Dr John Sullivan Talent Management Thought Leadership

Most HR metrics are “so what metrics” because they don’t create a sense of urgency or drive action. In direct contrast, the metrics recommended here have been proven to spur action because they allow managers to easily see performance trendlines, what actions must be taken, and what problems are coming. 

A Think Piece – That’s designed to get you to demand HR metrics that drive action.

Why Talent Managers Should Be Using These Three Action Driving Metrics

When attempting to drive HR, manager or executive action is your primary goal. Here are the top three action-driving metrics that you should be using:

• Index metrics – this is a single number performance metric that instantly reveals which HR functional areas require action today. 
• Prescriptive metrics – these metrics tell you (or prescribe) specific actions that will be needed to resolve each of your already identified current major problems. 
• Predictive metrics – these forward-looking metrics alert you to upcoming problems and opportunities that are far enough out, allowing managers to still do something about them.

The three action-driving metrics are described below. At the end of each description, you will find a link to an article that provides detailed implementation information on that metric.

Action Metric #1 – An Index Metric That Reveals Your Current Performance In A Single Number

In the business world, an index is a single number that statistically combines several sub-metrics. For example, the Dow Jones is a single number that reveals the performance of key stocks. The consumer price index (CPI) is a single number that reflects the inflation rate over a wide variety of products. In the HR world, National Semiconductor once developed an index that covered all of the important HR functions with a single overall HR performance number. For HR professionals, these indexes provide several benefits. 

• You only need a single number to judge performance – the primary value of an index is to make it easy for everyone to instantly see the change in HR performance areas, such as retention. So, rather than having everyone sort through several individual retention sub-metrics in order to determine overall performance. This index number allows you to spot a problem instantly (when the index number is below 100).
• The index makes it easier to track performance over time – because its components stay the same. This consistency makes it easier to track any changes in HR performance on the index over time.
• Indexes make comparisons between business units easy – even when business units vary significantly in size and role. Because every business unit compares their performance against the same preset “average performance target.” This “normalizing” of the data makes it possible to compare completely different business units on their performance in any HR area. 

Index examples in HR

Below, you will find several examples of HR indexes that you should at least consider.

• The retention performance index – a typical retention index score would be a statistical combination of several retention-related sub-metrics. The overall index number is compared to an average performance target (e.g., 100) on the combined sub-metrics. A score of 80 or lower performance score would indicate significant retention performance problems. While a score of 120+ would show excellence in retention. The retention index would be calculated overall for each individual business unit. The sub-metrics to be covered under this retention index might include the overall turnover percentage, the percent that was preventable, the diversity turnover rate, manager satisfaction with retention, and your giveaway/takeaway ratio. 
• The recruiting performance index – this recruiting index allows you to judge the overall recruiting performance by a single number. The component sub-metrics of this index might include the number of hires, time to fill, the number of unfilled positions, the performance of new hires, and hiring manager satisfaction.
• The employee development performance index – consider developing an index that combines the performance sub-metrics from several individual development metrics into a single score. Those might include the percentage of employees served, the percentage improvement in performance after service, the cost per employee, and the manager/employee satisfaction rates.
• The performance management index – the performance management process is difficult to assess because there are multiple ways to measure the success of this process. This PM index statistically combines several performance management sub-metrics. This index might include the percentage of plan participants that significantly improved/failed, the number of toxic employees that were identified/released, and the managers’ and employees’ satisfaction with the process. 

You can learn more about HR indexes and details on implementing them here. 

Action Metric #2 – Prescriptive Metrics That Advise On What Solutions To Use

I call most talent management metrics “descriptive metrics” because they do little more than describe what performance occurred in the past. And with only these traditional metrics to go by, many managers fail to take “the right action” to resolve the described problem.

This is mostly because individual managers don’t have access to the names of the solutions that are the most effective for each problem. The most obvious current examples of prescriptive metrics in the business world are Amazon and Netflix. Their “recommended for you” algorithms direct (prescribe) the user to things that are likely to work for them. In HR, we call them prescriptive metrics. Fortunately, they provide us with several benefits.

• Prescriptive metrics drive the right actions – because not knowing what solution will work is actually a major cause of both stalling and inaction. These prescriptions will likely speed up a manager taking the right positive action
• Prescriptive metrics encourage the use of failure analysis – because you must have data before anyone can know which are the most effective actions. This prescriptive metric process encourages the use of failure analysis. This process helps determine the root causes of failure and what solutions work or don’t work. When a solution that a manager takes is not recommended fails, HR can alert them of a better solution for next time.
• They allow managers some freedom – managers are not required to follow these prescriptive actions. So they are less likely to resist because HR only advises them on the top recommended actions.
• Rewarding managers makes a difference – individual managers are more likely to focus on using the right solutions when they are both measured and rewarded for excellent talent performance.

Prescriptive action examples for common talent problems

Below, you will find several examples of how prescriptive metrics can direct a manager to the most effective solutions.

• Prescriptive actions for stopping preventable turnover – HR can tell managers that their data reveals that the use of post-exit interviews will allow them to finally identify the real causes of turnover. And that the use of “stay interviews” can strengthen the reasons why an employee stays.
• Prescriptive actions for increasing the number of applicants – when sourcing is a problem, advise managers that they can help build the number of applicants. By encouraging their team members to accept the role of 24/7 talent scouts. While making referrals, they only include the very best candidates that they know really well. 
• Prescriptions for improving employee development – managers can speed up individual learning on their team by letting teammates know precisely how the best “learning individuals” on their team continually learn. Including their best and worst sources for learning.
• Do this for better candidate assessment – if your team is not accurately identifying weak candidates, give each finalist a problem to solve during their last interview. And then ask them to verbally walk you through the key steps that they would take to solve it. Focus on the key steps that they omit.

You can learn many more details about prescriptive metrics here.

Action Metric #3 – Predictive Metrics Alert You Of Future Problems/Opportunities 

In every corporation I’ve visited, 100% of their HR metrics are either historical, describing what happened yesterday, or real-time, showing only what is happening today.

Unfortunately, neither type of metric makes managers aware of upcoming problems or opportunities that they will face. A predictive “heads up” could help the manager stop or minimize any of these predicted problems. HR predictive metrics provide several benefits.

• Predictive metrics give managers time to prepare – because they let you know what is likely to occur in the future. This information gives a manager time at least to mentally prepare for the upcoming event.
• Predictive metrics provide you with probabilities – unless the event is certain. Predictive metrics can include the probability that each of these events will actually occur. 
• They also include the dollar costs – the very best predictive metrics estimate the relative costs of the upcoming problem and the possible financial benefits from each upcoming opportunity.
• Predictive metrics also provide an alert – in addition to the early notice. Predictive metrics add a “just-in-time alert,” which also alerts the manager “just before” the event is about to occur.

Predictive metrics examples in common talent areas

Here are some illustrative examples of predictive metrics.

• Predicting upcoming turnover – some predictive retention models can now predict which individual employees are likely to leave within the next six months with a 95% accuracy rate. So managers can use this turnover warning. In order to improve their retention efforts on individual employees, or if they fail, to plan for how to find a replacement.
• Predicting significant talent shortages – these metrics will predict which job families (e.g., AI) will face severe talent shortages or surpluses in the future. These metrics might also reveal the percentage of a manager’s employees who are likely to retire in the next year.
• Predicting which jobs/skills will fade – in a world where the required skills change so frequently. These forward-looking metrics can cover which jobs are likely to be either eliminated or replaced with software/robots. The supply/demand predictive metric might also cover future skill needs. As well as the job areas where layoffs are likely to be needed.
• Predicting upcoming productivity issues – in the rare HR department that pays the most attention to team productivity factors. HR can help alert individual managers about any upcoming productivity problems or roadblocks that their team will likely face in the future.

You can learn more details about predictive metrics here.

Final Thoughts

Once you realize that most HR metrics end up adding little value. Because individually or taken together they seldom drive changes in HR or manager behavior. You will quickly warm to the idea that new, more strategic action-driving metrics are needed.

First, indexes make it easy for non-HR people to see performance improvements in each major HR functional area. Next, prescriptive metrics help managers choose the most effective solutions based on data. Finally, predictive metrics encourage managers to think about the future, at the very least, and prepare for projected problems. So that they will have no excuse not to be prepared when the projected future problems actually occur.

And finally, if the arguments that were provided have not yet persuaded you. I urge you to do some internal benchmarking. Because these three types of metrics are currently widely used in almost every area of your corporation. And because they are widely used, at least in my view, HR is long overdue for some serious catching up in its selection and use of metrics that actually drive action! 

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