The ABCs of State HR Metrics

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The ABCs of State HR Metrics

• Presented by
• Chris Bailey, CCP andStacey McClure, PHR
• State Classification Office

September 29, 2004 2004 Texas Government HR
Conference
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• To move to the center of the organization, HR
  must be able to talk in quantitative, objective
  terms. Organizations are managed by data.
• Unquestionably, at times, managers make decisions
  based on emotions as facts. Nevertheless,
  day-to-day operations are discussed, planned and
  evaluated in hard data terms.
• - Jac Fitz-enz

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The Importance of Measurement

• If you cant measure it, you cant understand
  it.
• If you cant understand it, you cant control
  it.
• If you cant control it, you cant improve it.
• James Harrington
• The Improvement Process

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Transforming HR for Business Results A Study of
US Organization

• If you take into consideration pay, benefits,
  training, and all of the other human capital
  programs at a given company, human capital is
  usually the largest investmentthe company
  makes.
• - David Knapp
• Senior Consultant, Mercer

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Transforming HR for Business Results A Study of
US Organization

• The study, conducted by Mercer, found that most
  organizations tend to track and report a few
  basic measures.
• However, leading employers are attempting to
  measure in areas such as employee skill levels,
  promotions, or training program effectiveness,
  and link these measures to business results.

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Transforming HR for Business Results A Study of
US Organization
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Measurement

• What you measure
• May depend on your organizations objectives and
  initiatives
• Why measure?
• To communicate performance expectations
• To discover gaps in strategies
• To make better decisions
• To address the trend toward value reporting

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Metrics and HR

• Metrics help quantify and demonstrate the value
  of HR
• Metrics can help guide workforce strategies and
  maximize return on HR investments
• Metrics provide measurement standards
• Metrics help show what HR contributes to overall
  business results
• Metrics help make the business case for HRs
  objectives

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Common Objections to Measuring

• You cant measure what we do
• Lack of clear purpose for measuring
• Lack of cooperation between departments
• Difficulty in extracting data from multiple
  systems
• Difficulty in understanding and analyzing metrics
• Numbers may be used to draw inaccurate conclusions

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Todays Objectives
Assess Your Data
Build Your Metrics
Create Meaningful Measures
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Assessing Your Data

• What information do you already track on a
  regular basis?
• Are you currently using metrics?
• Are there critical areas on which you need to
  focus?
• What metrics would be useful to HR and the
  organization?
• Are there costs youre trying to contain?
• What do you wish you could track?

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Data Sources

• State of Texas Annual Cash Report
• Accounting and Payroll Systems
• Internal Human Resources Analysis Systems
• State Classification Office Reports
• SHRM
• WorldatWork
• Saratoga Institute
• IPMA

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Data Integrity

• Quality of data is critical
• Make apples to apples comparisons
• Garbage in.garbage out
• So
• Check the math
• Watch out for zeros
• Compare results to each other
• Conduct a sanity test

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Collecting Data

• Create a measurement team
• Communicate the importance of measurement to team
  members
• Select metrics together
• Determine how these metrics will be defined
• Obtain leadership buy-in
• Disseminate the tasks

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Building Your Measures

• Determine your measures
• Select a comparison group for benchmarks
• Others providing similar services
• Others of the same size
• Others with similar structure
• Others with similar budget
• Compare your results

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Statewide Performance Goals
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What Can Be Measured?
Staffing and Hiring
Work Processes
Competent Employees
Turnover Rates
Reduced Time-to-Fill for Vacancies
Training Costs
Number of Employees Trained
Cost per Hire
Voluntary Separations
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Example 1

• Reduce process time for regulatory permits while
  ensuring adequate public input

Low Turnover Rates
Reduced Time-to-fill for Vacancies
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Voluntary Separation Rate -Definition

• Formula
• Total Voluntary Separations / Regular Headcount
• Purpose
• Voluntary Separation Rate looks at the percentage
  of regular headcount that voluntarily left the
  organization.
• This metric is an excellent indicator of problems
  within the organization, including but not
  limited to inadequate compensation and/or
  benefits, lack of opportunities for promotion,
  low employee morale, inadequate training, and/or
  improper assessment of employee's qualifications
  (over or under qualified).

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Voluntary Separation Rate Calculation

• 13,894 / 141,277
• Total Voluntary Separations / Regular Headcount
• 9.8

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Time to Hire - Definition

• Formula
• The number of business days to fill a vacant
  position. This is counted from the day the
  position becomes vacant to the date a new
  employee starts in the job.
• Purpose
• Shows the length of time it takes to fill vacant
  positions.
• This metric is an indicator of the organization's
  ability to recruit and hire new employees.

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Time to Hire Calculation

• 11/1/2004 - 8/1/2004
• Date of Hire - Date of Vacancy
• 65 business days

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Example 2

• Percent of documented complaints to licensing
  agencies resolved within six months.

Competent Employees
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Training Cost Factor - Definition

• Formula
• Total Training Cost / Regular Headcount Trained
• Purpose
• Training Cost Factor is the average dollars spent
  on training for each regular employee receiving
  training.
• This metric is an indicator of the organization's
  investment in training and can also be used to
  monitor training costs and the organization's
  return on investment.

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Training Cost Factor - Data Sources

• States operating expenses spent on training
• 31,131,631 All agencies and higher ed
• USAS Expenditure Codes
• 7202 Tuition - Employee Training
• 7203 Registration Fees - Employee Training
• 7243 Educational/Training Services
• Number of Regular Headcount Trained
• The average number of regular employees,
  regardless of hours worked in the reporting unit
  (division or company) for the survey period
• Will need to rely on agency records

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Training Cost Factor Calculation

• 31,131,631 / 249,700
• Total Training Cost / Regular Headcount Trained
• 124.68

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Creating Meaningful Measures

• After collecting your data,
• Compare your value to the percentiles used by
  benchmarks
• Assess desirability of your position in relation
  to your organizational goals
• Saratoga Institutes range is plus or minus 15
  percentile points from the target percentile

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Voluntary Separation Rate Interpretation

• Look at your trend data.
• Do you know the cost of your organizations
  turnover?
• Review your exit survey/interview information.
• Look at turnover in relation to length of
  service.
• If turnover of employees with less tenure is high
  you may want to review your recruiting practices.
• What type of impact are voluntary separations
  having on the attainment of your business goals?

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Time to Hire - Interpretation

• Has the time to hire increased or decreased
  within your organizationWhy?
• Have you conducted business process analysis on
  your hiring process?
• Do you know which step in the process takes the
  most time?

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Training Cost Factor Interpretation

• Look at trends in your organization.
• Training Cost Factor helps organizations
  understand the average cost per training session
  by comparing training costs to training
  frequency.
• While a high Training Cost Factor may suggest
  that an organization is spending too much on
  training, a low Training Cost Factor may suggest
  an inadequate investment in employee development.
• Use in conjunction with other metrics.

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Pulling it All Together
A
B
C
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Building a Scorecard
Expense Factor
Benefit Revenue/Expense Percent
Separations by Length of Service
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Full Scorecard
Company
Target
Status
Expense Factor
165
90
Labor Cost Factor
Examine healthcare investments
Benefit Factor
Benefit Revenue/Expense Percent
Workers Comp./Claim Factor
Separation Rate
Monitor turnover
15.8
10.0
Voluntary Separation Rate
Involuntary Separation Rate
Separations by LOS
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Zeroing in on Metrics that Matter

• Begin your program with a solid foundation of
  basic metrics cost-per-hire, turnover, etc.
• Ask managers what issues concern them what
  impacts productivity, makes their lives easier?
• Based on the responses, determine which metrics
  affect the areas identified, and then determine
  which measures provide results that clarify the
  values identified.
• Benchmark what others are doing in terms of the
  specific metrics you choose. Dont spend
  valuable time on benchmarking until you know
  which metrics are important to your organization.

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Zeroing in on Metrics that Matter

• Take a numerical snapshot of your present
  situation.
• Analyze the outcomes of the proposed action.
• Decide what tools are needed in terms of
  technology and outside assistance.
• Make a business case for the action and outcome
  you decide to pursue.
• Show managers updated report (via metrics) on how
  HR has contributed to their success.
• Carla Joinson
• Metrics that Matter

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Strategic Relationships

• Process must be owned by Executives, Managers,
  HR, Finance, and IT
• Takes time and will power
• May require an investment in information
  technology support services to support human
  capital measurement and reporting opportunities
• Requires the fostering of key strategic
  relationships to ensure favorable outcomes

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Wrap-Up

• Take baby steps by starting with a few key
  metrics.
• You dont have to change the whole organization
  at once.
• Measurement and management go hand in hand.

C
A
B