| HR Says | Management Says |
| Intangible | Tangible |
| Higher morale | Turnover rate |
| Team building | Employee development |
| Happier employees | Employee acquisition cost |
| Better benefits | Cost to replace |
| Profit per employee |
Here's Nitz and Duffy's chart of HR metrics:
| | Acquiring | Maintaining | Developing | Retaining |
| Money | Cost per hire | Cost per paycheck; cost per EAP case; benefit $ per employee | Cost per trainee | Cost of turnover |
| Time | Time to fill | Time to respond; time to fulfill request | Training hours Turnover by length of service | |
| Quantity | # interviewed; # hired; % filled by promotion from within | # claims processed; # claims filed | # trained | Voluntary rate turnover; % employees with compa ratio > 1 |
| Quality | New hire rating; retention rate at 180 days; performance rating at 90/180 days | Process error rate | Skills attained; pre/post testing | Readiness level; performance review rating |
| Reaction | Hiring manager satisfaction; candidate satisfaction | Employee satisfaction | Trainee responses | Turnover reasons; exit interview feedback |
HR Making a Financial Difference
Nitz and Duffy give an example of an HR intervention that shows a financial differential. The situation: A company recruited nationally for a position that required final candidates to be flown to Southern California for interviews. Recruiting was expensive. The hiring managers were doing everything. There was a low percentage of offers made to candidates and critical revenue producing positions were left unfilled.
After HR took over it was a different story. The statistics:
- 416 resumes received; 279 resumes rejected
- 138 second emails sent; 87 no candidate response
- 45 scheduled for phone screen; 20 rejected or no show
- 25 forwarded to hiring manager for phone screen; 10 rejected or no show
- 15 sent script reading assignment; 10 rejected or no tape sent
- 5 flown in for interview; 3 rejected
- 2 offered job and accepted
HR was able to document an average annual savings of $144,000, plus:
- Time savings
- Improved manager satisfaction
- Increased revenue
- Increased profit
Bottom Line for Metrics
For basic guidance in presenting metrics to management, Nitz and Duffy quote Dr. John Sullivan's HR Metrics the World Class Way: "For metrics to be effective in altering behavior, they need to be both visible and immediately relevant to the audience that needs influencing, not the party producing them."
Metrics Killers
First of all, say Nitz and Duffy, the top reasons CFOs and CEOs say no are:
- No profits attached.
- Not tied to business goals/strategy.
- We don't have the $$$.
- Emotions.
Additional problems in getting heard are:
- No communication
- Miscommunication
- Speaking different languages
- Limiting the conversation to cost
- Measuring nothing
- Measuring too much or not tracking anything
- Lack of benchmarks
Turnover
Turnover is one of the standard HR metrics. First, think through what dimensions you will measure:
- By company overall
- Company vs. industry
- By region
- By store
- By manager/supervisor
- By shift
- By position
- Voluntary vs. involuntary
Turnover Calculations
Nitz and Duffy offer an example of a turnover calculation that you do for each district in your company:
(Turnover rate = # of separations/avg. # of employees X 100)
| | # EEs Sep During Month | Avg # EEs During Month | Monthly Turnover Rate | Annualized |
| January | 5 | 120 | 17% | 50% |
| February | 4 | 118 | 39% | 41% |
| March | 2 | 121 | 65% | 20% |
| 1st Quarter | 11 | 120 | 21% | 37% |
Say that, having done the analysis, you discover that one district has much higher turnover than other regions. Exit interviews confirm that there is a problem with the district manager.
It's time for a determination of whether it would be better to keep and develop the district manager, or replace him or her. Either way, your metrics helped identify a problem that was hurting productivity and reducing profit.
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