In her CIPD conference session on Measuring Performance, Row Henson from Oracle quoted Haig Nalbantian and Colleen O’Neill from Mercer as explaining:
“Visionary HR first must clarify what an organization’s work force needs to become, and then must build a blueprint of the necessary capabilities and actions.”
I totally support this, in fact I’ve just posted on pretty much exactly the same thing.
But Nalbantian goes on:
“These steps depend on an employer’s ability to find new information showing how HR initiatives do or do not fuel the organization’s objectives.”
No they don’t!
Yes, of course, having measures and metrics help present the case (don’t they Yuvarajah!) But in the main, organisations manage people so terribly badly (oh no? – what are your employees’ engagement levels like then?) that you don’t need information to see the opportunities forward. You need insight, passion, ambition, creativity, yes. But measures – not necessarily.
Henson encouraged participants to:
STOP saying: “I think… I feel”
START saying: “I know… I can prove”
SHIFT: From tangible to intangible asset accounting.
Mmmm. Well, I’ve got nothing against being able to prove things – when it’s possible. But quite a lot of the time, it’s not. And I think that we also need to influence our business colleagues to be yet more comfortable with thinking and feeling. We’re often dealing with ambiguity, and thoughts and feelings, as well as numbers, give us insights into what we’re dealing with. Don’t dismiss them.
As for intangible asset accounting, I think this is a red herring. I explain why in my book.
I’m in a minority view here, I know. According to Henson’s slide on data from the Corporate Leadership Council, 60% of HR executives say that better aligning metrics to their corporate strategy is their top priority, and 84% say that spend on HR metrics is going to grow over the next 5 years.
My minority perspective is why I didn’t go to any of the conference sessions on measurement. But it looks as if I did miss a few interesting things.
For example, I’ve always respected Anthony Hesketh’s views on HR (and he also wrote an endorsement for my book).
Hesketh’s new contribution to the field is a measure called Return on Invested Talent (ROIT). This is:
Operating Profit + Employee Costs + Depreciation + Amortisation
Employee Costs + Depreciation
I’m going to come back and write more about this later once I’ve had a chance to look in more detail at this (by the way Anthony, well done on your HROA Thought Leader of the Yearaward!).
So what else did I miss?
Well, it’s always impressive to see the sophistication of RBS’ measurement system:
The question of course (well, it’s my question, although I don’t think it was asked at the conference), is how well did the company’s measurement help them navigate this year’s crisis?, and the answer’s obviously not much!.
So my take-way is the need to align measures with a company’s strategy.
I think Enterprise Rent-A-Car has got the point. In her presentation, Donna Miller described Enterprise’s key metrics:
- Cost per hire
- Cost per source of hire
- Hires per recruiter
- 120 day retention
- By position
- By location
- By length of service
- Engagement scores
She then explained how these have been generated from the organisation’s strategy, including the employee value proposition, the brand, the value of the HR department and improving business performance.
And in her presentation, Tricia Raymant showed how the Royal Mail has chosen:
Metrics (1. Headcount vs plan 2. Redundancy costs vs plan 3. No. redeployments 4. Time to redeploy 5. % vacancies filled internally vs externally 6. Time to fill vacancies 7. % critical vacancies 8. % critical roles with successors 9. Retention Rates 10. No. Staff hours contracted 11. No. overtime hours and costs)
which relate to:
Critical customer / business requirements (1. No more than 1% of critical roles are vacant at any one time. 2. Employees are redeployed within 60 working days. 3. Vacancies are filled by employees seeking redeployment wherever possible. 4. Vacancies are filled within 40 days 5. Overtime accounts for no more than 10% staff costs).
which relate to
Business challenges ( To reduce staff costs by 10% To redeploy 20% of the workforce – To have the right people in the right place at the right time but to reduce overall staff costs).
And they are then able to report on metrics which support these business challenges:
Maybe not so sophisticated but hopefully more useful?
For an even more useful approach, see my post on my HCM Value Chain, wrapping up my current series on HR measurement (postponed by the InfoHRM and then the CIPD conference), hopefully very early on next month.
Other HR measurement posts from earlier in the series include:
- Consulting – Research – Speaking – Training - Writing
- Strategy - Talent - Engagement - Change and OD
- Contact me to create more value for your business
- jon[dot] ingham [at] strategic [dash] hcm [dot] com