The metrics that matter
Rob Gray, April 03, 2017
Data and analytics can be valuable to HR. But only if you're measuring the right things, in the right way
For some in the political sphere, we’ve entered a ‘post-factual’ era. However, for most organisations hard data has become more sought-after and valuable than ever.
Collecting and analysing data allows for an evidence-based approach to solving HR-related business problems. That’s hard to argue against. Where problems arise is in deciding what to measure, how to do so and to what purpose.
There is an increasingly widespread concern that HR has become preoccupied with jumping on the analytics bandwagon: measuring things and collating data without questioning the goal and value of the exercise, and without giving due consideration to how data should be interpreted. Consequently, some HR metrics are far from illuminating.
Matters are further complicated because every organisation is unique, with its own set of circumstances and objectives. The metrics that count will therefore differ depending on context.
Even so, there is much to be learnt from how others are striving to shed outdated or pointless data to focus on metrics that matter. This drive towards improved metrics can been seen across a broad span of HR-related areas.
McDonald’s, active in more than 120 markets with roughly 1.9 million employees, says the use of data and intelligence plays a pivotal role in shaping its business strategies. In the past it relied on operational measures such as employee turnover and restaurant staffing numbers, which although helpful at an individual restaurant level, did not help it assess how effectively it was driving new capabilities or changing established ways of working to seize new business opportunities.
After a review McDonald’s dropped or downgraded some metrics. One field in which it has done this is tracking its employer reputation.
Previously the restaurant chain relied on external employment surveys that provided quarterly results. Although these gauged McDonald’s performance compared with competitors, they were not real time nor did they offer detail on what was affecting its reputation.
“By contrast, there are currently around one million conversations a year on social media about our people,” says McDonald’s senior vice president of people David Fairhurst. “Customers are telling us great stories about interactions with our staff – and they are also offering suggestions on how we can improve the experience. My team has partnered with our digital team to review these conversations. We are now getting clear insights about how hundreds of thousands of people feel about our employer brand and the experience they have in our restaurants.”
McDonald’s still uses external employer surveys. But this new approach gives “valuable qualitative information and a real-time assessment of the impact of our employer brand campaigns, or when we make an important announcement related to people”.
Metro Bank believes recruiting sufficient colleagues with the right attitude and priorities is crucial for continued growth and success. “Rather than measuring time to hire, which risks driving the wrong behaviours among our recruitment team, we look at first year attrition,” says Metro Bank chief people officer Danny Harmer. “This reflects the quality and suitability of the hires we make and also tracks that everyone involved in hiring has been trained and has a ‘licence to hire’.”
Another key metric relating to recruitment and culture is the number of hires the bank makes through its friends and family referral scheme. This can account for around 20% to 25% of monthly recruits and as such is considered a key indicator of colleague advocacy.
Retention, succession and development
“We are at the beginning of the journey to use our data more wisely,” says Penny Newman, chief people officer at law firm Lewis Silkin. “For example, in systems designed to support talent planning and succession planning you are able to run scenarios based on potential retirements/promotions and look to see who would fill certain roles. Succession planning is done well in many large organisations but I wonder whether they also run diversity data against these scenarios. Recent moves on gender pay gap reporting and the well-publicised issues around the lack of diversity at board level suggest this is an area that could be improved.”
Across all organisations employee turnover is one of the most reported metrics. However, Eugenio Pirri, vice president of people and organisational development at the Dorchester Collection, argues that the true measure of success is not how long someone is with you, but what they do when with you. “We’ve moved the metric on our scorecard to look more at voluntary turnover and development; why people leave you and what they can learn and contribute while they are with you,” he says. “We track and monitor development, cross-training and general learning. We want to know whether our people are growing, developing, learning, and ultimately whether they are making a difference.”
This change, he adds, has had a positive effect on labour turnover. “Voluntary turnover has dropped three points in one year – to less than 18% – and more than 35% of the workforce has been developed in multiple skills, roles and departments.”
Sage Group chief people officer Sandra Campopiano believes that some HR teams create so many measures they can’t see the wood for the trees. “I encourage my team to have a few ‘killer’ KPIs, with the caveat that it’s important to dig deeper when something looks odd. For example, looking on the surface at employee turnover is way too generic. But if you drill down into the data and cross-reference by performance or tenure this can provide far more insight into demographic trends that create actionable insights.”
McDonald’s is moving all its people surveys to a ‘pulse’ approach – much shorter surveys focused on the most important things. It is rolling out ‘pop up’ surveys on employee websites to collect monthly survey data from all over world. The aim is to measure and provide insights in near-real time when new strategies are implemented.
Importantly, McDonald’s is also changing what it reports on. “Engagement scores across our staff and restaurant employees were the preferred survey measures, yet they are not always connected to what the business is driving,” says Fairhurst. “Now we are focused more on the behaviours that need to change. For example, we are implementing a ‘culture measure’ that will go out every quarter and focuses on the most important behaviour changes that need to occur in our company to drive growth.”
At Metro Bank an annual engagement survey with the customary 75 to 100 questions has been replaced by 13 questions covering the main quantitative areas. Crucially, the format gives employees the opportunity to provide freeform answers to three key questions: What one thing would you change for colleagues? What one thing would you change for customers? And what do you like most about working for Metro Bank?
“We use text analytics to derive comprehensive insight from our colleagues’ responses and correlate the feedback on what we can do for customers against the text analytics from our ‘Voice of the Customer’ programme, which reviews customer attitudes towards the bank every month,” says Metro Bank’s Harmer.
“The combined results give us a 360-degree view of the customer and colleague service experience and how to make it better.”
Ann-Marie Murphy, group HR director at New Look, says the retailer started with standard metrics such as employee turnover, payroll compliance and employee engagement, plus some legal compliance metrics. “We are now moving this on to focus less on the lag and more on lead measures, as well as a key focus on regular feedback from our employees on how they feel right now about working for New Look, and measure the level of employee advocacy in our business,” she says.
“We find what is really key is bringing the metrics to life for our leaders,” says Tammy Taylor-Stowe, head of HR business partnering at Yorkshire Building Society. “Where we used to report absence percentages regularly to the business, we are now discussing cost of absence or drilling down more specifically to the cost and incidence of, for example, mental health absence.”
Newman adds that on a day-to-day basis she likes to see pertinent graphs that aggregate information across the population. Therefore, she has configured her dashboard to show sick days taken over the last 52 weeks (in descending order of total days, so showing the top 10 employees with total absence days) and average days lost to sickness per month.
“This makes me sound like I am obsessed with sickness absence; I really am not. One of the reasons I left the top 10 total absence days on screen is that if someone forgets to close off a one-day absence our system keeps recording it, and so very rapidly someone is falsely shown as being off for 20 days when this is incorrect. Data can only be useful if it is accurate. You have to spend time auditing it.”