A business-connected HR operating model (people, process, technology, etc.) that connects business value to talent investments enables the talent strategy’s execution. You can learn more about this in our book, "Building Business Value Through Talent".
In the meantime, this article identifies the stages of execution and delivery in the HR operating model that are most essential to ensuring successful investment outcomes and which should therefore be closely monitored and measured.
Two categories of metrics drive the long-term success of the HR operating model: Operating Metrics and Results Metrics. Like many business functions, HR is (or should be) very process-based, especially for the work that relates to acquiring, developing and sustaining talent.
Operating metrics gauge how well HR processes are working. By looking at quantitative data that indicate the efficiency and effectiveness of a process, operating metrics provide the information to continuously improve how execution is working. Example recommended operating metrics for Talent Acquisition would be:
Throughput
• Volume, Mix (Internal and External), and Type
Process
• Time to Fil by Stage
• Interviews/Hire Ratio
• Candidate Drop Out Rate
• Offers Accepted/Rejected
• Cancelled Requisitions
Productivity
• Cost per Hire
• Recruiter (workload, TTF, Fills, etc.)
Similar kinds of operating metrics can be captured for other areas of talent management and HR work.
Results metrics, on the other hand, are the “bottom line”. What did the processes produce and how did results compare to expectations and prior experience? Significant variances in results metrics would typically be investigated by following the path back through underlying operating metrics. For example, in recruiting, if the quality of new hires seems inadequate (e.g., no show on day one, early attrition, poor performance, etc.), one might analyze recruiter workloads, candidate generation per requisition, source of hire, selection processes, etc., to identify what steps can be adjusted and tracked for their impact on quality.
Typical TA results metrics are:
• Speed
• Cost
• Quality
Speed and cost of hire are somewhat self-explanatory. Talent quality, in our view, is ultimately defined as sustained productivity. It requires the passage of time to be revealed and observed. In the case of new hires, it takes a significant period of time to settle a person effectively into the organization. Depending on the resources dedicated to achieving a rapid assimilation, a period of at least several quarters is typically required before one can become fully productive. In our experience, 24 months is probably the shortest period of time within which measuring quality data is meaningful. Because of that, we advocate an approach that captures a qualitative snapshot soon after hire via manager feedback as well as structured observations followed by quantitative measurement after the passage of time.
Business goals for an organization are normally measured through these types of operating and results metrics. HR should be no different.