So many HR Metrics: where to focus?
As I noted in my last blog, we in SAP HR are in a unique position to be part of SAP and a customer of SAP’s solutions. I also shared how we were delighted with the rich content of SuccessFactors Workforce Analytics, which comes with a large number of standard metrics, fully documented in terms of the method of measurement as well as the purpose and the meaning of those metrics. We face many of the same challenges as our customers in the area of HR Analytics as we examine all of those possible measures – what to measure, how, why, to fill what purpose, and for what action. And we’re excited about leveraging SuccessFactors Workforce Analytics metrics and methodology to improve our HR KPI governance and usage of HR data.
Behind the numbers are our employees
HR measures are more likely to impact individuals than measures coming from other topic areas. We aren’t measuring effectiveness or efficiency of transactions, how many documents were filed, how many euros or dollars were billed or paid, how many tickets were closed on time; individual human beings and their role and performance within an organization are behind any metric we publish. With this in mind, we always need to consider the impact of selecting a given metric as a KPI to measure performance – what action will leaders take to improve the results of that metric, and what impact will that have on people and the organization ?
Flexibility of Analysis vs selected strategic KPIs
Faced with the question of impact on individuals and the risk of how numbers can be mis-used, there is the initial gut reaction to limit the number of measures available so that everybody is looking at the same small number of metrics, for the same purpose. The analyst in me gets quickly frustrated by this approach which assumes you already know which questions you need to answer and how you are going to answer them. For me and many HR analytics leaders like me, the most interesting thing is to find the new questions, and how results on different measures and across different dimensions can help add nuance and insight to your understanding of the situation, ensuring better targeted action plans and better improvement scenarios. For real analytics to happen, you need the ability to cross-reference measures, much like what you see in the standard metrics documentation from SuccessFactors Workforce Analytics, where there is up front indication of what other measures can help you get a clear fact-based, number-based, picture of a given situation for an organization.
While on one hand, I am always looking for maximum flexibility to perform real analysis (what I consider the more exciting part of my job), there is a definite need to help the organization focus on selected strategic KPIs aligned with corporate and HR strategy. When I speak here of a KPI, I’m referring specifically to a small number of measures selected to measure performance against specific targets or performance thresholds – so the true meaning of a key performance indicator.
Selecting KPIs boils down to 1) start with your corporate business strategy 2) define your HR strategy and key drivers behind it and 3) select measures which show efficiency and effectiveness of your HR Strategy.
KPI selection: a question of playing favorites?
That said, there are a number of practices which can quickly turn your KPI selection process into pure chaos. For example, when you send out key words like “leadership” or “talent” and request people to share which KPIs they would like and have each leader fill that into a template which is consolidated and refined. You will likely in the end reach a key set of KPIs but only after going through a lot of debate. The process can seem to be quite haphazard with a lot of back and forth, and can sometimes feel like a KPI popularity contest to see whose favorites make the final cut. Most often, a final list is defined top down, where the leader decides which ones to use and his or her teams fall into step – while perhaps maintaining their own set of KPIs on the side. Don’t get me wrong – this approach does bring value since you do find a core set of KPIs to track overall performance, and it does allow for some further measures to be added in for necessary flexibility. But it doesn’t always bring you objectively and seamlessly to the most critical KPIs for HR and for the business.
Bringing objectivity to HR KPI selection: Top 100 Human Capital Questions
In working with SuccessFactors Workforce Analytics consultants, we discovered their methodology “Top 100 Human Capital Questions.” Based on years of experience across many different customers, SuccessFactors Workforce Analytics colleagues have boiled down the HR topics to 100 key questions that are shared across many different organizations from different industries, sizes, regional presence, etc. The approach is to request a number of business leaders to review those 100 questions and rate the top 15 that are considered critical for the success of the business. Results from this survey are analyzed and very quickly you are able to see those questions which are most often referenced, and know which measures will help you answer those questions. You can very quickly, and objectively, boil down the key critical topics to a handful, and identify 5-7 related KPIs to help track success of those areas. Most important in this process, of course, is to ensure that you get feedback from key business leaders, not only HR. And to leverage those business leaders and HR leaders in follow up discussions to reach agreement on the final short list of KPIs together.
And what about at SAP?
At SAP we have experienced both of these different approaches to selecting KPIs and seek to improve even more over time how well we can focus on the most critical topics with the right measures. We also are looking to make sure we will be able to answer those unexpected critical questions with deeper understanding of the situation through implementing more metrics packs (and corresponding measures) within SuccessFactors Workforce Analytics. Along with that technical implementation, we also plan to work on developing more advanced analytics skills within our HR teams for analyzing data and result measures to help SAP and SAP’s People be successful, ultimately helping all of our customers achieve their own success.
Stay tuned for further blogs about our HR Analytics journey within SAP HR!
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