Overrated HR metrics, and what you should measure instead
HR metrics can be a powerful tool for making business decisions, but can be a waste of time and effort when done inefficiently. Are you running the right type of metrics? Here are overrated HR metrics and improved versions that can add value to your company.
Turnover or how quickly employees decide to leave your organization is an example of a standard HR metric that doesn’t add much insight on its own. Knowing your turnover percentage over time can give you part of a picture but it will not drive solid business decisions. Is your turnover low because employees are motivated or are they underskilled for the market so they have no other options?
Improve your turnover metrics by supplementing them with details about who is leaving and for what reason. Run HRMS reports to see whether you are losing low performers or employees under disciplinary actions that you will not miss. Or are you losing your interns and apprentices who have absorbed knowledge and experience but choose to take it to a better environment? Understanding the details behind turnover rates will help to create policies that can positively impact your employees.
Seniority is another common HR metric that is often quoted but not effectively utilized. I recently saw a faux pas when a company sent out a congratulations announcement, commending long term employees on company anniversaries of 10 years or more but a few names on the list were terminations in the prior week as the new management cleaned house during a merger. HR seems trapped in a pattern - seniority data is used to make sure that an employee receives a congratulatory note or a reward, but it can be used for so much more.
Are you relating seniority to performance ratings using HRMS reports? There is often a correlation between higher seniority and lower performance over time as employees become complacent and part of the establishment. High seniority should be an asset but you need to make sure that this segment of your employees is being fully utilized, and this metric will help you to do that.
HR department performance metrics
How many HR departments are running metrics to justify their existence? The average number of HR employees to the employee population is a standard one that appears frequently but it usually doesn’t mean anything to the business and can backfire when another company delivering fewer services has a lower count. HR administration service costs can reach low levels especially when offshoring is involved.
It is more relevant to measure your managers’ opinions of HR’s services. How much of a partner is HR to the business? Do managers and directors feel that HR provides strategic advantage? When you move away from transactional metrics and on to customer service surveys you may find the true value calculation of HR.
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