This document is part of the A Guide to People Metrics resource.

EXPLAIN the role and value of people metrics to HR management.

What is a metric?

A metric in business is a measure used to gauge some quantifiable component of an organisation’s performance, such as return on investment (ROI), or revenues.

Metrics are part of the broad area of business intelligence used to help business leaders make more informed decisions. Organisations often use metrics to develop a systematic approach to transform an organisation’s mission statement and strategy into quantifiable goals, and to monitor the organisation’s performance in terms of meeting those goals.

What is a people metric is?

People metrics, in the area of HR management, provide a quantifiable measure of people activity. People metrics can provide evidence of performance against objectives and goals.

Some examples of a people metric include:

  • the calculation of average time to fill a new position
  • new hire failure factor
  • headcount by gender.

For example:

 

People Metric Formula for this measure Measure of performance
Average time to fill Total days to fill, divided by offers accepted Measures process efficiency and timeliness of the recruiting process
New hire failure factor Short tenure separations, divided by the number of external hires multiplied by 100 Provides one perspective on turnover rates within new hire populations. May point to factors such as poor organisational fit, poor understanding of the position, poor on boarding or inadequate qualifications to perform the job duties.

What is meant by a lead and lag measure

Terminology commonly used alongside people metrics includes reference to ‘lead’ measures and ‘lag’ measures. This terminology refers to a metric’s ability to inform future activities (‘lead’) or provide information about activities that occurred in the past (‘lag’).

For example:

  • responses to a survey on recruitment intentions are a ‘lead’ measure for future recruitment activity or growth in employee numbers
  • absenteeism over the past quarter, is a ‘lag’ measure because it is based on activity that occurred in the past.

A common misunderstanding is that the value of a metric as a strategic measure is determined by whether it is a ‘lead’ or ‘lag measure. Rather, people metrics will be of strategic value if they support delivery of the strategic goals and objectives of the organisation regardless of whether they measure past or future activities.

Why Use People Metrics

People metrics assist HR to speak the language of the executive team. By measuring people management activities, the value to business outcomes can be translated into quantifiable evidence, and presented in a language that resonates with business leaders.

VPS departments and public sector agencies are at various stages in their use of people metrics and collection of data. Some organisations have limited data (and perceive this to be a barrier) while others are collecting data, and regularly using metrics in their business communications.

Departments and agencies also have differing tools and HR information systems for collecting and integrating data. In organisations with either complicated systems or no systems for storing data, developing metrics can prove a daunting and time consuming process.

These situations need not present a barrier. Instead, the focus needs to be placed on gathering information that will provide the most benefit to the organisation. This does not necessarily need to be complicated,

as simple measures often provide the highest impact if measured, presented well, and collected and reported regularly.

Data Integrity

It is essential when using people metrics, as evidence of performance against objectives and goals, to establish the accuracy and validity of the data. Importantly, this quality assurance needs to extend to the technical aspect including data extraction, verification and report generation. This verification of data is an ongoing process.