“I hate numbers!” I’ve heard that phrase from so many human resources professionals throughout my career. Usually, it comes up in an interview or when I’m asking someone for metrics. Why do we need metrics in HR? Because it helps us measure effectiveness and offers us insight into issues before they become problematic. It also gives HR a strategic advantage and allows us to show that HR is more than a cost center.
Metrics can help measure the return on investment (ROI) for new and continuing initiatives. Here is an example.
Our company, HealthcareSource, recently defined its core values and wanted to measure how we’d been doing. We looked at our turnover rate year-over-year (which was cut in half); our Glassdoor score (an employer review website where employees rate companies), which went from 2.1 to 4.6, well over the Glassdoor average of 3.4; and our recruiting sources, which had been mostly agencies and posting sources. The majority of our hires in the last year were employee referrals. We were also able to demonstrate a reduction in costs associated with turnover by measuring the average cost of turnover as well as the recruitment costs.
Metrics also help us measure the effectiveness of benefits. We measure cost per employee. Employees don’t always realize how expensive their benefits are or the true value of their total compensation. We also look at participation percentage. If we see numbers dropping or if they look low, we start to ask why and then ramp up communication about that benefit. Or maybe you want participation to be low in a certain benefit, so you will watch for spikes. We watch these numbers closely around annual enrollment. This gives us some insight into the effectiveness of the benefit or the perception of the benefit.
Here are some additional HR metrics that we measure:
• Terminations (voluntary and involuntary)
• Average tenure (across the organization and by department)
• Diversity (all employees and management)
• Promotions and transfers (a good one to share with employees)
• Turnover and cost of turnover
Recruitment is one of the most demanding and challenging arms in HR because of the talent war, so we have to use metrics to measure its effectiveness.
Cost per hire is an important metric in my group. It not only measures our effectiveness in recruiting, but the ROI of our efforts. When looking at cost per hire, we review advertising costs, systems we use (like Linked-In) and the costs of internal and external recruitment. By re-evaluating our recruiting efforts and paying attention to this metric, we were able to shift our recruiting strategy, which dropped our cost per hire from $10,000 to $4,000. We found that using external recruiters was more inefficient so we focused on improving internal recruitment efforts.
In recruiting, we use a “Quality of Hire” metric to show if our recruiting efforts are effective. This has always been a mysterious metric in the HR field, but we figured out a way to measure it. How? We survey our hiring managers after the new hire is in the role 90 days. We ask them about the recruitment process and about the new hire. Here are some of the questions we ask in the survey:
• Does the new employee meet the expectations of the role?
• Is the new employee making meaningful contributions within the expected time?
• Is the new employee productive?
• Does the new employee rank as one of the best we’ve hired?
• Does the new employee strongly exhibit the Live It Core Values?
We ask the managers to respond on a 5-point scale from strongly disagree to strongly agree and monitor the data closely. This provides insight into performance issues, recruitment concerns and other issues that can be addressed in a timely manner. Here are some additional recruitment metrics we measure:
• Traffic on our Career page
• The time is takes to hire an applicant (from the date applying to date hired)
• New hires that leave within one year
• Number of rejected offers
• Recruiting costs
• Time to fill an opening
• The sources from which the company derives new hires
We conduct an annual engagement survey to elicit feedback from employees and measure the effectiveness of our initiatives. There are many ways to do an engagement survey, from workplace competitions to companies that will customize a survey for you. The first year you do an engagement survey treat it as a baseline. Report the results back to the employees and what plans you have to change it. Then, measure subsequent survey results with the baseline to see if there are improvements or changes.
Metrics can be overwhelming, but there are a lot of good resources to help with collecting data. The best place to start is the Society of HR Management’s website, www.shrm.org. There you can find calculators to help you get started.
Annual financial results show whether an organization was successful, so why not use metrics to prove your HR efforts
Michelle Strasburger is the senior director of talent management at HealthcareSource, a provider of talent management software for the healthcare industry. She has more than 10 years of progressive HR experience in small, mid-size and Fortune 500 companies and prides herself on pushing the status quo and making the HR team a strategic partner to the organization. Connect with Strasburger on Linked-In.