By Michelle Morra

No matter how great a “people person” you are as an HR professional, important company decisions cannot be based on what your “gut” says. Rather than be “almost sure” of doing the right thing you need to back it up with numbers.

This single message has resonated across the industry for years now: metrics give the high-level view and show whether you’re making a difference. Yet, when provincial HR associations set out to make that data available to their members, they found very little. The British Columbia Human Resources Management Association (BC HRMA) first saw a gap three years ago.

“We recognized that business intelligence in most functions of the organizations, such as computer systems or finance, had and used data to get budgets and resources, present to the executive and demonstrate their results. This was sorely lacking in the HR field,” says Ian Cook, director, HR Metrics Service.

There were expensive systems for large corporations, but none truly applicable to Canada and its many small- to medium-sized enterprises. At the other end of the spectrum were a variety of free HR metric websites, but the user had no way of knowing whether the information was audited or credible. Technology, too, was an issue. Until recently the data was rarely presented in a format useful to human resources.

HR metrics have always lacked consistency. It was hard to get any standard, common way to do comparative measures.

“In financial reporting, GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards) state categorically how certain numbers must be treated,” Cook says. “HR didn’t have the same kinds of standards. We had five ways of looking at turnover. Which was the right number?”

To address these issues, BC HRMA set out to build a quick, efficient, accurate and user-friendly metrics service for human resources. A collaborative venture by HRPA, BC HRMA, The Human Resources Management Association of Manitoba (HRMAM) and the Human Resources Institute of Alberta (HRIA), this all-Canadian metrics subscription service lets organizations benchmark their own HR stats against competitors and peers in their industry sector and geographic region. The not-for-profit, shared service also allows them to compare against best-in-class across all industry sectors for key measures.

How It Works
Organizations that subscribe to the service provide quarterly data on a minimum of 20 key HR statistics, via an easy-to-use online questionnaire. These include productivity, retention, workforce demographics, compensation, revenue per full-time equivalent (FTE), labour cost per FTE, vacancy rate, first-year turnover, diversity ratio and more. HR Metrics Service crunches the numbers, identifies flows and patterns, and generates customized metrics and benchmarking reports every quarter.

“What we’ve built is a set of standards that’s trackable and audited,” cook says. “You’ve got the whole backstory, so it’s hard for someone to say it’s wrong.”

He gives the example of a credit union in B.C. The company discovered through HR Metrics Service that after it invested in 18 months of complex training for new employees, many of those younger workers were leaving for higher paying jobs. Knowing that trend allowed HR to look at retention and ongoing incentives for that particular age group.

“It’s not a question of ‘We think these folks are leaving’,” he says. “It’s ‘Here’s what the data says: these folks are leaving.’ It’s black and white, no debate.”

Definitive answers are a welcome shift for HR, which has traditionally tried to make its business case with the much “softer” data that comes from intuition and anecdotes. At a time in HR history when every sector in braced for imminent, mass retirements in the baby boom population, having hard numbers makes difficult HR decisions easier.

Early Optimism
The strength of HR Metrics Service is its ability to benchmark against the results of companies with which you compete for talent. External comparisons provide a much broader understanding of what a metric means. If your average sick-leave hours equate to 10 days per year, per person, that’s fine if you compare one department to another. But is that a good or bad number in your industry? How do you know?

Moneris Solutions Corporation has long been tracking metrics internally, but HR Metrics Service is the first comprehensive source of external metrics they can track and use as a comparison for productivity measures and other lead indicators.

“Understanding how other organizations compare gives a sense of whether or not we have a serious issue. It gives just that much more information with which to make better decisions,” says Ken Jacobsen, the company’s senior manager, executive and company compensation.

A large North American payment processing company, Moeris is very interested in how its turnover and first-year resignation rates compare with other organizations, particularly in the mission-critical areas.

At this early stage of using the service—just two quarters in—HR is still in the process of determining at what level of detail the rate becomes relevant to benchmark externally. HR Metrics Service results will go to the broader executive team of Moneris once HR can report trends of its externally benchmarked metrics and have confidence in exactly what they’re reporting.

The City of Ottawa, which has long been using internal metrics such as employee health and wellness, is another subscriber to HR Metrics Service. It fills a statistical gap in a previously under-measured area for the city: talent management.

“We’ve been missing statistics on things like retention and turnover,” says Robert Vincent, Ottawa’s CGA program manager, HR system and reporting. “This particular survey seems to concentrate on these types of metrics. We’re very interested in participating with a group that will give us some feedback in terms of how we’re doing in those areas.”

While Vincent is hopeful that the service will provide more depth in terms of talent metrics than they currently get, he needs better comparators. It’s hard to compare HR in a municipality, where there might be up to 120 business lines and up to 14 bargaining units, to an institution or a private sector company that might have one or two business lines and bargaining units.

“In a city the size of Ottawa you’ve got a lot of people doing a lot of things for a lot of purposes,” Vincent says. “It creates a little bit of a discrepancy when you’re attempting to compare yourself, even to a private sector company of similar size. Are we really comparing apples to apples?”

He hopes HR Metrics Service will attract other participants from municipalities to allow for logical comparisons. Meanwhile, he is encouraged that the service has people looking at HR in new ways.

“At this point, the most important change that has come from the HR Metrics Service is that it has invited more in-depth conversations about the drivers of our business success, the value HR provides to the organization and how we can measure both in meaningful ways,” he says.

The More The Merrier (And Powerful)
Just as Vincent hopes to see other municipalities enter their data into HR Metrics Service, the more companies participate in the low-cost service, the more effective the data will be. At the time of writing, there were close to 80 organizations participating, including large companies such as Moneris, Grand & Toy and Cineplex, as well as SMEs I the publich and private sectors, hospitals, and more. Every quarter the service gains 10 to 15 new subscribers.

HR in Canada might finally have its standard terms and measures. Jacobsen likes the fact that the service comes from HR associations. “Because it’s these HR groups for the different provinces, who are basically the standard-bearers anyway—they set educational and other standards for the industry—having this service through them means we’re all talking the same language.”

The service also has his team thinking of new metrics they might like to implement in the future. For example, promoting from within is part of Moneris’ employee value proposition so it’s important for them to know their internal promotion rate; but promotion for its own sake may be a disservice to the company and the employee—which is why Jacobsen would like some sort of “readiness index” in the future. He would also like to benchmark, externally, voluntary turnover rates of employees with critical skills or within mission-critical areas. He might even suggest these metrics to the HR Metrics Service in future—the administrators are very open to input from subscribers.

Michelle Morra is a Toronto-based freelance writer.

Reprinted with permission from HR Professional Magazine.