Creating a bridge between people and business metrics

Citation

Newhall, S. (2011), "Creating a bridge between people and business metrics", Strategic HR Review, Vol. 10 No. 4. https://doi.org/10.1108/shr.2011.37210daa.003

Creating a bridge between people and business metrics

Article Type: Metrics From: Strategic HR Review, Volume 10, Issue 4

The latest ideas on how to approach measurement and evaluation of HR activities

According to a survey by DDI, only 5 percent of organizations are able to provide meaningful metrics that effectively demonstrate a correlation between talent initiatives and business performance. However, evidence from DDI’s Global Leadership Survey 2008/2009 suggests that talent management programs that are considered the highest quality are 20 times more likely to measure such performance, whereas those that don’t are rated the least effective (Howard and Wellins, 2008/2009).

If HR is to make a difference to business performance, it needs to know how and crucially where to make the most effective difference. HR and talent professionals need to focus on the impact of initiatives on overall business objectives and build a bridge that links people programs with business impact. So how can correlation be shown and meaningful data collated?

The best way to truly measure the impact of HR strategy is to build in robust measurement techniques from the very start of a program. Once a program has finished, or even after it has been launched, it is very difficult to measure an HR initiative in a meaningful way. DDI recommends considering the following four areas when planning how to measure a program:

1. 1.

   Set targets at the start. Ensure that clear targets are set from the beginning. Establishing these targets should involve discussion with representatives from the business line so that the right things are being targeted and a practical measurement plan is put in place.

2. 2.

   Stay on track. Ensure the action plan stays on track to achieve the objectives. It is easy to change the program, strategy or tactics during the course of the implementation, but how changing course might affect the overall outcome and evaluation must be considered.

3. 3.

   Measure outcomes along the way. The outcomes for each part of the action plan should be measured to establish the success of the strategies put in place; for example, the process of implementation, behavior change and overall outcomes.

4. 4.

   Collaborate with the people you serve. Go beyond measuring “HR metrics” only. Work closely with the business teams you are serving to measure overall impact on the organization. Evaluation tools to enable this information might include customer satisfaction surveys, financial analysis or sales growth and the skill is calculating how people connect with the business agenda.

So what stops HR from demonstrating effective measurement? We know that good evaluation can help monitor overall effectiveness and impact on an organization and that it helps guide decisions. However, only 5 percent of organizations actually use measurement to demonstrate the outcomes of their strategic objectives. The will is clearly there, but many organizations unfortunately find that they don’t get the results they were hoping for, or that it just becomes too difficult to measure effectively. The truth is that many simply do not have an effective measurement strategy. Below are some common pitfalls that HR practitioners can fall into:

• •

  They don’t measure at all.

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  They measure process only. Evaluation is based upon the learning process in the classroom, not its application to the workplace.

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  Poor timing. Measurement happens too soon or too late so that it is difficult to connect outcome with input. Measurement should leave enough time for an initiative to take effect but not so long as to have unclear affect.

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  Making assumptions. It can be easy to assume that improved profits are a result of a talent management program, but how? What is the connection? The relationship between cause and effect isn’t always logical. It could even be that the company was profitable and therefore invested more in HR. Innovation, new products, additional support from sales, production, marketing or even a change in the economy or competitive environment can impact profitability. To be more certain of cause and effect, consider operating a control group to differentiate results.

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  Failure to explain data effectively. Many people attribute an HR program to improved efficiency, higher retention rates or better customer satisfaction, yet fail to adequately explain how this conclusion is reached.

Effective evaluation will enable HR to become more embedded at the heart of the organization and to gain greater credibility in the boardroom. The board is generally focused on sales growth, rather than leadership growth. Create the link between the two and you will all be talking the same language.

Steve NewhallDDI (UK) Ltd.

About the author

Steve Newhall is MD, DDI UK. He has an extensive background in consulting and supporting global clients across all components of talent management, specializing in the early identification of leaders, succession management, leader and executive development and large scale selection systems. Newhall joined DDI in 1998 as an account director and progressed to UK managing director. Prior to joining DDI, he worked for Inlingua, the world’s largest chain of language schools. Steve Newhall can be contacted at: steve.newhall@ddiworld.com