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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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Agenda The role and application of HR Metrics
The role of IT in HR Metrics
Emerging research 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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Agenda The role and application of HR Metrics
The role if IT in HR Metrics
Emerging research 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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Next Steps in HR Metrics
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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Next Steps in HR Metrics
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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