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What Most Companies Get Wrong About People Metrics

Jan 6, 2022| Reading time: 11min

BY Kerrel Brown

Senior Marketing Manager

Every company measures some type of people metric, but many find it challenging to get right. In fact, 45% of HR leaders say their people metrics could be used more effectively.

People metrics, also known as HR metrics, are measures that help companies monitor their workforce and the success of their HR processes and practices. Typical examples are attrition, average time to hire, and absenteeism. Unfortunately, too often, even companies with the best intentions fail to realize the full potential of people metrics. Progress stalls because outdated systems require clunky, manual data collection processes, make it difficult to take action on the data, and require someone with an analytics background to make metrics useful.

But these situations don’t have to be the case. With the right people analytics solution, HR teams can effortlessly automate data collection and tie insights to action—all without any analytics or data science background.

Here’s a look at some of the common roadblocks many companies face when it comes to people metrics and how modern solutions can help HR teams of any size overcome these challenges.

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The process is too manual

A lot of HR professionals have to do spreadsheet gymnastics to gain value from their data.

In a heavily manual process, your metrics are spread across disparate tools. Consequently, you need to stitch the information together to get a holistic view of your data. That process typically looks something like this: You download all of your data into a spreadsheet, and you’re ready to analyze it. You open Excel and start messing around with pivot tables and VLOOKUPs. Finally, you create a visual presentation in PowerPoint to share with fellow business leaders.

This way of working often leaves HR teams with messy, siloed data. And when you have several spreadsheets floating around or data scattered across tools, everyone’s working from a different set of assumptions. Finance has a budget for headcount, yet each manager has their own headcount plan. And that headcount plan doesn’t sufficiently align with the business’ broader strategy. This type of unreliable information means the HR department doesn’t have high quality data to guide decisions.

To streamline these HR processes, you need a solution that will sync your employee metrics from across systems and automate the data collection process. This makes it important to work with vendors that allow you to manage and access your HR data through a single API. Doing so will allow you to pull everything from compensation and performance to engagement and demographics into a central place. As a result, your people metrics will always be accurate, consistent, and current.

Modern HR applications also let you test assumptions in real time without using complicated formulas. For example, let’s say you want to see what the sales team headcount would look like if you added three sales development reps instead of six. People analytics software allows you to easily visualize your alternate headcount plan to quickly determine the impact on budget, the org structure, and more. Then you can share visualizations of the plan with the executive team for further discussion without ever leaving the platform.

Efforts get stuck in the reporting phase

Organizations collect plenty of people metrics, but many struggle to take action on the data. Companies that stall in the reporting stage of people metrics know their retention or employee engagement rate. The problem is they can’t actually use that information to influence business outcomes.

People metrics are only effective if companies can act on them. Take, for example, DEI. According to Tom Haak of the HR Trend Institute, people analytics can be a powerful tool if you can take action based on what the data says, but you can’t simply measure a point of interest and then hope it will improve on its own.

Let’s look at how your business can move beyond people metrics reporting to gain value from data.

Track impact-based metrics

Impact-based metrics show the HR activities and people programs that bring the most value to the business.

According to Effective Human Resource Management, people metrics can be split into three types of measures: efficiency, effectiveness, and impact. Efficiency metrics measure the use of HR resources, such as cost-per-hire. Effectiveness metrics look at the results of HR activities, like the skills an employee learns during a course. Impact metrics delve deeper to demonstrate the business value of the activity. One example is increased sales after completing CRM training.

Natal Dank of PXO Culture says human resource teams should place a larger focus on impact-based metrics. Both efficiency and effectiveness metrics simply measure actions. Impact-based metrics measure the results of those actions. For example, an activity-based metric like efficiency or effectiveness tells you how many people attended a training program. An impact-based metric shows whether the training program closed a capability gap. This approach helps you identify the organization’s most effective employee processes and practices. Then you can use this data to inform future programs.

Use metrics to implement change

To enable true organizational change, you need the ability to apply data to solve a business problem. For instance, say employee turnover is a challenge. First, you can run an eNPS (employee Net Promoter Score) survey to gain a deeper understanding of employee engagement through numerical scores and written employee feedback. Then you can analyze the data and find areas to prioritize. For example, you might find that an employee with a low eNPS score and a high absence rate is a turnover risk. It’s also important to dive deeper into the details to understand the story behind the data. Perhaps you interview employees and learn that they’re experiencing burnout and work-related stress. Once you’ve identified the root cause, you can work with managers to develop a targeted retention strategy that curbs the turnover rate.

A critical element of data-driven change is to share the information. As a result, it’s important to present the metrics to managers and the executive team so you can collaborate on an action plan.

There’s too much focus on data science skills

There’s an assumption that HR leaders must possess analytics skills to gain insight into people metrics, and it’s preventing meaningful progress. In fact, 35% of HR leaders say they can’t move forward with people analytics because of a lack of skills.

However, according to the Society for Human Resource Management (SHRM), modern people analytics solutions should make it easy for HR leaders to use data to make informed people decisions—even if they don’t come from a data-analysis background.

A modern people analytics platform makes people metrics more accessible because it presents the information in easy-to-understand formats, like org charts, graphs, and maps. This means anyone in the organization can make sense of employee metrics, empowering leaders and managers to easily apply data to steer people initiatives.

This increasing ease of use is why more and more companies are recognizing the value of people metrics software. In fact, Deloitte’s 2021 High-Impact People Analytics study finds 70% of HR leaders invested in people analytics tools in the past 12 months.

Employees have zero access to people metrics

In their personal lives, your employees enjoy access to a range of self-serve options. They can view their bank balance or check their loyalty points without needing to contact anyone else. Yet, too often, employees cannot see even basic HR data.

Without self-serve access to key people metrics, employees have to request their data from HR. This process places a heavier administrative burden on HR teams, leading to delays. Because of this, employees request information less often or not at all. Consequently, their problems go unsolved.

The best way to solve this challenge is to give employees access to data they need, like KPIs, professional development plans, and performance management data. This creates a better digital employee experience and improves transparency. For example, it allows managers to easily evaluate team demographics and track key data like performance trends and engagement.

Your organization needs a new approach to people metrics

There’s no shortage of people metrics. The dilemma facing most HR teams is how to apply this data to solve business challenges. The answer lies in introducing a modern people analytics platform.

With the right solution in place, HR teams should be able to easily introduce connected processes, unlock access to data, understand trends, and take meaningful action based on that data. This approach will make sure you build a solid foundation for your people metrics program to support better business outcomes. Then, rather than instinct or anecdote, all of your people decisions will be rooted in data.

People analytics tools give you an easy way to view, manage, analyze, and take action based on people metrics. Ready to get started? Check out our People Analytics Buyer’s Guide to find the best solution for your business.

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