
Dr. John Sullivan has enjoyed a long and illustrious career as a talent management expert. He’s published hundreds of articles on the topics of recruiting and talent management, in addition to dozens of whitepapers and 10 books, and spoken about the topic to every major business source including The Wall Street Journal, The New York Times, USA Today, and BusinessWeek. Dice recently sat down with Dr. Sullivan to talk about current trends in the recruiting and talent-management space. As recruiters evolve in their thinking and approach to finding and hiring the best talent, they’re increasingly reliant on data collection, hard metrics, and new-ish tools such as social platforms. But are recruiters and hiring managers taking full advantage of everything out there? Tune into the video to find out: In addition, over the next few days, we’ll run a pair of blog posts written by Dr. Sullivan that originally appeared on eFinancialCareers, Dice’s sister Website. In Part 1 (below), he talks about HR metrics: what it takes to create strong ones, and the negative impact of weak ones on business results. Check it out:
The Case for HR Metrics
Human Capital has been rated the #1 business challenge facing CEOs by the Conference Board for the last four years in a row. Unfortunately, being listed as “a challenge” means that HR is clearly not doing enough in most areas, including metrics. In fact, one AMA/i4cp study ranked HR dead last among all major business functions in expert analytics usage. This lack of expertise has been allowed to continue despite the fact that recent HBR research showed that the use of advanced workforce analytics directly improves business results. It’s time to realize the metrics the HR function currently produces end up adding very little value to strategic business decision-making. Most HR metrics have been inconsequential. I call the ones that most HR leaders provide to their executives “so what” metrics because they fail to excite or to cause executives to act. In fact, one survey revealed that only 12% of CEOs trust human capital metricsWeak HR Metrics Harm Business Results
Taken together, this lack of trust and strategic relevance often leads executives to pay less strategic attention to HR. And ignoring HR or its metrics can lead to major business problems, because in many organizations, people/labor costs are the highest variable budget expense … often reaching as high as 60% (at my university, for example, it covers 80%). But despite being such a huge expense, most HR functions don’t actually report a single metric that could actually be assessed as strategic. Not being strategic means many HR functions don’t even report the #1 most important people management metric — the productivity of their firm’s workforce (i.e., the average dollar revenue produced per employee). And to make matters worse, literally every one of the metrics that HR reports are historical, in that they only tell you what happened last year. Instead, what is needed is real time metrics that show what is currently happening, what will happen in the immediate future, and the prescribed actions that are required to meet current and upcoming problems. And finally, further business damage occurs because HR results are not converted to dollars (i.e., turnover is shown as a figure such as 20% versus documenting the revenue impacts of turnover reached $6.5 million). Without this dollar conversion, executives often fail to grasp the full business impacts of current and upcoming HR problems and opportunities.Many Benefits of Strategic HR Metrics
Powerful strategic metrics help both the firm and HR because effective metrics keep everyone focused on the most important things. Other benefits include:- They tell you what’s working and what’s not.
- They provide alerts on upcoming problems/opportunities (while there is still time to do something about them).
- They allow you to quantify your business impacts in dollars.
Demand Metrics that Meet These 4 Strategic Criteria
The majority of the HR metrics normally reported to executives can only be labeled as tactical, in that they focus on internal HR results that relate primarily to efficiency and administration. Typical tactical metrics are measures like:- Cost per hire
- The percentage of performance appraisals completed on time
- The number of training hours offered
- Recruiting
- Retention
- Onboarding
- Managing talent
- Employer branding
- Rewards
- Leadership development