By SUSAN PRINCE, J.D.
BLR Managing Editor
HR metrics is a crucial element of the business process, because what you are
really looking at is leading indicators of the financial future of your company,
according to James A. Hatch, CPA and author.
In his presentation "Metrics and Benchmarking Strategies for Human Capital
Management" at SHRM's Annual Conference and Exposition in San Diego, California,
Hatch explained to a packed audience that companies have optimized their processes
and their brands, but they have not traditionally put much effort into optimizing
and managing their human capital.
Hatch maintains that the workforce represents approximately 37 percent of a
company's direct expenses. This means that human capital management is everyone's
concern and it shouldn't take a back seat in your company.
For example, in a retail environment, Hatch explained that the effect the performance
of a store manager and a cashier has on shareholder value is great. Therefore,
effective management of these two positions, turnover, and daily performance
is crucial to long-term success.
Hatch offered a model for HR metrics. He maintains that the employer should
look at both the workforce and HR delivery. The workforce should be analyzed
from two difference perspectives: the qualitative and the analytic. The qualitative
perspective is obtained through survey data and the analytic perspective is
obtained through the use of metrics. In terms of HR delivery, an employer should
look at HR customer satisfaction and process efficiency/cost effectiveness.
Hatch proposed a few HR metrics that he finds particularly useful to companies.
- New product or service revenue per employee
- Bench strength
- Succession planning depth
- Quality of hire
- Executive stability
- Time to first promotion
- High performer turnover
- Cost of voluntary turnover
- HR functional system costs such as labor, internal systems, and program
It is clear that HR metrics is a growing trend among HR professionals. Hatch
reinforced the importance of this trend to your company's bottom line.