HR Metrics that Matter (And Why You Should Care)
By: Emily Bennington
The other day I had lunch with the HR Director for a small law firm.
"I don’t get it,” she said. “We’re losing staff left and right and I can’t get our executive team to acknowledge the problem.”
“Have you tried assigning a number to the loss?” I asked. “That’ll get their attention.”
Of course, she hadn’t. Her approach had been to give the team periodic updates based on stories collected in exit interviews.
This is the classic HR dilemma, right? We want to sit at the big table and yet we struggle with speaking the language required, which is to say money.
We don’t like to quantify the value of people with HR metrics because it goes against our nature of focusing on potential and development versus spreadsheet tabs and bottom-line figures.
Still, every organization needs to understand the specific return of major investments and -- if you’re like most small businesses -- people are at the top of that list.
Therefore, it’s worth getting strategic about what’s working (and what isn’t) so you can make smarter decisions about where to put your limited time and resources.
Recruiting Metrics that Matter Most
If you’re not sure where to begin, it’s worth noting that a recent study on human resources from the Boston Consulting Group ( which surveyed 4,288 respondents in 102 countries ) found that recruiting had the highest revenue growth and profit margin impact of any (that’s right, any) HR function.
Captain Obvious Alert: Hiring the right people matters.
Since there are countless articles on this site about recruiting strategies and the like, I want to get nitty-gritty on how you can actually measure the HR metrics that form a critically-important aspect of your business.
Here are a few ideas to get you started:
Measure for results -- not data. “A lot of people waste a lot of time quantifying useless things,” says Roberta Matuson, CEO of Matuson Consulting and the author of Suddenly in Charge: Managing Up, Managing Down, Succeeding All Around.
“For example,” comments Matuson, “I see people in HR all the time who measure time-to-hire, but if it only took you one day and you still hired the wrong person -- well, who cares?”
Matuson recommends that small businesses focus on three HR metrics in particular: Where, What, and Who. In other words:
- Where are you finding your best hires (typically this will be referrals)
- What areas of the company have the most turnover, and
- Who is directly managing your defectors?
Check the pulse with employee surveys. Keep surveying anonymous. In small businesses, where every dollar counts, it’s tempting to try and conserve cash by handling staff surveys in-house. That is often a huge mistake says Matuson.
“I don’t know of any employee who would be stupid enough to honestly answer a survey that will go right back to their employer -- and if they are that dumb, you probably don’t want them working for you.”
Instead, it’s recommended that you bring in an experienced third-party administrator every year to “check the pulse” on employee morale and pinpoint any issues of note within your organization.
Employee engagement surveys are especially important in smaller companies where having a professional translator would not only increase the credibility of the results, but would decrease the likelihood that any one person could be singled out negatively.
“A good third-party administrator will be able to deliver the results in such a way that key points are preserved” says Matuson, “but the rest of the staff won’t automatically assume that the person complaining about the lunchroom is the person who always complains about the lunchroom.”
Quantify your exit interviews. Naturally, anyone who is already leaving your organization is likely to be more candid about the reasons for their departure. So as you conduct your exit interviews, don’t make the mistake of collecting anecdotes for your team to digest, after the fact.
As my HR friend above learned, it’s not enough to have an encyclopedic collection of stories -- you need to be able to walk into a management meeting armed with bottom-line impact.
As you begin to accumulate information related to your “where, what, and who”, make sure anyone who leaves your organization -- regardless of the reason -- fills out an exit survey where they rate their experience at your company on a scale of 1-5.
Of course, all the HR metrics in the world won’t mean a thing unless you apply it appropriately, which is why every business owner needs to look up from the spreadsheets every once in a while and engage staff directly at all levels.
“The number one reason I see employees leaving companies of all sizes is that they simply don’t feel valued,” says Matuson. “If you don’t take care of your high-performers, you can expect them to go somewhere that will.”
Check out our Sample Employee Survey to help you create your own employee questionnaire.
Emily Bennington specializes in two distinct forms of career transition: college students entering the workforce and women leaders entering executive management. She is the author of Who Says It’s a Man’s World: The Girls’ Guide to Corporate Domination and the co-author of Effective Immediately: How to Fit In, Stand Out, and Move Up at Your First Real Job. Emily has been featured on Fox Business and CNN and quoted in publications including the Wall Street Journal. Emily can be reached online at emilybennington.com, on Facebook and on Twitter.