Module 1 – Case
HR PERFORMANCE METRICS
Signature Assignment – Emphasized Level
HR Scorecard Example (https://www.cornerstoneondemand.com/recruiting/recruiting-analytics)
A search online for HR metrics will result in numerous lists all claiming to be the most useful HR metrics today, but there are some that are more useful than others. One of the top metrics used in HR is the Cost of HR per Employee. If you have an HR person or more than one person, this is how much you pay the HR team versus how many total employees you have. It helps you determine whether you need an employee dedicated to HR or multiple HR employees.
How You Calculate It: The total salary & benefits package of your HR team divided by the number of employees. This is an efficiency metric and your ratio will depend on your style of business. For example, if you have all salaried, full-time employees, you probably will need an HR person by the time you hit 30-50 people; if you have a restaurant with a lot of part-time hourly staff, you might not need an HR person until far more due to their part-time nature (i.e., no benefits).
Here are some other important metrics that you will find on an organization’s HR Scorecard. These HR metrics really home in on recruiting and performance.
Metric 1: Time to hire/average time to hire
What It Means: Recruiting processes can take far too long at some companies and it can mean that you lose talent. Having a recruitment process that is around 4-6 weeks to fill positions is desirable in order to save time and money. The time to hire is from when a candidate starts the interview process until they accept your offer.
How You Calculate It: Look up the number of days that each job you offered took to be filled from the time the candidate started interviewing, and then divide it by the number of jobs. For example, let us say that you posted four jobs throughout the last 90 days, and all four resulted in successful hires. The hiring process took anywhere between 5 and 9 weeks from start to finish, as seen below:
32 + 54 + 45 + 40 = 171 / 4 = 42.75 average time to hire for January 2019
Metric 2: Cost per hire/total hiring cost
What It Means: Similar to above, you should be also tracking what you are spending on recruiting, such as applicant tracking systems, recruitment software, or sponsoring job posts. You also should include the man hours it takes for recruiting (i.e., reviewing resumes, phone screens, and interviewing).
How You Calculate It: This may be more of an estimate or an average, especially if you include people’s salaried time on hiring. Do your best to add up all the time and expenses for recruiting in one year, and then divide that cost by the number of hires.
Metric 3: Offer acceptance ratio
What It Means: This is a simple metric of how many people accept the job versus how many decline the offer. This will tell you if your offerings are off (i.e., compensation is too low, no benefits, etc.).
How You Calculate It: Divide the number of offers accepted over the number of offers given.
In the January 2019 example under Metric #1, your offer acceptance ratio was 100%.
Metric 4: Above average performance management yield ratio
What It Means: This is a measure of how many people are performing at a high level per your performance review system.
How You Calculate It: Unless you have a performance management system in place with a quantified scoring system (i.e., points of 1-5 or 1-10), this one will be hard to calculate. If you have a points review system, you will want to figure out the cut off for an above average performer (i.e., 70 out of the 100 points), and then calculate how many employees meet that out of the total number of employees.
(Assume that the scores range between 1 and 5, with 5 being the best possible score.)
Metric 5: Employee referral program success
What It Means: If you have an employee referral program as one of your recruitment strategies, you’ll want to make sure it does what it’s supposed to do–create referred employees.
How You Calculate It: Calculate how many roles you’ve had open and the number of referrals you’ve interviewed (they don’t have to go all the way to offers, but they could–it depends on what you define as a successful referral). If you’ve had none, you might want to rethink your referral program entirely and ask your employees why!
Metric 6: Performance versus potential (9 box grid method)
What It Means: The 9-grid method compares performance versus potential of employees. One of the companies we look at in our performance management buyer’s guide, Cornerstone, uses this method for their performance review software.
How You Calculate It: You can take a look at Cornerstone’s performance software (https://www.cornerstoneondemand.com/recruiting/recruiting-analytics). We recommend using these examples because creating your own 9-grid system can be a bit complex; using an example might help you to then customize one for your company.
The 9-box grid is an individual assessment tool that evaluates an employee’s current and potential level of contribution to the organization. The vertical columns of the grid indicate growth potential, and the horizontal rows identify whether the employee is currently below, meeting, or exceeding performance expectations. The intersection of the two determines the employee’s current standing and where development may be needed.
The 9-box grid is most commonly used in succession planning as a method of evaluating an organization’s current talent and identifying potential leaders. When leadership performance and potential are assessed and plotted on the graph, individuals in the upper-right quadrant (Box 1) are identified as high-potential candidates for succession, while those in the lower-left quadrant (Box 9) may need to be reassigned or removed from the organization.
The boxes on the grid indicate where investment needs to be made to develop future leaders. Those people in box 1 should be ready for top leadership within 6 months to a year; those in boxes 2, 3, or 6 have a longer timeline but can be groomed for eventual movement to box 1.
A sample 9-box grid might look something like this:
The remaining boxes can be used to identify when coaching or a change in job or responsibilities may be needed. It may not be valuable to the organization to spend time and effort attempting to salvage an individual with low potential and poor performance; however, an individual with low potential but effective performance may need to be engaged or motivated in his or her current job.
When used correctly, the 9-box grid can be both a versatile and a valuable tool for an organization, but HR professionals are advised to become thoroughly familiar with it before attempting to use it. Like any tool, it can be damaging to the organization if used incorrectly.
Metric 7: Average time until promotion or pay raise
What It Means: This is how long it takes for an employee to be promoted for exceptional success. It sounds like an odd metric, until perhaps you think of how many people leave you around the 2- to 5-year mark after not getting a promotion.
How You Calculate It: Take your employee base and calculate how long it took for any of them to be promoted, if they have been. If you don’t do promotions, consider doing this calculation with pay raises instead. Then divide the amount of time by the number of employees that were promoted (or given a raise).
Use this spreadsheet to complete the Case 1 assignment as described below:
Case 1 Scorecard Data
From the spreadsheet provided, select 10 of the jobs filled in 2018 at Triox Corporation and complete metric calculations for Metrics 1, 3, 4, 5, and 7 based on the HR metric data provided. Once these five metrics are calculated, write a paragraph explaining what the calculations represent to the company then answer the following:
What is the benefit to an organization of using an HR scorecard? What is the benefit to the HRM department?
Signature Assignment Expectations—Emphasized Level
As you may recall, in HRM401 (Staffing Organization) quantitative reasoning was assessed at the “introduced” level, and later was assessed in HRM404 (HRM Information Systems) at the “reinforced” level. Now at this “emphasized” level, MGT491 Case 1 takes quantitative reasoning to computing various HR metrics and discussing what those metrics mean when on an HR Scorecard.
The skills needed in these three assignments build on each other and offer you the opportunity to enhance and practice your quantitative reasoning skills.
The grading rubric for quantitative reasoning at the undergraduate level has been developed to measure student success in meeting the MGT491 Case 1 expectations related to quantitative reasoning. Rubrics for the other two courses are included in their respective quantitative reasoning assignments.
Your paper will be evaluated using the Emphasized criteria as stated in the Quantitative Reasoning Case rubric. The following is a review of the rubric criteria:
- Critical Thinking: Expressing quantitative analysis of data (factual information) to support the discussion showing what evidence is used and how it is contextualized.
- Interpretation: Explaining information presented in mathematical terms (e.g., equations, graphs, diagrams, tables, words).
- Presentation: Ability to convert relevant information into various mathematical terms (e.g., equations, graphs, diagrams, tables, words).
- Conclusions: Drawing appropriate conclusions based on the analysis of factual information/data.
- Timeliness of Assignment: Was the assignment submitted on or before the due date?
Ingham, J. (2011, September 17). The HR Scorecard. LinkedIn Business. Retrieved from https://www.slideshare.net/joningham/the-hr-scorecard
Module 1 – CaseHR PERFORMANCE METRICSCase AssignmentSignature Assignment – Emphasized Level