Metrics—Manage It or Leave It to Chance

Nitz, President of the Institute for Financial Mastery, and Duffy, President of Leadership Habitude, made their remarks at BLR’s recent National Employment Law Update in Las Vegas. Here’s how they see the situation:

HR Says	Management Says
Intangible	Tangible
Higher morale	Turnover rate
Team building	Employee development
Happier employees	Employee acquisition cost
Better benefits	Cost to replace
	Profit per employee

Here’s Nitz and Duffy’s chart of HR metrics:

	Acquiring	Maintaining	Developing	Retaining
Money	Cost per hire	Cost per paycheck; cost per EAP case; benefit $ per employee	Cost per trainee	Cost of turnover
Time	Time to fill	Time to respond; time to fulfill request	Training hours Turnover by length of service
Quantity	# interviewed; # hired; % filled by promotion from within	# claims processed; # claims filed	# trained	Voluntary rate turnover; % employees with compa ratio > 1
Quality	New hire rating; retention rate at 180 days; performance rating at 90/180 days	Process error rate	Skills attained; pre/post testing	Readiness level; performance review rating
Reaction	Hiring manager satisfaction; candidate satisfaction	Employee satisfaction	Trainee responses	Turnover reasons; exit interview feedback

HR Making a Financial Difference

Nitz and Duffy give an example of an HR intervention that shows a financial differential. The situation: A company recruited nationally for a position that required final candidates to be flown to Southern California for interviews. Recruiting was expensive. The hiring managers were doing everything. There was a low percentage of offers made to candidates and critical revenue producing positions were left unfilled.

After HR took over it was a different story. The statistics:

• 416 resumes received; 279 resumes rejected
• 138 second emails sent; 87 no candidate response
• 45 scheduled for phone screen; 20 rejected or no show
• 25 forwarded to hiring manager for phone screen; 10 rejected or no show
• 15 sent script reading assignment; 10 rejected or no tape sent
• 5 flown in for interview; 3 rejected
• 2 offered job and accepted

HR was able to document an average annual savings of $144,000, plus:

• Time savings
• Improved manager satisfaction
• Increased revenue
• Increased profit

Bottom Line for Metrics

For basic guidance in presenting metrics to management, Nitz and Duffy quote Dr. John Sullivan’s HR Metrics the World Class Way: “For metrics to be effective in altering behavior, they need to be both visible and immediately relevant to the audience that needs influencing, not the party producing them.”

---

Bottom line, employees leave bosses, not companies. Join us March 1 for Leadership: How To Become an Effective, In-Demand Boss and Master Motivator. Click here for details.

---

Metrics Killers

First of all, say Nitz and Duffy, the top reasons CFOs and CEOs say no are:

• No profits attached.
• Not tied to business goals/strategy.
• We don’t have the $$$.
• Emotions.

Additional problems in getting heard are:

• No communication
• Miscommunication
• Speaking different languages
• Limiting the conversation to cost
• Measuring nothing
• Measuring too much or not tracking anything
• Lack of benchmarks

Turnover

Turnover is one of the standard HR metrics. First, think through what dimensions you will measure:

• By company overall
• Company vs. industry
• By region
• By store
• By manager/supervisor
• By shift
• By position
• Voluntary vs. involuntary

Turnover Calculations

Nitz and Duffy offer an example of a turnover calculation that you do for each district in your company:
(Turnover rate = # of separations/avg. # of employees X 100)

	# EEs Sep During Month	Avg # EEs During Month	Monthly Turnover Rate	Annualized
January	5	120	4.17%	50%
February	4	118	3.39%	41%
March	2	121	1.65%	20%
1st Quarter	11	120	9.21%	37%

Say that, having done the analysis, you discover that one district has much higher turnover than other regions. Exit interviews confirm that there is a problem with the district manager.

It’s time for a determination of whether it would be better to keep and develop the district manager, or replace him or her. Either way, your metrics helped identify a problem that was hurting productivity and reducing profit.

---

“I’m a good boss—but I could be better.”  Join us March 1 for Leadership: How To Become an Effective, In-Demand Boss and Master Motivator. Click here for details.

---

Benchmarking Resources

Nitz and Duffy offer the following suggestions for finding benchmark data to which you can compare your data:

• Industry associations
• Publishers such as BLR
• Organizations such as Society for Human Resource Management (SHRM)
• Government websites
• Yahoo finance
• Colleagues and competitors
• The results of a Google search

In tomorrow’s Advisor, Nitz and Duffy’s Six Steps to Metric Success, plus how to turn your managers into leaders.

More Articles on HR Management