Employees are a vital and major resource of any organisation. Research shows that salaries alone make up between 18% and 52% of an organisation’s overall expenditure, dependant on sector. Such a large investment demands a return but how many organisations can say that they know they are spending their budgets well?
Commercial departments such as sales or marketing measure their activities and base their decisions on a return on investment. Why should it be different in HR? Is the money you spend on pay and reward getting results? Do you attract the right people? Are the right people leaving the organisation and why?
Google is a great example of hard data driving people based decisions and initiatives. On the surface many of their decisions seem ‘wacky’ and hard to justify, but they are all based on detailed research and measurement. They offer free food (meals and snacks) to their employees, provide nap pods and allow them 20% of their time to focus on their own personal work projects. Can you imagine the SVP of People suggesting these to the CEO without the figures to back it up?
Making good evidence-based decisions requires the collection of good data. This doesn’t mean you need to tie yourself up in knots recording a vast sea of data you might never use, but it’s worthwhile giving serious consideration now to what information you may need in the future. By capturing data today you are preparing the evidence you will need to make good decisions and build winning strategies tomorrow.
Among the many potential HR metrics, Innecto recommends you consider:
Performance Do you evaluate your new hires by their first performance rating? Do you carry out exit interviews to analysis reasons for leaving?
Pay Do you have a historic snapshot of salaries in your business? Do you review employee pay for equity or discrepancies? Do you track performance in relation to salary progression?
Bonus/commission Do you track and review payments and how they compare to their targets? Do you track review the performance measures against targets?
Benefits Do you track the expenditure on individual benefit programmes? Do you consider the take-up of programmes and their cost-effectiveness?
By Adam Nuckley, Senior Reward Analyst
