The foundation of delivering great, value-driven HR, starts with knowing how effective your current HR program is – through HR metrics. For most of us, thinking about adding more math and calculations to our life seems… overwhelming, to say the least.
Or maybe you aren’t quite sure where to start. Or how to implement HR metrics in your current role. Or you don’t have a huge budget to outsource the data and analytics that surely “make everything easier.”
You’re not alone.
In fact, this is the exact spot that most HR professionals are in when they are asked to show their value and prove their programs success. Knowing that we need to start with one metric is great – but how do we actually get started?
4 Steps to Your First HR Metric
We start with these three questions – which will help guide you in the right direction as you explore HR metrics, and keep you on the right track. Ready, let’s start!
1. What are Your Organization’s Goals?
One of the biggest mistakes HR departments make over and over again – as do the C-suite when establishing company-wide goals – is understanding how each department fits under the organization as a whole. Since you likely aren’t able to influence how this is done company-wide, let’s focus on your role and department first.
It’s important to note that all HR metrics are not created equal. The metrics that your company needs to track is very different than the metrics at another company needs to track. Metrics are not a one-size-fits-all sport.
So to understand exactly which metrics are critical for your organization, you need to start with what’s critically important for your company as a whole.
We start with the company’s annual goals.
What is important to your senior leadership team, to get accomplished this year? What are they tracking as a company, to their shareholders/owners, and so on?
These annual goals, which likely retain similar themes year-over-year, indicate what is valued at your company. That’s important, because all of the work that you do needs to support these initiatives.
Note: all #HRMetrics are not created equal. The metrics that your company needs to track is very different than the metrics at another company needs to track. Metrics are not a one-size-fits-all sport. #HR Click To Tweet
When reviewing these goals, you need to consider what is driving your company forward this year – and if you want to level-up, understand why these goals were chosen this year. If you understand the future-focus of your company’s goals, the HR metrics you need to create will be that much easier to figure out.
Now that you know what is driving your company forward, what does success look like this year for your company? Basically, what will make the shareholders/owners ecstatic at the end of the year, looking back. Yes, sales – but what other factors are they saying they need to accomplish to be successful? Maybe it’s launching a new product, getting approval from an agency, hiring diverse employees, opening a new office, and so on.
Often, the company’s success factors are written into annual goals – but other times, they are either implied or part of a company’s mission statement or core values. Be sure you include what success looks like in addition to the annual metrics.
And while you’re examining the success factors, take notice of who actually approves what success looks like. Basically, the “who” behind a thumbs up– who you need to please, communicate your results to. It can be the CEO, or board of directors, but usually the pool is larger – such as the C-suite, senior leaders, or so on. At smaller companies, it may be the owner or your HR director. Get clear on the person behind the exam.
2. How Can HR Support these Goals?
Knowing the company’s goals and success factors only gets us so far. We need to pull the thread, so we can show how the work we do each day in HR, supports these overall goals and success factors.
What is HR, and you – specifically, tasked with completing this year? What projects are on your plate? What results will HR be held responsible for? What are your goals?
When looking at your goals, it’s important to notice what isn’t included as well – what are the various daily tasks or core job responsibilities that you are expected to deliver, but are not necessarily SMART goals? Hint: most of the relevant HR metrics that you will need to create to support your company’s goals and outcomes, will be rooted in your daily job – not necessarily in the big blocks you are going to accomplish.
Once you have your annual goals and your core job responsibilities captured, be sure to look at what your head of HR thinks is important. This may be easy or difficult, depending on your organization and your insight, in general, to what HR leadership is working on.
Regardless, since you work in HR, understanding what your HR leader thinks is important this year, coupled with what they care about as an individual contributor in their own role, adds another level of depth that ensures you are going after the right metrics, at the right time.
3. Connecting the Thread in a Meaningful Way
Now that you have compiled a list (did you get the handy workbook download?) of what the company cares about, what your HR department cares about and what you are required to deliver this year, it’s time to pull the thread in a meaningful way.
Basically, you’re going to ask, “So what?” – and find the value of each item so we can determine which metrics are important to start tracking.
If we start by looking at our company goals, we want to ask, for each one – how does HR (and you specifically), support this goal? It likely isn’t as obvious as you’d hope for most of the goals.
To break it down and find the HR value, you’ll need to “pull the thread.” Here is an example of how you would do this, using a real-life set of goals.
For each goal, we’re going to ask: why does the company care about this? In other words, why is this goal critical for the company’s success this year? Using the same goal examples, here’s how it breaks down:
Once we know why the company cares about each item, we then need to get clear on how you, in HR, can support each goal and desire. It may not be clear, heck – you may have to guess your first go-around, but the work that you do each day definitely builds upon the company’s outcome. Otherwise, there would be no need for strategic HR partners.
Want another example and the guide to help you get there quicker?
Now we can start to identify the HR metrics that we need to track for our company.
4. Choosing Your First Metric(s)
Now that it’s clear how the work we do supports the company’s outcomes, we are able to identify the right HR metrics to start with. To this point, we’ve outlined what our company cares about, because in order to create metrics that have any sort of value, our metrics must match up to the company’s drivers – not the other way around.
Now is when you may be saying… “This seems to be a lot of work, when X expert told me I should just track employee engagement, turnover rates and time to fill – and we’d be fine.”
Perhaps. But we are taking an hour of time now, so that when you do track metrics, your leaders actually care about what you are saying – and you can influence HR more effectively.
Take the time now, so that when you do track #hrmetrics, your leaders actually care about what you are saying – and you can influence #HR more effectively. Click To Tweet
If we take X expert’s advice into consideration, you will likely be missing the mark. Not because tracking employee engagement is a bad idea – in fact, you may end up finding that’s the right metric for you to start with – but instead, you won’t be telling the right story behind employee engagement.
Just having metrics doesn’t add any value. The metrics must be aligned with what you are trying to share/teach/show/explain, to the business.
You have to pull the thread – and get to the bottom of why your company cares enough about a specific goal/outcome to have it part of their success factors, and how all employees within the organization are there to support that outcome.
When looking at this step, you’ll ask: how does HR support this outcome and/or what work does HR do that can influence this outcome?
Based on these questions, we have the starting point for what metrics are important to the business.
We know exactly where to start.
Without wasting time or resources in chasing down metrics and details that don’t have a direct correlation to what the business has to report on.
And if you get stuck, remember to pull the thread one more time – ask “so what” again and again, until you get to the root, then make the HR correlation.