What Makes a Good People Analytics Metric?
A simple rule of thumb
You don’t have to spend much time in the people analytics space before you hear some debate over metrics to use. “We’ve got to make sure our metrics link to our strategy” or “How do we know that we are using the right metrics?” The debate can seem never-ending at times. While some may argue the choice of metrics depends on preferences and business objectives, there is one objective criterion for what makes a good metric.
This is a rough rule of thumb I use to decide. I ask myself,
Can I make a line chart of the metric?
In other words, is this something that I can track and trend over time? This isn’t an all-inclusive rule but it can give you a way to weed out metrics that don’t provide much value.
Why does that matter?
Let’s take a step back and think about the purpose of a metric. Generally, metrics are meant to track progress toward goals or business objectives. They are not the goal or business objective itself. Goals are important but having them does not mean that you have good metrics. Metrics should tell you if you are improving, getting worse, or staying the same.
For example, if the goal is to increase revenue, related metrics would be those that measure progress toward that goal, such as the increased output per worker in a manufacturing environment (thus having more stuff to sell) or increased sales per sales rep (thus having more effective sales methods).
For a people analytics example, let’s assume your objective is to increase employee engagement. Just because you can measure that in an annual employee engagement survey, does not mean your survey results are a good metric.
Using the rule of thumb, can you make a line chart of your annual result data? It may be possible if you combine the data across multiple years. However, annual survey results are often presented as a table or a single value, which means they are not a good metric. A better metric would be pulse survey results collected more frequently throughout the year.
Here are a variety of examples of metrics for different areas in HR.
The items on the left aren’t necessarily bad. With some tweaking, they can be good metrics. Their traditional calculation as a one-time or annual number makes them less valuable as a metric. In contrast, can you picture a line chart for the metrics in the right column showing a trend?
Various organizations provide examples of HR or people analytics metrics, such as Gartner, SHRM, McLean, and others. There’s plenty to choose from but it can be hard to find some that are not behind some paywall or that require registration to access. Here are three accessible lists of HR metrics, among many others.
19 HR Metrics Examples: Making Data-Driven Decisions in 2024 - AIHR
The 29 Most Important HR Metrics You Need to Track
As you review lists such as these, use the rule of thumb. Can I make a line chart of this metric that shows a potential trend? If not, consider how you can make it a better metric. Let’s just say that in these lists, there are a few metrics that don’t meet this rule of thumb.
Given that good metrics are values that you want to track over time, it is imperative to have better data governance and systems. It takes more discipline to track data over time and keep some historical record of what is happening and how things are changing. You may need snapshots of data over time to calculate these metrics.
For example, if I’m trying to track the metric of the percentage of remote workers, I need to track their current work status and the work status they may have had last month, last year, and each month going back to some past point. Data governance and records retention guidelines will help ensure you have the historical data needed. You may also need some data engineering to be able to convert that historical transactional data into a form that you can use for metrics.
So there you have it, a simple way to help you select better metrics. With better metrics in hand, you’ll be in a better position to build better dashboards with metrics that truly measure progress toward your goals.
As a side note, you can’t get into a discussion about metrics without some mention of KPIs. A traditional definition is that KPIs are a subset of the most important metrics. I don’t disagree with the sentiment of establishing some metrics that are more important than others. In theory, a good metric that is critical to business success is a KPI. However, I think “KPI” has become a trite buzzword that gets thrown around haphazardly by executives as a signal that “we are serious about our metrics”. In reality, some of the talk of KPIs is just lip service. I’ve seen “KPIs” that barely qualify as a metric, let alone a good one. The rule of thumb for a good metric can help you identify good KPIs.
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Great post - let’s take it to the next level and introduce HR to Control Charts so we don’t just spend our days chasing random noise :)