Infohrm 1: Metrics Standards
On my desk is one of the most amazing pieces of HR work I’ve ever run across. At 600 pages, the spiral bound book is a ream of paper devoted to the documentation of HR Metrics.”The Metrics Standard: Establishing Standards for Core Human Capital Measures” is a three year old labor of love from the HR Analytics firm, Infohrm.
I’ve been learning about Infohrm in a series of demos and conversations. The management team has been walking me through the details of their reports and processes. They were kind enough to send me a copy of the book.
Infohrm, is a software company with Australian roots. The company delivers a package of tools that gives an HR department the capacity to standardize reporting and metrics. A series of dashboards, graphs and predefined analytic tools create a repeatable framework for data driven decision making.
The Metrics Standard is the first comprehensive recitation of the HR metrics package. It defines 200 discrete metrics with 4 to 10 variations each (for a total of around 2,500 distinct measurements). The report methodically defines all of the parameters required to generate each metric
For each of the 200 metrics defined in the report, one sees:
- Measure Construction: The metric defined as a formula
- Interpretation: The relative importance of the metric and the meaning of high and low scores
- Data Sourcing: Likely sources of the inputs required for the measure
- Analysis: How to look more closely into the measure
- Limitations: What the measure misses or doesn’t address
- Targets: How to set performance goals for the measure
- Variations: Nuances that can be gained by changing an input or narrowing the scope
- Related Measures: Other metrics that can shed light on the metric
The metrics themselves range across the primary concerns of an HR department:
- Workforce: Demographics, Structure and Tenure
- Retention: Turnover, Engagement, Cost of Turnover
- Staffing: Recruitment, Internal Movement, Staffing Effectiveness
- Capability: Performance Mgt, Education and Development, Management, Training
- Compensation and Benefits: Compensation, Benefits, Equity
- Environment: Attendance, Employee Relations, Health and Safety
- Service Delivery: HR Department, HR Expense, HRIT, Contact Center, Payroll
- Organizational Effectiveness: Productivity, Structure, Innovation
Each of the categories contains detailed descriptive information for two to ten metrics. They range from the obvious (Retention Rate, Hours of Training per Employee, Benefits Expense per Employee) to the insightful (Market Cap per Employee, Human Investment Ratio, Revenue per Employee). Each metric is really an analysis family, the metric being better understood as a report subject or a family of measures.
Infohrm (we’ll cover their software and services in another review) operates as a membership organization like the the Corporate Leadership Council or SHRM. With hundreds of members using their analytic tools, Infohrm is in a unique position to document and describe metrics and the maturity process associated with using them. They make the powerful case that the only way for an HR Department to become a full-fledged organizational player is by using the same data-driven, evidence based decision making approach that the rest of the organization uses.
The single most important part of that journey, after the commitment to make it, is defining a baseline of measurements. Without standardization and consistency these variables are nearly meaningless. Instituting metrics standards ensures that when one employee reports on turnover, she is talking about the same thing as the next employee one division over. This standardization process (Wes Wu calls it data governance), becomes an institutional preoccupation once an enterprise reaches global scale.
Organizational reporting standards help an HR Department overcome one cause of the function’s low credibility. With repeatable analysis in place across the organization, real problem solving can follow. Standards are central to the beginning of HR’s development as a profession.
Interestingly, SHRM has some sort of a ’standards’ initiative in place today. Earlier this year, ANSI (the international board that certifies standards) designated SHRM as a Standards Developing Organization. The initiative that grew out of the designation is involving hundreds of thought leaders and professionals in the process of designing key standards. (Jeremy Shapiro from Hodes is running the team that defines Cost Per Hire). It’s somewhat surprising that the Infohrm data isn’t at the heart of the SHRM project.
Like a tachometer and speedometer, HR metrics that measure internal performance are important tools. Knowing the oil temperature, high beam status, water pressure, whether the turn signal is on, fuel efficiency, trip distance are essential components of good trip engineering. Every operator of an automobile needs some subset of the standard metrics package.
But, no internal measure can tell you whether you are going the right way, how to make a detour, the likelihood of a larger mission’s success and so on. HR becomes a strategic function well after data is standardized across the organization. Predictive analytics that help a company understand the implications of the metrics involve asking much larger questions.
The Infohrm Metrics Standard is an amazing first step in the process of making HR really relevant.
