Common Sense KPI’s Gone Wrong

I love dashboards.  I have a goals list on my phone tracking how many miles I’m supposed to run or ride on my bike.  I have a trending graph on the device that tells my how much I weigh.  The only reason I have not bought one of those fitness wristbands yet is because I just can’t stand things on my wrist!  I was just on the company call, and we do the company performance dashboard, we stack ranked the all time leaders for ideation at the company, and all sorts of other visual and gamified graphics.  As employees, we should be managing our goals and goal progress, and some systems now have cool mobile components that can visually show where we are with each performance goal.  It’s great to be able to track where we are at any given time in almost any area of our lives.

Sometimes our KPI’s go desperately wrong, even though they seem to make sense.  My current personal goal is to get back to 10% body fat.  For those of you who don’t know me, let’s just say I’m already one “skinny ass dude.”  The problem is that less fat for a person who is generally athletic and out of doors as often as possible sounds like a good thing.  The question is, is it the right thing?  We actually face the same problem in our HCM KPI’s.  Here are a few examples.

Employee Referral %:  

  • Employee’s who are referred to us by other employees are our best people.  Right?  Almost all of us would agree that this is true as these employees will have higher levels of engagement, are pre-screened as people we’d want to work with, are capable and smart.  The referrer has a stake in the person’s success, but their credibility is also on the line so they probably won’t be referring crappy people.
  • Often, we’ll see that companies want to achieve as high a referral % as possible.  This allows the company to get more great people, but also reduce recruiting costs.  The problem is that there’s also a tendency to refer people who are similar to us.  This is a problem on a couple of fronts.  First of all, there is an ideation and innovation problem.  If you recruit people who are similar to you, who have similar experiences, have worked in the same places, you are not getting your company’s due in diverse thinking.  Second, people like us are not demographically diverse all of the time.  if you have a lot of “white dudes” and you want a 100% referral rate, you’re still going to be a bunch of “white dudes” in 5 years.

Employee Turnover %:

  • This one is fun.  Some organizations are SO proud of the low turnover that they have.  I’ll walk into a new project and within day’s I’m inundated with how they have achieved 5% turnover.  I mean, having great employee engagement so much so that nobody ever wants to leave is a great thing, right?  We see targets of 8% and lower all the time.
  • Depending on which philosophy to subscribe to, there is such a thing as “desirable turnover.”  Those are the Jack Welch bottom 10%, or in your forced bell curve performance ratings the bottom 5-15%.  Let’s just say that there are 10% of people in your organization at any time that SHOULD leave, and you should be encouraging to leave.  So if your desirable turnover is up to 10%, and your target is less than 10%, something is pretty much wrong.  Right?
  • The key is to figure out how to shift the conversation to unwanted turnover rate instead of total turnover rate.  A very high performing organization could have a total turnover rate at 12%, but if their unwanted turnover is only 2%, I’d say they are doing fantastically.

We all want high referral rates, and we also want low turnover rates.  These are great KPI’s, but we take too much for granted and at face value.  Going to extremes just because there’s a number to hit impacts our organizations in a pretty negative way, and in HR, it usually means that we have some of the wrong people working for us.

Pretty is not Useful

Not all of us have fancy business intelligence tools and cool dashboards with great graphs prepared for us in our business environments yet.  If we’re lucky, we belong to organizations that have spent millions of dollars figuring out how to get us analytics when we log into self service environments.  Or perhaps we have bought into a cool talent application tool that already had the functionality.  We’ve been prophesying that business intelligence would go directly to the manager/end user rather than having requests for ad hoc reports that would have to be processed for days before the end user ever got any data.  Even if we don’t have all the cool dashboards and business intelligence tools at our disposal, I’m hoping that many of us have used the cool image and graphing functionality in MS Office 2007.  Indeed, the software now presents all sorts of data in all sorts of new, flashy and easy to build ways.  From a consulting perspective, beautiful and sexy is a wonderful thing.

The problem is that…. well, there’s a problem.

Have you noticed that many of the charts you are getting are 3 dimensional?  From my perspective, they are beautiful, and the formatting is impeccable, but I can’t really tell where the top of the bar lines up with the axis points anymore.  Sure I can tell that the top of any bar in a bar chart is…. oh between $20-25M?  Yeah – that’s problematic.  I have a $5M effort rate.

I’m not sure what to do with the dashboards.  Managers want quick access and a visual regarding where they are and how their organization is performing.  But at the end of the day, don’t the want a data dump into Excel anyway?  (warning: data privacy problem, but that’s a different topic).

Hopefully when we build the BI environment, we were smart.  After building our flashy but not very useful graph, we spent another $100K and build the drill-through charts.  You know, the ones where you click on the indecipherable bar to get a chart that presents the real data?  What we really did was create something that was pretty to look at, and then force the manager to click to get at what she really wants.  And we paid for it.  Sounds like good, smart design based on great user experience principles to me.

Ok, I know that there will be a revolt if I actually suggest that everyone goes back to 2D charts.  We all love our flashy reports and dashboards.  But can we just make sure they are actually helpful before we publish the stuff?

The Marketing of Snowflakes

If you ever look at a snowflake dangling from the window at your local Macy’s or Bloomingdales, realize that this snowflake is only a piece of marketing, there to draw your eye, but not an accurate representation of reality.  You see, most marketing snowflakes have either five or eight sides to them.  Nobody seems to know how or why this happened, but I suppose some marketer out there thinks that it is more aesthetically pleasing to have a five or eight sided snowflake.

The reality of the snowflake is that they almost always have six sides.  Sometimes they may have three or twelve, but those are relatively less common to the six sided variety.  The reason for the multiples of three is simple, snow is made up of water, or H2O molecules, and chemically have so many bonds to offer to other H2O molecules.  The end result is that water molecules can create snowflake structures with three, six or twelve sides.

The beauty of the snowflake is a wonderful thing.  Certainly it does draw our eye and our attention.  Certainly the thought of beautiful fresh white snow brings to mind a white Christmas, skiing through fresh power, kids and snow angels, or whatever else you have in mind.  But at the core, it is still just a marketing figment of our imagination, inaccurately portrayed.

Manager and executive dashboards are quite the same.  Often, we have planned and conceived for months or years about how to best capture the attention of our executives and bring them thoughtful HR data.  We’ve given them tools and pretty graphs, and indeed, these dashboards carry the flare and flash that can draw anyone’s attention with a state of coolness and color.  But at the end of the day, the dashboard is just the dashboard.  VP’s of HR and other executives often don’t really look at the dashboards we’ve worked so hard on.  They might glance at a particularly high turnover rate, but rather than digging through the detail themselves, they might instead pick up the phone and call they nearest HR director with an inquiry about what’s going on.  At the end of the day, they still rely on the same old mechanisms for information.  They want us to create reports, and have meetings.

The cause of all of this is particularly simple.  Executives have no use for data.  The best representation of an HR analytic, whether it be a trended graph, or some sort of drill-through crafty piece of eye candy, is still just data.  What executives want is information, and our dashboards still don’t interpret data for them.  That’s why they still need the rest of us, our reports, and the face time in meetings.

I don’t think I’m being critical of dashboards – in fact I rather love them.  But we have to understand the gap if they are to get better.  Dashboards can give execs a glance at the health of their organization, but they don’t provide understanding and diagnosis.  We need to be able to provide information, not data.