Issue 2
HR Metrics
March 2014
APS Human Capital Matters: HR Metrics
March 2014, Issue 2
Editor’s Note to Readers
Welcome to the second edition of Human Capital Matters for 2014—the digest for leaders and
practitioners with an interest in human capital and organisational capability. This edition focuses
on HR Metrics. The digest includes a range of material commencing with a couple of articles
developed for government agencies in the Victorian jurisdiction. It includes several articles that
will expose readers to some of the thinking in the private sector and among consultants with a
United Kingdom and United States focus. In addition to these articles you may be interested in
the Australian Public Service Commission’s Strategic workforce analysis and reporting guide.
Human Capital Matters seeks to provide APS leaders and practitioners with easy access to the
issues of contemporary importance in public and private sector human capital and organisational
capability. It has been designed to provide interested readers with a monthly guide to the national
and international ideas that are shaping human capital thinking and practice.
The inclusion of articles is aimed at stimulating creative and innovative thinking and does not in
any way imply that the Australian Public Service Commission endorses service providers or
policies.
Thank you to those who took the time to provide feedback on earlier editions of Human Capital
Matters. Comments, suggestions or questions regarding this publication are always welcome and
should be addressed to: humancapitalmatters@apsc.gov.au. Readers can also subscribe to the
mailing list through this email address.
Contents
Victorian State Services Authority, A guide to people metrics, June 2010
This edition commences with a guide to people metrics published by the Victorian State Services
Authority in June 2010. The objective of this guide is to support the HR function in the use of
people metrics, by further enhancing the capability to use people metrics strategically. It was
designed to be used with the people metrics dictionary (see below).
Victorian State Services Authority, People Metrics Dictionary, June 2010
The People Metrics Dictionary provides 47 measures, each accompanied by an information
sheet. These information sheets describe the measures in detail and provide a formula from
which they can be derived.
Chartered Institute of Personnel and Development (CIPD), Shaping our future, Using HR
metrics for maximum impact, 2011
The third article provides a tool designed by the Chartered Institute of Personnel and
Development (CIPD) to help organisations identify the most meaningful HR metrics for use in
their organisation. The tool is designed for HR and L&D professionals who want to ensure that
measurement of HR is aligned with organisational priorities and managers who want to use
metrics and measures to maximise return on the skills and abilities of their employees.
Snider, E (2014). NCR's three-step workforce analytics process spurs strategic changes,
Search Financial Applications, accessed 27 February 2014
NCR, a US-based computer hardware, software and electronics company is focused on turning
the theoretical aspects of workforce analytics and planning into practical applications that can
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increase HR’s contribution to the bottom line. Emma Snider reports on a keynote address given
by Kathleen Creech, senior HR business partner and global workforce strategy lead at NCR, to
the Human Capital Institute's Workforce Planning and Analytics Conference held in Alexandria,
Va 10–12 February 2014.
Schiemann, W. A. HR METRICS:Myths, Best Practices, and Practical Tips, A Metrus
Group White Paper, 2007
The paper focuses on some practical tips in building an approach to identifying the right
measures and building an approach to HR metrics.
Visier, FROM HR METRICS TO WORKFORCE ANALYTICS: Five Key Workforce
Insights That Every Employer Should Capture for Greater Business Impact White Paper,
2012
This article provides a link to a white paper that discusses workforce analytics related to five
critical performance indicators, and the need to discover the connections inherent in these
workforce topics so that HR leaders can arm themselves with the intelligence necessary to make
changes to optimize their people strategies.
APS Human Capital Matters: HR Metrics
Victorian State Services Authority, A guide to people metrics, June 2010
In June 2010, the Victorian State Services Authority developed A Guide to People Metrics to
support Victorian Public Service and broader public sector human resource functions in their use
of data and measurements.
The guide provides an introduction to metrics and people metrics. It guides those working in HR
in how to use people metrics to demonstrate the efficacy of HR initiatives in supporting the
delivery of the organisation’s strategic goals.
The guide includes:

an introduction to metrics and people metrics

an overview of the different ways of using people metrics

principles to guide identification of people metrics that are meaningful to the organisation

a checklist to consider when building a story about the business

case studies.
The guide uses the following definition of people metrics:
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.
The guide argues that the reason to use people metrics is that they 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.
The guide notes that data integrity is critical. 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
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data extraction, verification and report generation. This verification of data is an ongoing
process.
The approach to using people metrics will depend on the situation. It is not always appropriate to
spend a lengthy period of time developing a sophisticated approach to issue measurement, and in
turn a one-dimensional approach may not be thorough enough for the given situation or
audience. How people metrics are integrated, analysed and communicated will need to change to
suit the situation and the audience.
The guide explores how people metrics can be used to support the HR roles as a:

service provider to the organisation

support function for the organisation

business partner with the organisation

strategic and transformational driver.
As a service provider, HR regularly use metrics in response to requests that include:

information to support managers and executives

requests for data and information from external agencies

preparation of one-dimensional reports of past activities.
Some examples of the types of people metrics that would be used in this role include:

a manager requesting a report on absenteeism days per employee

the executive requesting a workforce classification breakdown

a manager requesting the recruitment cost per hire.
An important role of the HR function is to support the organisation with the tools that enable
employees to access real-time services. This support is provided in the administration of a
number of online systems that managers and employees can access, to receive information about
the workforce.
Some examples of the metrics used in this role may include:

the average annual leave or sick leave days of a particular organisational subgroup

performance management information

a calculation of training days per employee

personal development plan prevalence.
The people metrics used in this role report on the current situation, so are only relevant at a given
point in time.
The HR function advises the organisation about the impact of the workforce on overall
organisational performance and identifies opportunities for improvement.
Some examples of how people metrics may be used in this role may include:

a demographic analysis of people employed within the organisation to calculate age
staffing breakdown, gender staffing breakdown and staffing rate 50+ years
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
a cross-analysis of people metrics including successor pool coverage, positions without a
ready candidate, and leadership development plan rate to inform the organisation’s
succession risk

a cross-analysis of recruitment, employment brand strength and new hire failure rate, to
establish if attraction strategies are being successfully implemented.
HR is a key function alongside finance and other core business areas that can help an
organisation achieve its goals and objectives. For HR to be successful in this role, it needs to be
aligned with the organisation’s strategy.
The HR professional uses people metrics in order to:

define workforce drivers of success

communicate the impact that future HR activities could have on the goals and objectives
of the organisation

proactively identify people issues and influence strategic conversations

provide a people perspective in organisational strategic planning.
The guide notes that the selection of people metrics that are meaningful to the business can be a
daunting task. However, people metrics are meaningful to the business if they:

provide evidence of performance against a business need

inform activities toward an organisational strategic objective or goal

provide an evidence base for a strategically aligned HR opportunity.
At the time the guide was published the Victorian Government had vested the State Services
Authority with functions designed to foster the development of an efficient, integrated and
responsive public sector which is highly ethical, accountable and professional in the ways it
delivers services to the Victorian community.
Contents
Victorian State Services Authority, People Metrics Dictionary, June 2010
The dictionary is intended to assist organisations develop strategic people reporting measures
that can help them to identify trends within their workforce which can directly impact the
achievement of organisational goals. The dictionary provides 47 measures, each accompanied by
an information sheet. These information sheets describe the measures in detail and provide a
formula from which they can be derived. Each sheet contains technical discussion of their
application, interpretation, analysis, data sourcing, limitations and targets, which may be best
used by experienced HR practitioners.
The information sheets have been customised and reproduced from Corporate Leadership
Council 2005, The Metrics Standard: Establishing Standards for 200 Core Human Capital
Measures with the permission of the Corporate Leadership Council.
At the time the guide was published the Victorian Government had vested the State Services
Authority with functions designed to foster the development of an efficient, integrated and
responsive public sector which is highly ethical, accountable and professional in the ways it
delivers services to the Victorian community.
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Contents
Chartered Institute of Personnel and Development (CIPD), Shaping our future, Using HR
metrics for maximum impact, 2011
This article provides a link to a tool designed for HR and L&D professionals who want to ensure
that measurement of HR is aligned with organisational priorities and managers who want to use
metrics and measures to maximise return on the skills and abilities of their employees.
CIPD notes that the practical tool is the fourth in a series of four tools which build specifically
on the Shaping the Future insights. This programme involved research over a two-year period
and uncovered eight themes that CIPD believe are important for long-term performance.
The tool focuses on insights related to measurement, assessment and evaluation. The work of the
CIPD Human Capital Panel suggests that, while it is easy and potentially informative to analyse
data based on historical trends, effective HR functions focus on data that is multidimensional and
forward-looking which can inform strategic decisions. It is argued that a balance of ‘hard’
quantitative and ‘soft’ qualitative indicators is necessary to inform decisions that take account of
managing people within interconnected and complex organisational systems.
CIPD research into the role of line managers shows how measures must be relevant to
management issues, aligned to organisational priorities and communicated in ways that meet the
needs of managers at all levels in the organisation and so can lead to effective action.
The tool is designed to be worked through sequentially. It is built around the following four
areas:

identifying where HR can make a strategic impact

selecting appropriate metrics from which organisational insights can be drawn

effectively communicating insights from metrics for maximum impact

the HR function and measurement capability.
The tool also provides an action planning facility to help you identify and take forward key
actions to make a sustained improvement to the development and use of metrics in your
organisation.
The Chartered Institute of Personnel and Development (CIPD) is a professional association for
human resource management professionals. It is headquartered in Wimbledon, London,
England. The organisation was founded in 1913 and has over 130,000 members internationally
working across private, public and voluntary sectors.
Contents
Snider, E (2014). NCR's three-step workforce analytics process spurs strategic changes,
Search Financial Applications, accessed 27 February 2014
NCR's three-step workforce analytics process spurs strategic changes
The author has reported on a presentation at the Human Capital Institute's Workforce Planning
and Analytics Conference held in Alexandria, Va 10–12 February 2014. Kathleen Creech, senior
HR business partner and global workforce strategy lead at NCR, shared her team's three-pronged
approach to workforce analytics. Creech explained that NCR, a global consumer transaction
technology company headquartered in Duluth, Ga., has an extremely varied employee base,
which is why workforce analytics are particularly important. The company's approximately
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30,000 workers are divided into hardware and software engineers, salespeople, consultants and
service representatives, who are called customer engineers.
The author reports that Step one in Creech's process was echoed throughout the conference: Start
with the business strategy.
"It's about going back and thinking about [the] business strategy, and then selecting those
programs and initiatives that we think most directly will drive it."
From there, the workforce analytics team defines the strategic priorities and desired outcomes of
the project. The final step is to determine the metrics that will be used to tackle the problem.
The article discusses the application of the process to an issue involving the work of the
company's customer engineers. Desired outcomes included reducing contract penalties, more
effectively delivering on service-level agreements and raising customer engineers' employee
engagement. Four metrics that were reported on a dashboard each month: customer revisits
within three days, first-visit resolution, attrition within the first year of employment, and training.
Work is still progressing, however, turnover has been reduced by 9% saving the business
approximately $375,000.
Emma Snider is the associate editor for SearchFinancialApplications. This is a website provided
by TechTarget for Technology Pros. TechTarget (NASDAQ: TTGT) is the online intersection of
technology buyers, targeted technical content and technology providers worldwide. TechTarget
is based in Boston and has locations in Atlanta, Beijing, Cincinnati, London, Paris, San
Francisco, Singapore, and Sydney.
Contents
Schiemann, W. A. HR METRICS:Myths, Best Practices, and Practical Tips, A Metrus
Group White Paper, 2007
The paper distinguishes between measures and metrics. Measures are referred to the way in
which a particular concept is quantified. A metric is the actual ‘reading’ of the measure at a
particular point in time.
The key point is that it is the ‘concept’ that matters most—the measures are the approach to
capturing the essence of the concept. For example, Shiemann notes that employee engagement is
a concept that has been shown to be highly important in driving employee retention,
productivity, and other business outcomes. However, there are many different measures of
engagement in the literature. It is asserted that HR metrics or measures are really surrogates for
actual concepts that have been identified as being important in organizations.
The white paper notes that some concepts are tangible and others are intangible. Turnover is
used as an example of a tangible concept while other concepts such as leadership and
engagement are provided as examples of intangible concepts.
The paper goes on to establish the difference between HR measures and people measures. People
measures capture information about people drivers or outcomes in the organization that have a
clear relationship to achieving organizational goals; they represent the primary human capital
and talent factors required to execute the business strategy. Human Resources measures, on the
other hand, address processes, competencies, and other factors relating to the HR function.
A particular problem identified in the paper is organisations using too many measures. It is
suggested that this is caused by adding on new measures whenever a problem is encountered.
The paper suggests that this can be overcome by organisations refocusing on their strategy to:

identify their value proposition in the business
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


identify the key results and drivers of their success
identify the measures that would best capture the above
ensure that they had a good check and balance system in place that provided input from
multiple stakeholders (their customers, employees, suppliers, funders, industry
benchmarks).
The paper outlines a hierarchy of measures including strategic impact measures, effectiveness or
transformational measures and efficiency or transactional measures. Organisations with too
many measures were found to have almost all transaction measures and very few strategic
impact measures.
The approach to building the right measures described in the paper follows the following steps:
1. Start with thinking about the unique business strategy that differentiates the organisation
from others.
2. Develop a value map to capture the relationship among the important people concepts as
they relate to the important operational, customer, and financial outcomes needed to be
successful.
3. Develop the HR Measures and metrics once the important people concepts and
relationships are understood.
4. Populating each of the people and HR concepts with measures that help the management
team track how well the organization is doing in reaching its end goals, and how effective
various initiatives are in helping to ‘move the dials’ on the outcomes or the drivers of
important outcomes.
5. Targets are important for setting future goals, but in order to set targets, it is helpful to
have baseline information to understand what the performance on a measure has been in
the past.
6. For larger HR organizations, it is possible at this stage to use a cascade process to ask
each major HR function (e.g., recruiting, training) how their processes are influencing
important people measures.
7. Once concepts, measures, and targets have been decided, it is then important to have
measurement owners, disciplined reporting time frames, and a good root cause analysis
process to help prioritize gaps, and allocate resources to the most important areas.
8. Validating measures involving linkage analysis is the approach by which one can
quantitatively test the hypotheses in the model.
Dr William A. Schiemann is founder and CEO of Metrus Group, an organisational research and
advisory firm specialising in strategic performance measurement and organisational change.
Contents
Visier, FROM HR METRICS TO WORKFORCE ANALYTICS: Five Key Workforce
Insights That Every Employer Should Capture for Greater Business Impact, 2012
In February of 2012, HRmarketer Services Group surveyed over 150 U.S.-based employers
regarding their workforce analytics practices, preferences and future plans. The majority of the
participants worked in an HR role, although a small demographic represented senior
management, and other departmental groups such as IT and Finance. The survey was conducted
online on behalf of Visier Inc. The results of the survey indicate that there is an acceptance of
using workforce analytics in organizations to manage and report HR data. However, the survey
also revealed that there is room for greater improvements in the solutions they are selecting to
manage and report their workforce analytics.
8
The white paper discusses workforce analytics related to five critical performance indicators, and
the need to discover the connections inherent in these workforce topics so that HR leaders can
arm themselves with the intelligence necessary to make changes to optimize their people
strategies.
The White paper notes that in order to make those informed business decisions, executive leaders
need the right data. This has created a growing demand for workforce analytics, which are more
informative, insightful and accurate than ever before. However, organizations continue to
struggle answering the most important and fundamental question regarding workforce analyticswhat to measure.
The paper discusses the following five key workforce areas that were found to have the greatest
impact on business:
1.
2.
3.
4.
5.
Critical Talent Retention
Recruiting Effectiveness
Productivity
Compensation and Pay Equity
Performance Management
Specific metrics that are identified in the paper to assist in exploring if an organisation is
retaining critical talent include:





Resignation rate
Resignation rate of top performers
Promotion rate and promotion wait time
Engagement Index
Market compensation rate.
Specific metrics identified to explore recruiting effectiveness include:




Vacancy rate (i.e position vacancy rate)
First year turnover rate
New Hire performance
Time to fill
The white paper identifies the following metrics to examine productivity:



Return on Human Capital Investment
Revenue per Full-Time Equivalent (FTE)
Profit per FTE.
It is noted that employers might also consider measuring productivity on both an annual and a
quarterly basis, and comparing these figures to the national averages that are published by the
U.S. Bureau of Labor Statistics, or other bench-mark statistics.
With compensation contributing to the largest share of the total cost of a workforce, it is
imperative that HR leaders give considerable focus to make certain their incentive programs are
competitive and aligned with business goals.
Metrics identified to consider compensation and pay equity include:



Performance-Based Pay Differential
Median Performance and Pay Level
Direct Compensation and Direct Compensation Increases
9
The paper notes that performance management is a core pillar of talent management—but
organizations cannot hope to manage and improve performance, if they do not possess the
analytics to understand performance in their organization. Suggested metrics include:




Performance Appraisal Participation Rate
Top Talent
Low and High Performer Turnover
Performance Rating Distribution
Headquartered in Vancouver, B.C. and San Francisco, Calif., Visier delivers workforce
analytics through the cloud to empower HR professionals with the most critical insights for
optimizing their people strategy to meet their business strategy.
Contents
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