As HR is increasing its presence as a strategic part of the business, key performance indicators, or KPIs, are becoming a key part of the language for discussing how it is actually performing. Recruiting, in some ways, is actually easier to measure because it is very similar to sales: you either have results or you don’t. Today I want to talk about first year retention, a measure that I believe is going to continue to grow as a recruiting metric, even though many companies wouldn’t consider it even remotely linked to recruiting as of today.

recruiting kpiWhen I realized the link from retention to recruiting

Several years ago I ran into the wall. Figuratively, that is. I was spending about 50% of my time processing termination paperwork and 49% processing new hires. The other 1% was spent wondering just how we were going to sustain this churn. We were turning over about 50% of employees in positions that made up 90% of our workforce. In a company with more than 600 employees, you start to get the picture for just how bad things were. Like I said, my entire job was dedicated to moving the people into and out of the organization.

So I decided to try something. I gathered information. I pulled five years of archived files and noted termination reasons along with tenure and manager information. I looked into our Stone Age HRIS and pulled the same items for more recent terms. Once I had amassed the data, I started analyzing. I quickly identified a few key trends and highlighted them in the report I developed.

A few days later I presented my findings to the VP of HR, demonstrating through the data that approximately half of those terms not only happened within the first year, but within the first 90 days on the job. We were spending hours recruiting, training (each employee received over a dozen hours of training before starting work), and coaching these people, only to have all of that effort wasted. The data showed that if an employee made it past the 90-day mark, they were significantly likely to stay for a year or longer.

This is when I realized that recruiting has a very strong link to retention, especially first year retention.

[Check out: What it’s like to be a recruiter]

First year retention, examined

When we think about retaining employees, a more senior staff member might come to mind. We automatically assume that if someone took the job just a few weeks ago that they are going to be excited and engaged for months to come (hint: the honeymoon period). Well, that depends on several things, including the recruiting process. Here are the ways the two are linked:

  • Realistic job preview-during the recruiting process, an accurate picture of the job must be depicted at every stage (job ad, phone screen, interview, etc.) If not, the candidate might get a more rosy picture of the position than is actually accurate, which leads to frustrations on day one. People are quick to skim over areas that might be bothersome for them in the leap to a new company–it’s critical to show the good, the bad, AND the ugly to provide a full understanding of the job and what it entails.
  • Manager engagement in the hiring process-having managers who not only join in the selection process, but actually lead it, is key. Managers who develop questions to probe candidate abilities and fit ultimately pick better people than those who use a stock list of “what is your greatest strength” type questions.
  • Team engagement in the hiring process-a great way to help people feel like they have friends on day one? Let their team interview them. When I have done this I request that they ask some technical questions, but that they also focus heavily on fit: does the candidate gel with the existing workers? Are they similar in terms of values and passion? How have they felt about coworkers in the past? If a person feels like they have friends at work, they’re more engaged and less likely to bolt a few weeks later.

[Check out: How one of the best managers I’ve ever seen engages new hires from day one]

The future of recruiting metrics

In the past and still today, recruiting has been focused on some very surface level items: mainly time to fill and quality of hire. If we’re solely looking at those numbers, I could have phenomenal time to fill and quality numbers, only to have them dropping out of the workforce a few weeks or months later. Using a metric like first year retention as a recruiting metric provides a more well-rounded picture of just how well it is actually being performed. And it also brings a long-term, holistic view to recruiting.

What recruiting KPI’s does your company use? Are they working? What do you think of first year retention as a metric?

Analytics in the business world serve many purposes, and a survey by the American Management Association uncovered the top five reasons business leaders say analytical skills are necessary today.

Which of the following create the greatest need for analytical skills in your organization?

  1. Accountability for results 67.0%
  2. Competitive environment 61.6%
  3. Complexity of business environment 52.6%
  4. Increase in customer data 51.3%
  5. Risk management 50.7%

business analytical skillsI found the results intriguing, because while we say we need accountability first and foremost within our organizations, many leaders often do a poor job of actually communicating that need. Oh, they’ll tell people they need to be accountable, but when it comes down to time to measure performance, they’ll think about things that don’t really tie into accountability for results. Having analytics to drive those sorts of decisions will be a positive overall; however, it will also mean that leaders and managers can no longer rely on other unimportant “measures” of performance.

  • Bob has been in the office for fifty or sixty hours a week for the past few months. He must be doing a good job. [Is it possible that he’s just horrible at managing his time/workload?]
  • I know she doesn’t write well, but Mary responds to emails 24 hours a day, 7 days a week. She’s really dedicated. [If she’s not sending out the right message, maybe “number of emails sent” isn’t a good measure of her performance?]

In some positions, it’s relatively easy to measure outcomes (sales, for example); however, in others it’s more difficult. For instance, how do you tell your administrative assistant to be “nicer?” Can you quantify that? How do you get an engineer to work “harder?” Those subjective measures are a pain for managers to enforce and a pain for employees to have to ascertain. You need to give them some actual targets to strive for that they understand.

ROWE me, baby

I had a discussion recently with some friends about the ROWE (results only work environment) movement, and it was quite an interesting conversation. A ROWE is a workplace where you work when, where, and how you want, as long as you meet your business objectives/goals. It sounds nice, and I love the idea, but it’s not necessarily easy. The key to making this work is holding each person accountable not for how many hours they log in the office, how long their butt is in the chair, or how long they are logged into their work computer; it’s about the results they accomplish. Again, it sounds like an excellent idea, but managers quickly become anxious at the thought of removing some of the traditional barriers and measurements for employees, even though in the long run the focus is to get employees to focus on the one thing that actually matters: results! This conversation keeps leading me back to accountability, and I’d like to share a few resources with you on that front in case you, like those who answered this survey, are interested in moving toward a culture of accountability.

4 accountability examples, ideas, and suggestions

  1. How many times have you heard a leader in real life or fiction demand: “I don’t care how you do it. Just get it done!” Many times, organization charts and job descriptions push people to perform a set of tasks. This mindset leads people to believe that if they perform their functions they’ve done what they’re supposed to do, whether or not the result was achieved. Effective leaders operate on the premise that their people must focus on achieving results. They lead and inspire them to pursue results by creating an environment that motivates them to ask, “What else can I do?” over and over until the results are achieved. They manage their people so that their “job” is to achieve results. Each person’s daily activities must be in alignment with the targeted results.
  2. In the book Turn the Ship Around, we learn about David Marquet and his attempt to remove the leader/follower model from the operation of the submarine he commanded. When he first took command of the ship, nobody was held accountable for anything, which correlated with the ship’s poor performance record. He began taking steps to give people accountability and oversight of their own areas, freeing him up to be a commanding officer instead of a 24/7 manager of minute details. It’s a great book if you are interested in seeing how other leadership/management approaches work.
  3. Several years ago I wrote about asking better questions to get better results. It’s still one of the most popular pieces, and for good reason. People are hungry for ways to help drive accountability within their organizations, and simply asking different questions is an easy way to start moving into that sort of mindset. More here: Asking Questions at Work.
  4. Adrian Gostick and Chester Elton often talk about the data that drives great companies and great teams. After researching extensively, they developed a model that described how the best managers led their teams. The key elements? Goal setting, trust, communication, recognition, and accountability. So not only is it something that helps on a personal level, it also helps managers to get the most out of their teams! More of this found in The Orange Revolution.

 Wrapping up

Back to the study, I would be interested to hear your feedback on some of these items. Do you see any of these five areas playing a part in a need for analytical skills within your organization? Why or why not? What drives accountability in your organization? Is that driver toward an accountable workforce actually getting results?

Last week a friend called me for some help. He’s working on some 401k reporting requirements, and the data the provider needs from him is fairly detailed. In prior years, we could have pulled some quick reports from the accounting system and gotten everything plugged in after some love sessions with a keyboard. However, the newly implemented accounting/recordkeeping system seems to think that actually running reports and gathering data insights is a “nice to have” versus a “must have.”

This got me thinking pretty hard about the importance of test driving new solutions before settling on a provider. If the selection team had been aware of the flaws in the system, including glaring ones where people can’t get data reporting that they really need, then they might have chosen another tool entirely.

As it turns out, there is limited reporting functionality, but it’s so incredibly complex that only one person is able to accomplish the task, and that’s only after an hour or more of trial and error. Yeah, not very efficient.

The economist says

If you’ve been around here for a while, you probably know that I like the Freakonomics podcast. I’m an economics nut, and I always thought if/when I got my master’s degree that I might like to teach economics as an adjunct professor. Yeah, livin’ the dream! :-)

Anyway, in a recent show, the two economists were talking about making business better, big data, etc. One of them, Steve Levitt, consults with different organizations to solve business problems. He mentioned that until he actually got into the businesses, he never realized that the problem of big data, analytics, and actually getting actionable information out of existing data would be driven (or limited by) the IT infrastructure.

That comment, combined with the experiences above, are probably a reality for many of you out there. Thinking back, I used Excel as my HRIS for some organizations, because we were too small to need anything else. That didn’t really allow for analysis or anything fancy–it was just a recordkeeping system.

MINOLTA DIGITAL CAMERAPayroll runs the show

Now there are providers out there that offer services to small companies to help them transition away from spreadsheets to a cloud-based system for HR needs, but many companies, especially smaller ones, wouldn’t want to have an HR system and a payroll system. That decision is usually driven by payroll, since that’s a critical business task. For many smaller organizations, keeping the HR records straight isn’t considered that critical. There are a few reasons for that:

  • HR is usually carried out by a non-HR person in really small organizations
  • Even when the company has an HR person as they grow, the compliance requirements still aren’t too difficult
  • Payroll is more important than virtually every other internal business activity (don’t believe it? Try not doing it once and see what happens…)

Big data, little data

A few years ago I worked for a company with about 600 employees, all located within 100 miles of the corporate headquarters. The company had a problem with turnover. Majorly. We weren’t food service or anything like that, and yet we had approximately 50% turnover year after year for as far back as I could find records. So I decided to try to get some insights into what was going on. I snagged the data from the past five years, dumped it into a spreadsheet, and started manipulating the information.

Within a few hours I had some great insights that pointed toward the problems, and I crafted a few potential solutions to help ease or even solve the problems we were facing.

When I presented my findings, I was told, “You didn’t have time to worry about things like that. Go process your 25 terminations and 15 new hires and leave this alone.”

In my example, we had the data and the potential solutions, but we lacked the one thing needed for action: leadership support.

Closing thoughts

I don’ t know that we broke any new ground here today, but I’ll leave you with a few takeaways from my perspective:

  1. If you’re looking at a system any time soon, run it through the paces that you’ll have to in your daily work. It’s important to know now the limits before you’re in the thick of things and trying to do something the system simply can’t.
  2. If you’re watching all this “big data” talk and thinking that it’s for larger organizations, it can certainly be implemented, even if on a smaller scale, at organizations with fewer people.
  3. Get the support of your leaders early. I think one of my mistakes was presenting the data without creating a need for solution first.

It’s day two of the 2014 SHRM Talent Management conference, and I attended a great session on Quality of Attrition: Management’s Favorite Human Capital Metric. The bottom line is that we know that every person that leaves the business is not the same. Why they left, how valuable they were, and what the organization could have done to change the results are all elements of attrition quality that can (and should, arguably) be measured.

So who’s doing it?

According to data from i4cp, high-performing companies are more likely than low-performing companies to measure various factors relating to employee attrition. In fact, 85% of high performing companies measure factors such as voluntary/involuntary attrition, whereas low performers only measure that data approximately 70% of the time. Continue reading

When we talk about metrics, analytics, and business intelligence, we forget that measuring human resources isn’t the goal.

It’s an objective. Yes, we need to do it, but it isn’t the end of the process. At the end, after we’ve spent all the time and effort measuring human resources as best we can, all we have is data.

And it’s what you do with that data that matters.

Measuring human resources with lean analytics

This is a massive post on analytics. Not specifically written for HR, but wildly valuable. Here’s a snippet to get you started:

This should not be news to you. To win in business you need to follow this process: Metrics > Hypothesis > Experiment > Act. Online, offline or nonline.

Yet this structure rarely exists in companies.

We are far too enamored with data collection and reporting the standard metrics we love because others love them because someone else said they were nice so many years ago.

And so starts a long, detailed journey into using analytics for business.

For the visual learners

measuring human resources

This handy dandy chart is there for those of us who learn by seeing. It’s a great representation of the flow for actually using metrics versus simply collecting them. If you want to simplify that further and look at four key steps in the process, here they are:

  1. Figure out what to improve (What’s the problem?)
  2. Form a hypothesis (I think xyz will solve the problem.)
  3. Create an experiment (Let’s test xyz.)
  4. Measure and decide what to do

Each of those steps is important, but the one I see most often lacking is number 4. In the big scheme of things it’s relatively easy to guess a problem (#1), guess a solution (#2) and test out an idea on a pilot group of employees/managers (#3). It’s the moment when you are actually measuring human resources and making decisions based on those measurements that I see the problems come in. People lose focus. They don’t know what to do. They might not really want to know the answer to the problem at hand.

It could be a dozen different things, but I would encourage you that step 4 is where you see the best HR pros stand out. They are the ones that embody the true purpose of human resources.

For those measuring human resources

As I read through the amazing article I linked above, I kept wondering about HR topics, and I realized I already have a go-to resource for those questions.

If you are looking for ideas of what to measure, how to use it, etc. in an HR context, please check out everything that Cathy Missildine-Martin has ever written. She does great work and is highly competent in this area.

Realistic job previews aren’t new or groundbreaking. (But people still don’t do them.)

Why?

Honestly, I don’t know.

Here’s a little snippet from a recent SHRM article.

“One way to avoid quick quits is to be real in describing what it will be like on days 5, 50 and 150 for that candidate during the interviewing process,” Erker said. “Painting a rosy picture or pulling a bait-and-switch once they’re on the job will just mean you’ll fill that position again in six to 12 months.”

Realistic job previews in a nutshell

Tell the candidates what the job will be like. In real terms. Every aspect of it that you can quantify.

  • customers
  • teammates
  • managers
  • senior leaders
  • daily tasks
  • big projects
  • and whatever else you can think of

Sugarcoating or hiding any negative aspects of the job is the best way to ensure that the new employee doesn’t stick around for long. Why? Because you’ve lied to them. Yep.

Remember that it is not enough to abstain from lying by word of mouth; for the worst lies are often conveyed by a false look, smile, or act. Abraham Cahan

When you try to avoid telling someone the whole story just because you want to get them started in the job, that’s about as short-sighted as you can possibly be.

Measuring your success with realistic job previews

One of the recruiting metrics that I put a lot of stock in is first year turnover. Some measure of turnover is healthy in an organization over the long haul, but turnover within the first year is a negative thing.

I think there’s a high correlation in first year turnover and a solid realistic job preview during the interview process. Offering full insight into the job with time for both pros and cons lets the person make an informed decision about whether the job and company are truly a fit for them.

Omitting the negative aspects from the interview might get the person to accept a job offer, but you can bet that they won’t be sticking around a year later.

Take the time to give your candidates realistic job previews and you’ll have better hires.

Or you can lie. Fake it. I’m sure that will work out fine, too. </sarcasm font>

You hate him, don’t you. That guy from marketing (or accounting, finance, etc.) always has to show off with his slick charts and pretty presentations. I mean, what are we going to do? We’re in HR, darn it. We can’t be that snazzy, can we?

The first time I shared some HR department metrics with our leadership team, I wasn’t sure what format they needed to be in. I pretty much dropped in the basic numbers and presented them as-is. However, I’ve since learned more about how our leadership team likes to review information, and I am working to get the data into a format that they understand and expect.

What I learned

The big key for us is fairly simple. Continue reading