1.
Metrics: Measuring HR's
Business Impact

2.
Evaluate: Right or Wrong?
If it can’t be measured,
don’t do it.

3.
5 Metrics Lessons

4.
Prioritize These HR Metrics
1. Overtime costs
2. Turnover
3. Unscheduled absence rate
4. Training expense per
employee
5. Employee satisfaction
6. Revenue per employee
7. Time to fill
8. Cost per hire
9. Average performance rating
10. Diversity statistics
• Retail
• Services/consulting company
• Manufacturing
• Technology firm

5.
Once Upon a Time…
• 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 as a
business focus area.
• Hiring
• Assessing
• Training
• Retaining
• Performance

6.
HR Metrics Case Studies
• Disney-time to fill, retention, diversity, cost per hire
• Virgin Media-improving candidate experience, improving $$$
• Google-faster time to productivity
• GE- “Owen” commercial increased traffic 8x
• Opower-time to fill, recruiter dashboard
• Deloitte-saved 2 million hours a year on talent calibration/ratings
• My story…
• What’s your success story?

7.
Balanced Scorecards—a bigger
picture of HR performance
impact.

8.
Balanced Scorecard

9.
Balanced Scorecards: Keys to Success
• Building to suit is key. Can’t adopt
someone else’s. Value is in the
design/creation/implementation.
• Take into account broader impact
of HR activities.

10.
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

11.
Sample HR Balanced Scorecard
• Objective: Reduce turnover costs.
• Description: Develop effective recruiting methods and new hire orientation methods to
optimize the retention of new hires.
• 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.
• 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).
Source: SHRM

12.
HR+ROI—two words that never
go together.

13.
#1 Reason HR Avoids ROI Calculations

14.
How to Calculate ROI on HR Activities
• Explore ROI Process Model Example:
• 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.

15.
How to Calculate ROI on HR Activities
Example:
• Objectives:
• Reduce absenteeism costs by 10%
• Create benchmark of existing level
to measure against

16.
How to Calculate ROI on HR Activities
Example
• Gather data on absenteeism for
a 6 week period prior to the
program implementation
• Gather same data for 6 week
period post implementation

17.
Isolating Impact
• Key credibility factor. Methods:
• Control groups (contrast with experimental group)
• Trend line analysis (historical, training, two alternative future options)
• Expert estimation (last resort)

18.
How to Calculate ROI on HR Activities
Example
• 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.

19.
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 handout for full ROI Process Map

20.
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

21.
Activity: Calculating HR ROI
• 7 minutes work, 7 minutes discuss
• Questions to answer: How do you proceed? What data do you gather?
*See ROI framework on page 3
• 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.

22.
Option #1 Example
• 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

23.
Developing an Evidence-Based
Mindset

24.
The Power of Evidence

25.
Evidence-Based HR
• Evidence-Based HR is based on the
evidence-based approach to medicine.
• 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. It also helps us to be less opinion-
focused and more credible.

26.
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

27.
Evidence-Based HR
• Note: You’re a scientist, too!
• Where to find data
• Management journals
• HBR
• SHRM Foundation
• Deloitte/Bersin
• i4cp
• CEB
• ***Qualitative data

28.
Activity: Evidence-Based HR
• 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.

29.
Activity Solutions
• 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.

30.
Key Takeaways
• Metrics are individual, like hair styles.
Don’t try to copy someone else.
• Bottom line: blending a healthy
appreciation for measurement and
metrics, an evidence-based approach,
and a broader organizational perspective
is key for credibility, impact, and results.

31.
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