|Get a printer-friendly version of this article.|
Lessons in HR metrics
|Although take-up of analytical tools is relatively low within HR - especially compared to the finance department - there's no disputing the fact that most organizations are awash with employee-related statistical data. HR departments routinely carry out employee satisfaction surveys, collate information about turnover and absence, or receive formal feedback from employees through appraisal processes. As such, they have a large amount of raw material which - combined with the right analytical tools - could provides much-needed insight into the effectiveness of their people management strategies.
The problem is that this raw data is rarely converted into useful management output - and when it is, shortcomings in the core data collation processes become apparent. High quality analytical insight - the kind that positions HR as a provider of key strategic data to senior management - requires both depth and breadth of information. While organizations should begin their analytical initiatives by leveraging the information that's easiest to access, their long-term plans should take into account the value they might derive from a more comprehensive approach.
Cost of turnover - where depth of metrics really counts
Having established the full extent of the costs involved, RBS was able to define a break-even point for a typical employee, representing the moment in time when they start to add net value to the organization rather than being a net cost. From a financial perspective, its research demonstrated that this point typically arises after around one year's salary has been spent.
This breakdown provides a meaningful context for line managers to weigh up the implications of attrition in their department, reflecting the true cost of losing employees at different stages in their first year of employment. Over time, if it were broken down into job types (e.g. for senior managers or call center employees) it would provide even more detailed insight at a local level. As such, it's a practical example of how HR metrics can be presented in a way that's meaningful for departmental managers.
Putting motivation in context -where breadth of metrics matters
This survey is one of many data sources designed to establish perceptions about the bank, including information drawn from joiners and leavers, and more unusually, from external individuals who were offered jobs but turned them down. Pulled into a central datawarehouse, this information is then mapped onto other HR-related data and used to address key business issues, demonstrating the power of multi-dimensional analysis.
For example, the bank recently analyzed employee turnover in its call centers, where attrition rates across industry are traditionally high. It found that in some centers, turnover rates were slightly higher than expected - despite the fact that the broad feedback from employee surveys was good. That finding prompted it to carry out further drill-down analysis, which threw forward issues specific to individual business units. Using this data, HR was able to provide each business unit with an action plan to tackle the issues raised.
In another example, the bank mapped its employee engagement model against productivity, and uncovered evidence to support managers' intuitive belief that higher engagement leads to higher productivity. It also discovered that engagement increased by a staggering 20 percentage points if employees took four or more options from the bank's flexible benefits scheme. As Greig Aitken, head of HR Strategy and Planning, remarks: "If we reduced our turnover by a fraction of that 20 percent, we'd be saving tens of millions of pounds."
This kind of analysis provides key strategic information which the HR department can pass onto the board and line managers. As the HR profession looks to build a role for itself beyond its core administrative roots, these kinds of initiatives provide practical, real-life examples of how value can truly be generated. ** see "Human Capital Management: A pragmatic approach to delivering strategic value", by Webster Buchanan Research, November 2001" http://www.websterb.com/Tpage/PSFTHCM1/psfthcm1.cfm
For Disclaimer and Copyright Notice, click here.
© Webster Buchanan Research 2013