A trend toward quantifying what’s happening in human resources (HR) departments by tracking metrics such as employee turnover and succession coverage is gaining momentum within B.C. companies and other organizations.
This approach allows an HR department to identify problem areas in a company, such as high turnover in particular age groups or at certain tenure levels, so it can develop new practices to address the problems and track results.
A key driver of the trend is the BC Human Resources Management Association (BCHRMA)’s HR metrics service, launched two years ago. The service allows organizations to subscribe to metrics reports that calculate the organization’s performance across 22 to 94 HR metrics, depending on how much data the organization submits.
The reports also benchmark the organization’s performance by providing the average, median, high and low figures for similar organizations.
Ian Cook, BCHRMA’s director of research and learning, noted that the service has grown to 65 subscriber organizations across B.C., Alberta, Saskatchewan and Manitoba, with approximately 35 of those in B.C.
“It’s a growing number,” he said. “We’re looking to be up to 80 around next quarter and up to around 100 by the end of the year.”
Generally, he said, the HR analytics approach attracts organizations with staffs of 200 people or more.
“When you’ve got 40 or 50 staff, you pretty much know them all, you pretty much know what they’re doing, you can see if the young folks are leaving,” he said. “You hit 150 and it starts to become impossible to track in your head.”
Cook said that, based on subscriber feedback, a key area the metrics service has been able to illuminate is high turnover rates in particular age or tenure groups. That issue, he said, has particular currency in a context where baby boomers are retiring and companies are trying to ensure that new talent is being developed.
Bruce Pollock, director of human resources for the BC Assessment Authority, said that the metrics service has helped the organization identify a turnover problem that had gone unnoticed.
“We have uncovered a bit of an anomaly in our resignation rate for our newer employees, right around the three-year mark,” he said, commenting that while the organization is performing well on most turnover bands, the numbers at the three-year mark “are what I would consider to be high.”
Pollock said he’s planning to follow up on that discovery with focus groups or an internal discussion survey with employees at that service bracket to try to better understand what’s going on.
“That’s the next step,” he said. “The numbers themselves are only so good. It’s really ‘What are you going to do?’”
Cook noted that besides using the metrics to identify and address problem areas, they’re a good way for HR departments to prove their value.
Previously, he said, HR departments have had to try to justify spending on, for example, leadership development, by citing assessments performed or hours of training provided.
“‘So what?’ was just a huge big question,” said Cook.
Now, he said, HR departments can show succession planning metrics to demonstrate they’ve used leadership development funds to ensure they’ve got talent ready to fill key vacancies.
“That ‘so what?’ goes away when you can say, ‘We’ve gone from 60% to 80% [succession] cover and we’ve done it faster than the market.’ It just gives an awful lot more credibility.”
As the trend toward using HR metrics gains steam in B.C., Milliken HR Consulting principal Stephanie Milliken said she’s only just starting to see a shift. Organizations are looking beyond operational metrics – such as he ones measured by BCHRMA – toward less tangible but, she argues, more significant strategic HR metrics.
“I encourage employers really to focus on the strategic metrics: those practices that actually make meaningful and measurable difference to your bottom line,” she said.
A classic example in the field, she said, is Sears’ employee-customer-profit chain approach. It identified that customer service drives profit, and then set about measuring and assessing what factors drive employee attitudes and retention, how employee retention affects customer satisfaction and how that in turn affects the company’s financial results.
Unlike operational HR metrics, she said, strategic HR metrics are often best measured qualitatively, through employee and customer surveys.
While very large companies have been taking this approach for many years, she said, it’s only starting to gain traction in B.C., where organizations are smaller. But Milliken feels that, with the heightened interest in HR metrics of late, that’s changing.
“Probably in the next five years we’ll see the majority of organizations adopting this [strategic HR metrics] approach.”