followed metric is cited as Headcount; followed by Turnover Rate, Voluntary Turnover Rate and Resignation Reasons.
- Metrics such as HCROI, HEVA showing the value added and revenue productivity per employee, are the least followed metrics.
More findings are shared in the Global HR Metrics 2012 report, below.E.K, 07/2012
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The world is involved in a global crisis and executives are trying to manage Organizations through the downturn without destroying its long-term success. Many of the giant corporations, most of which were subjects to many case analysis, are cutting costs frequently through lay-offs. Some companies need vitally reducing their headcount, but some others are just following the others expecting that they can rehire once the economy improves; what a pity...
We live in a world where yesterday is a distant memory and tomorrow is an uncertain dream. The only reality is now. However it is easy to understand that the talented, qualified workforce will be the scarcest resource in less than ten years for Organizations. All survey results point out this reality which can be foreseen from today. The important question is: Are Organizations ready for this challenge? Are they really aware of that? How did they reduce the size of the workforce? Are talented people downsized just to reduce costs? What role did HR department play? These are critical in order to address people issues and to establish people strategy in an Organization and should be addressed especially when the global economy recovers.continue to read...
The most successful organizations manage their human capital as a strategic asset by aligning workforce with business objectives and using measurement to drive decisions, monitor performance and improve results.
2007/2008 US Human Capital Effectiveness Report,Saratoga
Measuring human capital is an evolving process, and this process is not over yet. New metrics are added or developing in order to fully reflect the strategic value of people to the business results. But in contrast with this critical importance of the subject, most of the Organizations are at the beginning or do not attach any importance to measurement activities at all.
As an extension to my previous six articles on "Measuring HRM", i wanted to discuss some more new HR metrics that can be easily followed and calculated by HR professionals. These will be mainly focusing on reporting of workforce demographics and retention of human capital.continue to read...
Effective work is not performing one task; it is the sum of many important things done well. So, if we want to know how effective a recruiter is, we have to talk about several key tasks.
In today's competitive environment, it is widely acknowledged that people are key assets of an Organization. All other tangible assets are inert and subject to depreciation. Only the human capital has potential to learn, develop and contribute to business outcomes. And the acquisition process of these key assets has an enormous importance for the business enterprises.
We all know that it is HR people job to lead the Organization in the recruitment, development, coaching and measurement of human assets and the results of their performance. According to Jac Fitz-Enz; "a great deal of the value-adding potential of all functions in the Organization depends on how effective are the human assets HR professionals help them acquire".
This saddles HR people, mostly recruiters, with a great responsibility to bring up the right human capital or human potential to the Organization in order to add value to the overall business success. continue to read...
As we begin the new millennium, it is increasingly clear that the core strategic asset of enterprises as well as the new foundation of the wealth of nations is human capital. Without the ability to measure these assets, their management is unlikely to be either rational or optimal.Eric Flamholtz
In my previous article on "Employee Turnover Cost
", i have tried to explain the importance of the turnover issue and the possible costs that it can cause. I am not going to re-state my ideas, but i will try to come up with more metrics on employee turnover and movement in order to follow-up carefully such acts within the Organization.
Turnover issue has long been HR's responsibility. It has been a long debate within HR professionals why to question turnover issue solely in their department. That point of view is somehow correct. Yes it is true that management of turnover should be done collaboratively by HR and line management. But the analysis and the follow up of the consequences should be done by HR and suggestions for necessary actions in order to prevent it, should be given to senior management of the Organization. continue to read...
Measurement is the first step that leads to control and eventually to improvement. If you can't measure something, you can't understand it. If you can't understand it, you can't control it. If you can't control it, you can't improve it.H.James Harrington
In Recruitment Metrics article, i have tried to give as many important recruitment metrics as possible so that HR professionals may choose one or two of them for their own purposes. As i said previously; those metrics are neither new nor invented for this website. Instead, they can easily be found by just clicking my favorite HR links on the left side.
However, the important thing is to be aware of measurement vitality, to know how to align those metrics with overall business and HR strategies and how to interpret those along with a methodical approach. That's why in most of the key research results we see that that the need for a measurement method and for an alignment are the missing pieces in HR professionals' knowledge. continue to read...
In my previous articles on HR measurement, i have tried to come up both with empirical evidence on HRM performance linkage with overall business results and with survey results showing HR professionals' lack of an established measurement system. The picture is so clear; despite the effect of HR practices or programs is significant to the financials of Organizations most of HR professionals still are not able to show the impact of their work or the impact of the workforce with the help of some quantified, objective data. As a result, measuring the impact of HR programs and systems on key business results is far from being a common practice.
This and my upcoming articles on HRM measurement will cover the most important and widely used HR metrics in order to quantify the effectiveness of HR programs or processes. Those measures are not new at all. My intent is not to discover or invent new things. On the contrary, those are available online and free for everyone’s access. So why not to use them? The answer is, not sparing the time for such measurement activities and not being able to interpret those metrics and understand their meanings.continue to read...