Now that the worst recession since the Great Depression is over – officially, at least – the “new normal” has arrived for employees and employers alike. In the past year nearly every organization has been forced to re-examine each cost to justify its contribution to the bottom line or to decide to reduce or eliminate it altogether. Human capital costs are no exception, yet many companies find it hard to measure the precise value each worker provides for the cost it requires to employ him or her. Having this information could be highly useful in determining HR best practices and for HR planning. At the start of a new year, and with the lessons of the past year fresh in mind, this may be the ideal time to refine those measurements using HR metrics.
But where to start? What are the “right” Human Capital metrics for a given organization? Can a clear connection be made between a metric and organization-wide performance? Can the data to drive the use of a metric be accurately and readily collected? Is top management committed to an analytics-based business strategy? Is the organization suited for such an approach? So many questions and so few easy answers. Take heart, and start simply.
Step 1: Know your workforce – by more than name and job title. Really analyze who is working for you, how long, what positions, career paths, etc.
Step 2: Profile the ideal employee for each job – think about hard and soft skills, organizational fit and who are your “A” players.
Step 3: Review your HRIS (Human Resources Information System) capabilities. Computer technology can greatly facilitate the collection, maintenance, and analysis of the HR-related data needed to compete on analytics.
Step 4: Identify validated assessment tools for use in hiring, promoting, and retaining employees in critical jobs. With the results of steps 1, 2, and 3 in hand you can begin to apply what you know to what you need and what you are trying to measure.
These four steps can start your company down the road to better hires and longer retention by reducing the guess work and increasing the exactitude with your workforce is selected, engaged, and motivated to stay. As Thomas Davenport has noted in Competing on Analytics, “People may be ‘our most important asset‘, and even our most expensive asset, but they are rarely our most measured asset.” Separate your organization from the crowd. Put HR analytics to work for you today!