Organizational Performance Metrics
Workplace Monitoring Metrics
Key Customer Metrics
Voice of the Employee Data
Organizational Performance MetricsAt the top level are metrics that employee actions influence; Organizational Performance Metrics. Historically, HR departments would attempt to justify investments, programs and strategies by recording and tracking impact on retention. They would use abstract “cost of replacement” calculations based on outside research to show how many millions of dollars a 5% increase in employee engagement or participation in leadership development program would save through more retained employees. Essentially, trying to indirectly show correlation to profitability. Many newcomers to the workplace strategy industry still rely on retention research to market and sell their tools, focusing on likelihood to leave in the next 6 months and providing things like smart alerts for retention issues. Both of these measures are fine, but they are truly the “basics” when it comes to HR metrics. It is no longer necessary to indirectly relate to key business metrics. Rapid data gathering techniques and data analytics platforms like Qualtrics allow high performing Human Resource operators to show where there are direct correlations between their actions and the overall performance of the business. Building an effective business case with a clear return on investment for current and future workforce planning and strategy initiatives is the secret for convincing your executive team to do anything. The key Organizational Performance Metrics that today’s sophisticated People Analytics teams aim to impact are below:
Revenue per employee – Revenue divided by the number of employees in the organization. This number fluctuates based on the number of employees and the amount of money brought into the company. To measure this in a growth environment, with many new hires, identify programs that speed ramp-up and productivity. In a shrinking phase, this number will appear to increase, but try to ensure the increase is greater than the proportion of reduced hires, or there may be engagement or morale issues linked to the reduction in force.
Operating Margin – Profit represented by % of revenue left over after all operating expenses are subtracted. One of my former managers used to say “An Engagement score is a good way to know how people act around litter in the office. High scores will pick up the trash and throw it away or recycle, medium scores walk right by, and low scorers are the ones that littered in the first place.” Basically effort and alignment with business goals. Kenexa even describes it as “The extent to which employees are motivated to contribute to organizational success, and are willing to apply discretionary effort to accomplishing tasks important to the achievement of organizational goals.” Engagement scores, average performance reviews, lifecycle survey results all tie in very closely with levels of profitability. Modern analytics tools make it easy to show these relationships.
Earnings per Share and Total Shareholder Return – A measurement of the amount of profit or value a holder of one share of the company would receive. Earnings per Share and Total Shareholder Return are critical metrics for executives, who often are compensated in stock. This makes influencing this metric very compelling to leadership teams. However, doing so can be difficult. The best practice for this is ensuring that you are using models and platforms for your employee and talent-based programs that have clearly researched correlations to EPS and/or Total Shareholder Return.
Return on Assets (ROA) – Return on assets is net income divided by assets. It provides an indication of how efficiently management uses the organization’s assets to generate earnings (Kenexa). The organization’s most important asset is its employees and employees are the ones who influence how assets are utilized, strategies around asset usage and the extent to which they put forth their own maximum effort. Tracking the impact programs have on this metric and projecting ROA for upcoming initiatives will make getting budgetary approval for new programs much easier.
Workplace Monitoring MetricsThe Workplace Monitoring Metrics listed below are the backbone of any strong People Analytics data analysis. They form the basis of what people typically call a “big data” set when merged with the other data sets to see which individual and combined elements influence the Key Organizational Metrics.
Open hiring requisitions
Time to fill open requisitions
Cost per hire – Make sure to include costs from recruiters, job advertising, talent management systems and the cost of having senior leaders interview candidates, if applicable, rather than just calculating a multiple of new hire salary.
Number of candidates per hire
Number of interviews per hire
Voluntary vs. involuntary terminations – I know I said retention as a focus isn’t great. Good retention vs. blanket retention is a good metric. Are you managing out low performers on a regular basis and are your managers managing people with potential in a way that maximizes their performance? Answering these questions and affecting the outcome will definitely impact company performance.
Average performance rating
Key Customer MetricsOften missed by people analytics and Human Resources teams are Key Customer Metrics. These customer-based metrics are highly connected to the actions made by your employees both directly and indirectly. Both these metrics and the Workplace Monitoring Metrics above are strongly influenced by Voice of the Employee data. Thus, when creating a combined analysis it is important to explore how changes in Voice of the Employee data influences Key Customer Metrics, Workplace Monitoring Metrics and Organizational Performance Metrics. Typically, marketing or customer experience teams gather and track this information. Collaborating with that team to create a centralized and combined database of HR and Customer data to analyze and track the impact your team has on these metrics will further define and refine the outcomes of your work. This enables you to further configure your work and the development of your people to deliver the most benefit. Here are some of the most common customer metrics you’ll use:
Customer Satisfaction/Net Promoter Score/Engagement
Share of Wallet
Number of products purchased
Average Revenue per customer
Voice of the Employee DataCapturing Voice Of The Employee Data and input from managers on their performance is the final layer of our employee focused Big Data Set. If this were the marketing team, we would call this primary research. Understanding behavioral, opinion and other qualitative data about your employees will allow you to draw new conclusions and pinpoint the actions, management techniques and operational changes by uncovering which factors have the largest impact on Organizational Performance, Workplace Monitoring, and Key Customer Metrics.
Employee Engagement Level
Pulsing and Continuous Listening
Lifecycle Monitoring (Surveys delivered at key employee lifecycle triggers)
Candidate Experience surveys
Development Program Evaluations