HR Metrics Should Be Relevant, Broken Into Manageable Pieces

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By Martin Berman-Gorvine

June 29 --Metrics in human resources must be relevant and broken down into manageable parts to be of real use, Ryan Kohler, founder and chief innovation officer of Mountain, Utah-based hiring software company ApplicantPRO, said June 29 at the Society for Human Resource Management's Annual Conference and Exposition in Las Vegas.

“I'm not a huge proponent of metrics at all costs,” Kohler said. “I don't think you should come up with a billion metrics just to come up with them. You could come up with some metrics that are completely meaningless.”

“A metric is like a report card,” Kohler said, in that a student's grade is a measure of his or her past progress that says nothing in itself about how to improve performance. Similarly, he said, “a metric really has very little value on its own, until you can compare it to something else and understand how you got there.”

Moreover, Kohler said, “focusing on the wrong metric can be worse than not using them at all.” For example, he said, “time-to-fill” an open position could be “fixed” very easily, by hiring the first person to walk in the door, regardless of qualifications. Also, he said, tracking metrics is not a replacement for real understanding of the fundamentals of the business.

Simpler Equations

To work with metrics, Kohler advises turning each metric into an equation, and then breaking that equation down into smaller and smaller equations, “until you get to equations with only a few simple inputs.”

Then one can measure each sub-equation to determine its impact on the larger metric, and focus on improving those small inputs, he said, adding that “HR would do well to take on an iterative change model, because small change equals small risk.”

Kohler demonstrated how this process would work with the time it takes to fill jobs. The starting equation is days from the date the job becomes open to the hire or start date. Smaller “sub” equations would examine:

•  the number of days from the date the job becomes open to management approval to fill it;

•  days from that approval to the job posting;

•  days from the job posting to the start of screening applicants;

•  days it takes to screen applicants;

•  days it takes to conduct interviews;

•  days it takes to make a final decision; and

•  days from the extension of a job offer to the candidate's acceptance or start date.

 

“Measure each stage to see its impact on the total 'time-to-fill,’ ” Kohler said.

One must also always be aware of unintended consequences and outside influences, Kohler cautioned. For example, he said, time-to-fill may go down because unemployment is really high, so HR shouldn't take the credit.

Pitching to Management

For HR to use such metrics to get its coveted “seat at the table,” Kohler said it's essential that HR professionals understand the thinking of business leaders. For example, a data-based presentation wouldn't work with a vision-driven leader, and vice versa.

Another example Kohler offered is that venture capital-based software company CEOs “don't care about profit,” they care about revenue, because high revenues will interest people in a position to buy the company.

So an HR pitch about the cost of turnover won't work in this sector of the software industry, he said; instead, an HR professional could point out how high turnover hurts revenues, because a new salesperson takes months to get from zero up to a respectable sales number.

Kohler promoted “pitching for alignment,” a method of getting management to see how what HR wants accords with company goals, or at least with particular managers' aims. “Make your numbers tie to management's numbers,” he advised. First, he said, “convert data to dollars,” and then “convert savings/gains to a measurement that fits your specific environment.”

And don't make it about HR, Kohler warned; saving HR time “does not equal return on investment.” Instead, he advised, be prepared to answer how HR's proposal supports management's goals, reduces management's pain or affects management's numbers.

To contact the reporter on this story: Martin Berman-Gorvine in Washington at mbermangorvine@bna.com

To contact the editor responsible for this story: Simon Nadel at snadel@bna.com