HR key performance indicators can be both incredibly difficult or quite simple to generate, depending on the type of indicator you’re looking for. The main problem with your KPI’s is that you need to first make the switch between simple metrics to understanding what a performance indicator is. The reality is that a simple metric and a KPI may use the same calculation and generate the same number, but their use is different. A simple metric does not measure or diagnose your performance against a stated goal or strategy.
While simple metrics can diagnose current problems, KPI’s can and should be used as leading indicators for future issues. Through the use of analytics, you should be able to figure out what metrics are leading indicators for various problems your organization might experience in the future. For example, it should come as now surprise if turnover increases after a low participation in open enrollment after you make significant plan changes. These would have been leading and lagging indicators of your employee satisfaction and engagement scores.
We all use headcount reports, but what does that really tell us about the organization other than the size of it? The simple headcount metric doesn’t do us much good if it’s not tied to a quantifiable goal. For example, you might want to run headcounts and compare them against the percentage of female executives in your organization because you have a mandate to improve the ratio female to male employees in senior positions. Or perhaps your stated goal is instead to reduce headcount while maintaining aggregate productivity. Now you’re running headcounts against financial figures. Needless to say that one organization’s KPI’s are not going to match yours because the goals will be different.
Turnover is another popular metric that every organization uses. As a simple metric, all it really does is tell you how many people are leaving the organization. As a KPI, you can put a twist on the metric and start to decipher who is leaving and why. For example, if you have a strong push to retain younger employees in North America. Turnover can now help you achieve these goals by precisely identifying how you’re doing. Alternatively, if your goal is employee engagement, turnover can be seen as a lagging predictor of engagement.
The point being that we all run metrics. Most core HRMS solutions come with the capability of running hundreds of reports. Most of these reports are seemingly meaningless, and they are. However, more and more HR solutions are coming prepackaged with analytics tools that allow some form of drill through to allow you greater flexibility of reporting. Where 10 years ago tying turnover to gender and getting a trend over time would have been a pipe dream, more and more vendors are packaging these reports through either cubes or table views.
6 responses to “Human Capital KPI’s”
systematicHR – Human Resources Strategy and Technology » Human Capital KPI’s
Human Capital KPI’s HR key performance indicators can be both incredibly difficult or quite simple to generate, depending on the type of indicator you’re looking for. The main problem with your KPI’s is that you need to first make the switch between simple … [
I think you make a good distinction between a measure (a fact) and a key performance indicator (a factual data point relative to a goal). These are often used too interchangeably, which deflates the analytical power of good KPI practices.
Two thoughts came to mind that might also be relevant in analyzing results being tracked on Human Capital:’
– In setting the strategy, remember that sheer volume (i.e. % turnover) is not inherently a good or bad number. Refine or segment your KPI results with considerations of “good” turnover results (retirement, underperformers) and “poor” turnover results (promising leaders, high performing individuals). The same 10% statistic could have either very good or very bad implications.
– Consider and compare the correlation between metrics in the business performance and Human Capital KPIs. Engage other functional managers to better understand the implications – low involvement at open enrollment may have simply been due to a large shipment or product delivery deadline on the operations side.
Even the most thoughtfully-designed KPIs only serve to point us in the proper direction for discussion and analysis. It falls to the measuring professional to consider the drivers to results, and sort the “cause and effect” relationships in business activities.
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Toby, I get your point 🙂 True, but then we do have to have some kind of measures. perhaps tracking talents in the organisation is better way.
But then, what KPI’s should be actually used to measure
performance measurement. One measure that can encompase all measures like all employees having goals and targets, developmental plans, feedback secessions.
Is it really possible to have one encompasing measure?
Cheers,
Deepika
I agree totally with the main argument. First a KPI is only useful if it can help improve, or show problems emerging. Second KPIs benefit from some thought on what it is you really want to achieve. I Liked the turnover example, yes staff are leaving and we’re hiring, whats new? But what is it you want to do with the information and how does that apply to your goals. I think goal setting is perhaps the most challenging part of KPI’s and also where they relate to corporate goals. Do we wish to monitor female staff as a percentage? Is that because we want to raise our percentage? In the USA the government has mandated in certain areas of government that there must be say 8% hispanic workers on a project to comply with contract approval. Does anything like this exist in the UK? If so there a good KPI with a reason to watch!