How can HR play a more strategic role in the corporate landscape? HR pros and others have been asking the question for years.
And the people at the big consulting firm Deloitte Touche Tohmatsu have at least one answer: Measure the things that the C-suite wants measured.
To be sure, if you’re doing a competent job within traditional HR parameters, you’re probably already measuring a bunch of numbers and trends.
Among these: employee headcount over time on a full-time equivalent (FTE) basis, total payroll, total compensation and benefit costs per employee, and industry- and geographical-area-specific comparisons of your organization’s compensation levels.
It’s not just about cost
But as useful as these traditional measures are, they don’t do much to elevate the strategic status of HR in the organization.
What do we mean?
If HR tracks and reports only on measures that have to do with cost, then HR stands for reactive record-keeping in the minds of the people who are reading these reports. In other words, you end up always ringing the unwelcome cost bell, not the profit bell that the C-suite loves to hear.
What else to track
So what else should you be tracking, in order to both help the organization and impress the top execs with your strategic acumen?
Performance-driven measures are what the C-suite people look at in gauging corporate success and setting corporate direction.
And you can track some of these measures. When you do, you’ll bring both critical information and an aura of strategic understanding to the table.
Five key measures
Among the measures Deloitte suggests you might want to look at:
1. Time-to-efficiency for new managers and employees. This is a hot measure, according to a worldwide survey of 531 executives – both HR and non-HR – that Deloitte did a few years back. Fully 60% of the organizations contacted either were tracking time-to-efficiency or planned to.
Why is time-to-efficiency so important? We all try to minimize turnover of key employees, but in today’s workplace you have to expect a certain level of turnover. The company that gets its replacement people up and running fastest gains a competitive edge – and that’s language your C-suite understands.
2. Management time spent on people issues. Again, a measure top execs are starting to look hard at. Some 55% of organizations either were tracking it or planned to when Deloitte contacted them.
HR can take a strong hand in improving line managers’ efficiency in dealing with people problems – and then report on its success. You’ll need to poll line managers periodically to get this data.
3. Cost per turnover. Deloitte’s survey showed that almost three-quarters of organizations contacted were tracking this or planned to. Cost per turnover provides HR with a powerful budget argument for retention programs – top executives are often floored when they learn the full cost of losing key employees, which may approach or even exceed annual salary.
4. Recruitment cost per employee. HR can score big points by streamlining recruiting through use of modern methods – social media, job boards, job fairs, tie-ins with key universities, etc. – and then demonstrating the cost reductions.
5. Training spend per employee. Some cutting-edge HR departments go so far as to calculate ROI on training. Training gets to the heart of what almost 90% of the execs surveyed considered their company’s most important source of talent – the development and training of existing personnel, as opposed to outside talent searches.
Is it all worth it?
Just in case you wonder whether it’s worth it to make the effort to track all these trends, check another finding from the Deloitte survey: Just 23% of the executives contacted said they believed HR plays a crucial role in corporate strategy and operational results.
That means 77% held the traditional view that fences HR in, restricting it to the narrower role of record-keeping and compliance watch-dogging.
Yes, some 82% of the respondents said they expected HR to take a more strategic role in such key areas as productivity and talent management in coming years.
But then, people have been forecasting a more strategic role for HR for a while now. You need to do something to make it happen.
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