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Metrics: Measuring HR’s Business Impact
Ben Eubanks, SPHR, SHRM-SCP

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http://LHRA.IO/ Ben.Eubanks@LHRA.IO (256) 466-3626
More than numbers

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http://LHRA.IO/ Ben.Eubanks@LHRA.IO (256) 466-3626
Agenda
1) Metrics as Part
of HR Strategy
2) The Balanced
Scorecard Process
3) Speaking the
#ROI Language
4) An Evidence-
Based Approach

4.
Why are metrics so important?

5.
If it can’t be
measured, don’t
do it.

6.
Think Like a Consultant:
Prioritize the Metrics
1. Overtime costs
2. Turnover
3. Unscheduled absence rate
4. Training expenses
5. Employee satisfaction
6. Revenue per employee
7. Time to fill
8. Cost per hire
9. Average performance
10. Diversity statistics

7.
Be Insatiably Curious

8.
Credibility
Better to have it and not need it
than need it and not have it.

9.
The Essence of HR
Strategy
• All HR activities should have a
connection to organizational
strategy and objectives
• The more aligned your HR strategy
with the business, the better
• Example: customer service
• Hiring
• Assessing
• Training
• Retaining
• Performance

10.
A Story of
Failure

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Stories of Success
• Virgin Media-improving candidate
experience, improving $$$
• GE - “Owen” increased traffic 8x
• Opower-predicting performance
pre-hire
• Deloitte-saved 2 million hours a year
• Google-faster time to
productivity=more $ per employee

12.
What Will Your Story Be?

13.
Balanced Scorecards—a bigger picture of HR
performance impact

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Balanced Scorecard Essentials
• 4 quadrants/perspectives:
• Financial (How does our performance
affect company performance?)
• Customer (How do we impact the
customer?)
• Business Process (How effective are we?)
• Learning/Growth (How do we improve?)
• Accountability
• Actionable
• Results-focused

15.
Sample HR Balanced Scorecard
Objective: Reduce turnover costs.
01
Description: Develop effective
recruiting methods and new hire
orientation methods to optimize the
retention of new hires.
02
Actions:
•Identify key attributes of successful
employees who stay at the company for two
or more years.
•Utilize technology more effectively for
recruiting and screening applications.
•Identify selection methods that will
contribute to successful hires.
•Integrate branding efforts into recruiting.
•Revise the orientation program to ensure
new hire retention.
03

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Sample HR Balanced Scorecard
Objective: Reduce turnover
costs.
01
Description: Develop effective
recruiting and orientation
methods to optimize retention.
02

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Sample HR Balanced Scorecard
Actions:
• Identify key attributes of employees who stay at the company
for 2+ years.
• Identify selection methods that contribute to successful hires.
• Integrate branding efforts into recruiting.
• Revise the orientation program to ensure new hire social
assimilation.
03

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Sample HR Balanced
Scorecard
• Measures:
• Cost-per-hire (financial)
• Turnover rates and costs
(financial)
• Time-to-fill (business process)
• Customer satisfaction with new
hire performance (customer)
• New-hire satisfaction with
orientation (learning and growth)
• Supervisor satisfaction with
orientation (learning and growth)

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Balanced Scorecards:
Keys to Success
• Build to fit your business. Don’t
try to adopt someone else’s.
• Don’t underestimate value of
design/creation/implementation.
• Be a business professional first
and foremost.
• Don’t just measure. Act.

20.
HR+ROI—two words that never go together.

21.
#1 Reason HR
Avoids ROI
Calculations

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How to Calculate ROI on
HR Activities
Mini Case Study
Your company has decided that its
absenteeism is too costly, and a
new absentee reduction program
has been scheduled to improve
results. You have been tasked with
calculating the ROI of the program.

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How to Calculate ROI
on HR Activities
• Objectives:
• Reduce absenteeism
costs by 10%
• Create benchmark of
existing level to
measure against
Develop/Review
Program
Objectives
Develop
Evaluation Plans
and Establish
Baseline Data

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How to Calculate ROI
on HR Activities
Data Collection
• Gather data on
absenteeism for a 6 week
period prior to the
program implementation
• Gather same data for 6
week period post
implementation
Collect Data
During Program
Implementation
Collect Data After
Program
Implementation

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Isolating Impact
• Key credibility factor!
• Methods:
• Control groups
(contrast with
experimental
group)
• Trend line analysis
(historical,
training, two
alternative futures)
• Expert estimation
(last resort)

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How to Calculate ROI on HR
Activities
• Absentee reduction program produces savings
of $581,000 in reduced turnover, scheduling
costs, etc. The program cost $229,000.
• For this example, net benefits are $581,000-
229,000=$352,000.
• ROI=352,000/$229,000 x100 = 154%.
• This means for every $1 invested, $1.54 in
monetary benefits are received after costs
are covered.

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Intangibles
• Anything that cannot be documented
and translated credibly to financial
benefits should be noted in the final
findings report as being intangible.
• Examples: satisfaction, teamwork,
commitment, stress, conflict, etc.
*See full ROI Process Map

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Report OUT!
• Create a short, written report
explaining your findings
• Include data, calculations, and key
recommendations
• Remember: ROI is not about
evaluating your performance, it’s
about process improvement

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http://LHRA.IO/ Ben.Eubanks@LHRA.IO (256) 466-3626
• 7 minutes work, 7 minutes discuss
• Questions to answer: How do you proceed? What data do you
gather?
• Option #1: Your CEO has requested a new employee retention
program to reduce preventable turnover. Just before approving the
budget for the program, she tells you that she wants an ROI study of
the program over the next two months to see if it is a valid
investment.
• Option #2: After yet another employee injury on the job, your boss
requests that you develop a new safety training program to reduce
workplace injuries. He knows the CEO will be tight on funding the
project for more than a few months, so you must perform an ROI
study to help justify the investment.
Activity: Calculating HR ROI

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http://LHRA.IO/ Ben.Eubanks@LHRA.IO (256) 466-3626
• Gather data on existing turnover/retention.
• Set target goal for retention rate
• Determine how you will calculate retention and impact/cost and
what is included (e.g. involuntary turnover excluded)
• Collect data on all turnover during your program
• Continue collecting after program completion
• Isolate effects (trend line, control group)
• Convert to monetary value: how many people/how much money did
you save with the program?
• Calculate ROI (saved vs investment), identify intangible benefits,
report out
Option #1 Example

31.
Developing an Evidence-
Based Mindset
Don’t just tell me.
Show me.

32.
The Power of Evidence

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Evidence-Based HR
Example: what if you had to make a
change in your strategy, and five
different executives had five different
opinions. How would you proceed?
Aligning HR practices to be evidence-
based is a natural way to become
more adept at finding and using data
to validate big decisions.

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Evidence-Based Management: 6
Key Actions
1. Asking: translating a practical issue or problem into an
answerable question
2. Acquiring: systematically searching for and retrieving the
evidence
3. Appraising: critically judging the trustworthiness and
relevance of the evidence
4. Aggregating: weighing and pulling together the evidence
5. Applying: incorporating the evidence into the decision-making
process
6. Assessing: evaluating the outcome of the decision taken

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Evidence-
Based HR
• You’re a scientist, too!
• Where to find data
• Management journals
• HBR
• SHRM Foundation
• Deloitte/Bersin
• i4cp
• CEB
• ***Qualitative data

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http://LHRA.IO/ Ben.Eubanks@LHRA.IO (256) 466-3626
• Key question: Is this a proven method of improving results?
Research and find out.
• 7 minutes research, 7 minutes report out
• Option #1: You heard news about some big companies changing
performance management and think you want to do the same,
moving to a system of more frequent feedback.
• Option #2: CEO wants you to buy software that will allow you to put
your candidates into “talent pools,” allowing you to recruit from
those pools on demand.
• Option #3: You heard a speaker talk about employee engagement
and now you want to get buy-in for an investment in that area.
Activity: Evidence-Based HR

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http://LHRA.IO/ Ben.Eubanks@LHRA.IO (256) 466-3626
• Option #1 Feedback
• https://www.wsj.com/articles/how-performance-reviews-can-harm-
mental-health-1445824925
• https://www.pwc.nl/nl/assets/documents/pwc-performance-survey-
2015.pdf
• Option #2 Talent pools
• No data found in quick search. Any luck?
• Option #3 Employee engagement
• www.kevinkruse.com/employee-engagement-research-master-list-of-
29-studies/ 29 research studies pointing to engagement improving
revenue, sales, retention, satisfaction, productivity, etc.
Activity Solutions

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http://LHRA.IO/ Ben.Eubanks@LHRA.IO (256) 466-3626
Key takeaways

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http://LHRA.IO/ Ben.Eubanks@LHRA.IO (256) 466-3626
The Virtuous Cycle of Curiosity and Credibility
Curiosity Credibility

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http://LHRA.IO/ Ben.Eubanks@LHRA.IO (256) 466-3626
THANK YOU Contact me for my slides,
notes, & research:
Ben.Eubanks@LHRA.IO