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Enabling business results with HR 'measures that matter'
How HR metrics are influencing key business decisions
While yesterday's data could help organizations understand what was happening, HR measures are now allowing organizations to understand why it is happening and better predict what could happen. Data-driven HR insights are uncovering issues, influencing organizational decisions, and driving continuous improvement—all valuable, strategic contributions to business success.
Aligning HR measurement with overall business objectives
Metrics have become a vital component of HR and HR service delivery, allowing companies to measure HR program performance while providing actionable insights and information on HR efficiency and effectiveness. To help ensure that HR programs and strategic choices support broader business objectives, HR metrics and measurement tools focus on HR's contribution to overall business issues. The most highly valued HR measures and metrics can:
- Explain what is happening within an organization and why
- Provide information regarding people while creating a link to overall business performance
- Help business leaders assess issues while driving continuous improvement
As HR moves from administrative and transactional to operational and strategic, organizations are identifying "measures that matter"—HR measurements that support broader business goals, objectives, and decisions.
Three trends driving demand for HR metrics
Organizations are increasing HR metrics capabilities for three key reasons:
- Access to a greater quantity and quality of internal and external data than ever before: HR transformations are beginning to provide companies with accurate, reliable, and integrated data that was previously unavailable.
- Cloud solutions that expand HR's technological capabilities: New technologies with improved interfaces are making it easier to use HR measurements to achieve larger organizational goals.
- Data analysis and metrics competencies within HR: HR employees are bringing more analytical skills to the job than ever before. The days of HR talent with "soft skills" alone are over; HR professionals now have analytical competencies previously only found elsewhere within an organization.
Tailoring HR metrics to meet strategic goals
From reports to dashboards to scorecards, HR measurement and reporting can provide varying levels of information to meet your organization's specific goals and parameters. Regardless of the implementation, the key is to identify the "measures that matter" first, so the reporting tools and capabilities provide the right insights to help you achieve your stated goals.
Customer metrics quantify internal "customer" satisfaction with HR to help identify improvement opportunities. They can range from general (overall employee satisfaction) to specific (percentage of leaders citing leadership training as a driver of satisfaction).
Process metrics measure output and efficiency of HR processes and include insights such as job offer acceptance rate, number of HR data errors, and variance from compensation guidelines. These metrics address high-level issues such as the effectiveness of process execution and opportunities to improve efficiency or reduce errors.
Talent metrics help identify workforce competency gaps, implications of different hiring, effectiveness of attrition and promotion strategies, and which talent characteristics foster high performance. Talent metrics include succession plan promotion rates, retention of high performers or critical segments, and the share of new hires who receive top performance ratings or leave within six months. Talent metrics quantify the strength of the talent pipeline and identify improvement opportunities that will ultimately help with overall retention and employee productivity.
Financial metrics quantify the cost and impact of HR processes and programs and include information such as the cost of turnover, training spend per employee, return on investment of an HR initiative, and the realization of business case savings from an HR transformation project.