Since we’re already on the subject of metrics and more metrics, let’s take a deeper dive before making further investments in HRM and the HRM delivery system (HRMDS). We know we can’t improve what we don’t measure, but the dirty little secret of HRM and HRMDS metrics is that we will only get improvement in the specific metrics on which we focus. And that focus is too often on HRMDS activities and process outcomes rather than on the HRM and organizational business outcomes that we’re trying to achieve. But we’re going to change that.
It’s relatively easy, for HRMDS activity and process outcome metrics, to establish them, assign target values, and take periodic measures. How many calls by type at the call center, how quickly were they answered, how accurate were the answers, and how many were resolved with that first call? How many qualified expressions of employment interest were received, and at what cost and elapsed time, via each recruiting source used? How many “pay checks” were “cut” per payroll cycle, with what degree of accuracy and timeliness and with what elapsed time between the close of the payroll cycle and the time when all distributions had been made? How many performance reviews or salary increases or training enrollments were completed “correctly” and on time, which managers are running late, and is the cost of that lateness in followup/tracking activities? What percentage of address changes were handled in the last quarter via self service versus call center or electronic forms, with what frequency of related changes (e.g. of state tax changes, of HMO enrollment changes, or of mass transit subsidy changes) handled concurrently, and with what error correction versus avoidance via embedded address edits?
While all of these examples are important to the efficient and effective running of the HRMDS, and therefore of profound interest to those responsible for it, we could do all of this to a very high standard of low cost, rapid turnaround, and high quality without helping our organizations increase revenues or profits materially, bring new and better products/services to market faster, or enter and dominate new markets more predictably. Although the HRMDS’s behaviors and capabilities are critical to achieving these more strategic HRM and organizational business outcomes, we won’t get those outcomes unless we can establish the right metrics for them and do the heavy lifting necessary to achieve them.
With apologies to Mark Twain, I’m beginning here a series of posts that will take us from the simplest of HRM/HRMDS activity metrics to those which reflect the results of HRM/HRMDS processes and then on to those metrics which really matter in achieving the desired business outcomes. Not all of these are appropriate for use in every organization, but they are all related to the running of the HRM business. Whether you’ve put your HRMDS together and operate it yourself, perhaps with some selective outsourcing and/or systems integrators, or you’re using very comprehensive HRM BPO, you must understand when and how to use the full range of HRM and HRMDS metrics to ensure that you don’t achieve the lowest possible cost of payroll operations while increasing your organization’s outlays on health care or its turnover rate among the very employees you most want to keep.
To organize what would otherwise be an overwhelming number of possible metrics, this series of posts will first introduce a model of the HRM domain that organizes all the bits and pieces of HRM processes into a small, very stable set of highest level processes. This model is extracted from my HRM Business Model “Starter Kit,” which you can read about here. Then we’ll build up our recommendations around metrics from the simplest and least valuable to the most complex and most valuable, with respect to achieving business outcomes. I’ll provide examples of those metrics that are useful in running the HRMDS, like those which belong in our shared services or BPO agreements, and those which should be the analytics delivered via dashboards for employees and managers, “flight cockpits” for HRM and HRMDS executives, and “mission control” setups for HRM process specialists and HRMDS operations professionals.
It’s fairly easy to spot those metrics which are useful in operating the HRMDS and even those needed to measure the outcomes of specific HRM processes, and many of both kinds are independent of both industry and organization. However, there’s a great deal of analytical heavy lifting which must be done by the HR leadership in a specific organization to determine by which metrics they’ll know if they are achieving their business outcomes. Since this is obviously impossible to do if no one has linked organizational business outcomes to HRM business outcomes and on to HRMDS behaviors and results, you may want to check here and here to get further background on the importance of making these linkages. Look for a later post to explore strategic HRM planning, which produces these linkages, in much more detail.
The Bottom Line. We’re awash in possible HRM and HRMDS metrics, and most of them won’t help us move the dial on our organization’s business outcomes, to include revenues and profits. But we’ve also got an HRMDS factory to run, and that too requires appropriate metrics. Looks like we’re going to need a taxonomy, a classification scheme, to organize all the important metrics and know which ones to use, when and for what. Please stay tuned.