Can Metrics Really Measure HR?

HRMetrics.org, an organization that helps organizations measure HR, offers two very pragmatic reasons that metrics make sense:

1. Measuring—just the act of measuring—improves performance.

2. Senior executives tell HRMetrics.org that the inability to document HR and human capital performance is the number one reason for terminating HR professionals.

What About Metrics

All metrics are numbers, but not all numbers are metrics. Real metrics measure outcomes associated with customer-driven objectives. They are not an end in themselves.

Let’s take hiring metrics as an example. Hiring managers have identified the most important recruiting metrics as new hire quality, time, hiring manager satisfaction, and recruiting efficiency.

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Never forget that “quality is metric 1,” says HRMetrics.org. New hire quality and when to measure it should be defined before recruiting is initiated. This simple process of noting what the hiring manager considers to be quality performance will automatically improves recruiting performance.

Quality for a mail clerk, for example, might be defined as 99 percent accuracy and processing all mail within 2 hours after 6 weeks on the job. A global logistic director could also be evaluated on accuracy and time and value but probably after at least 6 months in the position.

Time—The Metric that Makes Recruiters Great

The recruiting time metric is the ratio of the contracted days until the new person starts compared to the actual days until he or she starts. The contracted time is set by the hiring manager and the recruiter jointly before recruiting begins.

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Instead of the traditional post-hire critique, says HRMetrics.org, create a template that defines hiring manager satisfaction before initiating recruiting—and then use it to evaluate recruiter performance after the position has been filled. This is not only a more fair process but also one that fosters a better working relationship with hiring managers.

Recruiting Efficiency Makes CEOs Happy

Efficiency, the ratio of costs to productivity, is the best financial measure of any activity. To calculate your recruiting efficiency, HRMetrics.org says that you should follow these four steps:

1. Add up your recruiting costs for the period being measured.
   
2. Determine your total compensation recruited for the same period by either adding up the base starting compensation for all new external hires or multiplying the average base starting compensation by the number of hires. This, not the number of hires, is your staffing productivity.
   
3. Calculate your recruiting cost ratio (RCR). Divide the recruiting costs (1) by the total compensation recruited (2). The result is your RCR.
   
4. Subtract your RCR from one—the result is your recruiting efficiency

HRMetrics.org’s final tip: Start with one or two recruiting metrics and phase in the others over 3 to 6 months. It’s sure to enhance your performance—and your career.

In tomorrow’s Advisor, making metrics more meaningful, standards for metrics, and an upcoming audio conference that answers all your metrics questions.