Jun 27, 2007

The Problem with HR Metrics

Over on the EBM blog Joanne says:

HR has used metrics for a long time. However, their typical metrics at best can be used to manage the HR function and fulfill compliance requirements. And they rarely operate 'at best'. More commonly their metrics are used in a vacuum with no view toward the impact on the business.

An example is time to fill. Is is really important to reduce time to fill if we consequently reduce quality of hire? Most organizations don't even connect the two measures. We need to evaluate time to fill in the context of time to productivity, performance, 1st year turnover, LOS, and potential so that we do not chase a target that may be detrimental to the organization. The goal is the balance of time and quality - same for cost per hire.

This is what I call HR's tendency to measure "input metrics". Time to fill, number of new hires, number of training programs conducted, number of salary revisions carried out, percentage of workforce completed the performance management system, etc.

Or at the most, they go up to efficiency metrics - yield ratio of recruitment, percentage of training programs done on schedule, budget overruns etc.

However, what really holds HR from being a 'business partner' is measuring the impact of its role. How is recruiting really contributing to the higher performance. How are learning initiatives really impacting productivity and how are organizational change efforts really unlocking people and group potential.

Unless HR comes up with a way to measure the "impact or outcome metrics", they will continue to chase the wrong numbers and never really get seen as "business partners"