Metrics for Organizational Life · 2018. 4. 1. · 16 Classifications: The 4 Types of Metrics...

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Decision making processes for choosing the right metrics

Metrics for Organizational Life

For…

Session ObjectiveTo provide the fundamental decision-making process for using, developing, and managing

metrics

for HR professionals

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Agenda

Case & ExercisesLet’s start with a little thinking

exercise, and a friendly competition

IntroductionWe’ll introduce the different classifications of metrics.

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Static MetricsExamples of static metrics, their uses.

Process MetricsExamples of process metrics, their uses.

Network

MetricsExamples of network metrics, their uses

Data MetricsExamples of data metrics, their uses.

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Tying it all togetherThrough examples, analysis and some

critical thinking

DACEMI ModelA model built on Six Sigma that helps to facilitate metric design and measurement

Real Case ExamplesWe’ll discuss specific examples where

the processes and methods listed were used

Advice & To dosWe’ll conclude with some advice and some things you can do for your company

Case & Exercise

Health Service ProviderNew Leadership

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New Leadership at an HSOYou are the head of HR for a global health services organization.

Your new CEO asks for a meeting where she requests you brief her

on the state of the organization from the HR perspective. In that

meeting she mentions that she would like to tie the performance

of employees to KPIs, and to the HR function. From the way she

talks about her strategic plan, you can guess that she is a fan of

concrete evidence, preferably in the form of measured trends, and

data-based insights.

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-Dona Doni-

Chief Executive Officer

First question is: What does the organization currently measure?

Second question is: What should we be measuring that we’re not?

Rapport!

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HR is behind…

The State of Metrics

2

Surveys

1200+

Responded

31%

Do not use

Metrics

12%

Use Predictive

Analytics

Based on two surveys conducted by IPMA HR (2010), and a join survey by Mercer and World at Work (2012)

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Does HR possess internal capabilities?


68% 51% N < 15 14%

HRIS HRIS Export? # of Metrics CPH

Suitable for all categories business and personal presentation,eaque ipsa quae ab illo inventore veritatis et quasi architecto beatae eaque ipsa quae ab illo inventore

Capabilities

HR professionals sometimes do not even possess the capabilitiesfor measuring the most basic business-critical metrics. When theydo, they are restricted by outdated technology, or lack ofcustomization options.

Most Popular Metric—Headcount 68% of respondents said they use headcount to make decisions, butonly 60% of them said that their HRIS allows them to measure it.

Company Measures Headcount

HRIS Measures Headcount

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Centralized Analysis

There is a central owner usually in a center

of expertise.

Don’t Know

Wow!

Currently Decentralized

Decentralized but have plans to create

a COE within 12 months

Decentralized Analysis

There is no central owner of

metrics and analysis.


47% 5%

9%

39%

HR organizations do not possess focus and do not

apply the necessary resources to use

measurement and metrics to their fullest

potential, but is it because they don’t want to or

because they’re not given the resources?

Dedicated Resources

of respondents have only 1-2

FTE equivalent dedicated to

analysis and metrics.

47%

Not enough focus. Not enough resources.

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Source: Metrics that Matter to HR. Sourced from https://www.shrm.org/multimedia/webcasts/Documents/11eidson.pdf


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ClassificationThe way we classify something changes our view and usage of it..

Defining by the how instead of the what…

Electronics (How): They use electricity. Transportation (How): They transport objects and people.

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Metrics represent measures of specific

conditions in the organization

Just like the Human Body…

Process Metrics

Nervous System

Adaptability

Responsiveness

Mobility

Behavior

Transactions

Data Metrics

Activity

Static Metrics

Contrast

Events/Occurences

Body Temperature

Volume

Organ Health

Value Creation

Power

Culture

Network Metrics

Heart Beat/ EKG

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Classifications: The 4 Types of Metrics

Static MetricsThis classification provides a snapshot of the overall health, and available quantity of value to the organization.

Network MetricsNetwork metrics provide in-depth knowledge of the hidden, internal workings of the organization, as well as focus on identifying specific sections of the organization

Hybrid Metrics

Hybrids combine metrics with a pure classification to measure specific capability-related value. Most common metrics tend to be either static or hybrid.

Process MetricsProcess metrics provide details relating to internal mobility and responsiveness of the organization, as well as external versatility and adaptability.

Data MetricsData metrics relate closely to the concepts of big data, business intelligence, ERP, and predictive analytics. It is usually measured instantaneously, and provides insight into day-to-day operations.

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Metric Sub-structureEach classification can be further broken down into a sub-structure,

allowing us to understand their usage better than before…

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Components: Breaking the classes down…

QuantityTotals, counts

The quantity component is designed for understanding

aggregates.

TimeTime period

The time component measures relationships occurring on time

intervals.

FlowFlux, change

The flow component is a measure of changing dynamics.

Geography (Location)Position, location

The geography component is concerned with position and

location of events (not necessarily physical geography.)

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Static Metrics

When to use

Use static metrics when thevolume or overall quantity of anobject is necessary to measure.Statics have a large quantitycomponent that can be used toyour advantage when you seeka snapshot.

Quantity

Time

Flow

Geography

Component structure… How we break them down

Static metrics provide a quantitativesnapshot of some object, and thatsnapshot can be in time or an overallmeasurement.

The key to understanding static metric is tolook at the units of measurement of themetric. If they quantify an entity, then theyare static, even if they a little of the othercomponents.

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Process Metrics

When to use

Use process metrics when you’dlike to understand the flow ofan important object from onepart of the value supply chain toanother. Process metrics canalso be used to any quantitywhere time-value of money isparamount.

Quantity

Time

Flow

Geography


Process metrics focus on measuring flowand time. And although by definition theyprovide insight to a particular process inthe organization (geography), and themeasure of the quantity that ‘flows’, theyare flow and time-value biased.

The key to understanding and identifyingprocess metrics is to ask the question,does this metric help me understand theflow relationship relative to some fixedpoint in my process.

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Network Metrics

When to use

Use network metrics when youwant to either understand theorganizational structure of theorganization, or when you’d likefocus in on a particularmember/employee in theorganization. Network metricare similar in nature to the ideaof a 360. The concept ofunderstanding the structure ofan entity through itsconnections.

Quantity

Time

Flow

Geography


Network metrics are the least used form ofmetric today, mainly because datacollection and analysis can becumbersome, and strong knowledge ofnetwork theory is a fundamentalrequirement behind their usage.

The key to identifying and understandingnetwork metrics is to consider thequestion, how does the organization as awhole behave, and how are individualmembers behaving relative to othermembers they work/connect with.

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Data Metrics

When to use

Use data metrics when youneed to get a sense of the day-to-day operational activities ofthe organization. Because datametrics are based on existingelectronic data in theorganization and their ability toprovide instantaneous resultsand conclusions, they can beused readily for a wide array ofapplications.

Quantity

Time

Flow

Geography


Data metrics capture the essence of all theclassification components depending onwhich metric is used at any given time. Butbecause they provide data-based analysisthrough automated and electronicmeasurements, they can provideconclusions that are prone to errorbecause of incorrect interpretation byhumans.

The key to understanding and identifyingdata metrics is in their instantaneousmeasurement nature and the high-techmethods of measurement they employ.

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Each classification has its strengths and weaknesses

Comparison: Classes & Components

While each metric category does possess components of every kind, some metric groups excel at

measuring specific phenomenon, while others are able to provide some general insights.

Static Metrics

Process Metrics

Network Metrics

Data Metrics

Quantity Time Flow Geography

Activity (2-3 minutes)Classify/Categorize these commonly used metrics:

Headcount, CPH, TTF, Employee Engagement (assume accuracy), Login Time

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Component Classification (Exercise)

QuantityMetric Time Flow Geography

Headcount

Cost Per Hire (CPH)

Time to Fill (TTF)

Engagement (assume accuracy)

Login Time

Most metrics used today tend to be a hybrid of a combination of metric components. We can simplify our classification process, by

always making some judgment on which one is the dominating component.

½

½

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Final Answer…

Head Count Cost Per Hire Time to Fill Engagement Login Time

This is purely a count

metric, so we can classify

it as a static metric

CPH is a quantity metric

that takes into

consideration time-value

of money.

TTF is a purely time

metric that describes the

efficiency of an internal

process.

Engagement is a product

metric of a process component

(productivity), and a quantity

metric (Satisfaction)

Login time does not

measure time from and to a

section of a process, but it is

an instantaneous metric.

Static Metric

Static Metric

Process Metric

Static Metric

Data Metric

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Metrics & PerspectiveExamples of metrics, and the way we currently view, use, and

understand them.

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Useful Static Metrics

Cost/Hire (CPH)

Diversity Group %

Interview Hire Ratio

Comp./Revenue

Referrals/Emplo

yee

Merit Increase/

Total Comp%

OA Ratio

Overtime/Standard Comp.

Candidate

Quality

Health Cost/Emp

loyee

Average Salary

Worker’s Comp.

Severity

Retention

Cost/Employee

Absent Days/Employee

Vacancy Cost

Average Employe

e Age

Headcount

Separation Rate

Resignation/

Headcount %

Management

Span of Control

Union Employee

s%

Churn over %

Career Path Ratio.

Training CPH

Training ROI

Bench Strength

Revenue/FTE

ROIProfit/FT

E

Income Factor

Cost of Labor

Static metrics are the most commonly known, used,

and adopted type of metrics by the corporate world.

This is because they are easy to understand, explain,

and usually give a snapshot view of a particular trend.

Almost every metric the majority of HR professionals

have ever used has been a static metric.

To identify a static simply intuit whether that metric is

concerned mainly with the quantity of a thing.

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Useful Process MetricsOutput Rate

Capacity Cushion

Input Rate

Capacity Cushion

Activity Slack

Process Efficiency

Normal Time

Aggregate Job

InventoryValue

Crash Time

Jon Inventory turnover

Cost to Crash

Processing Time

Employee

Productivity

Capacity Utilization

Time to Hire

Waiting Time

Time to Intervie

w

# of Waiting Entrants

Variable Cost of Process

Cycle Time

Process Efficienc

yIdle Time

Process Quality

Operating Expenses

Defect Rate %

TAKT Time

WIP Level %

Cost of Payroll/Revenue Multiple

Rework Rate

Process Capability

Internal Cost of Failure

Utilization

Process metrics borrow much from operations and

process engineering, including models such as

TQM, Six Sigma, and LEAN.

Most process metrics will be measured in time or

flow (for example efficiency is a metric driven by

flow).

If a metric has a heavy focus on measuring

movement, time, or cost of movement or time, then

it is likely a process metric.

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Useful Network Metrics

OutdegreeCentrality

IndegreeCentrality

Eigenvector Centrality

Inbetweenness Centrality

HomophilyEccentricity

Strength PageRank

DensityModularity

ClusteringK-Kore

Modularity

ErdosEmbeddedness

Path Length

Clustering Coefficient

Network metrics are the rarest to find in the HR

Dashboard, which contrasts their relevancy and

powerful impact on top and bottom line growth.

Network metrics can be used to identify a range of

challenges and their solutions, including measuring

inclusion, collaboration, change failure or success,

productivity, engagement, efficiency, communication,

and informal information networks.

Network metrics are concerned with the “where”.

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Useful Data Metrics

Email Distribut

ion

Login Time

Usage of

Software%

Sentiment

Message

Impressions

Social Shares

Geolocation

Activity Time

Benefit Utilizatio

n

Meeting Density

Purchase

Categories

Frequency

Flag Rate

Variability

Absent Days/Employee

Vacancy Cost

Data metrics are the most recent, exciting development in

data science and application. Data metrics utilize high

frequency calculations to identify trends which humans

may not have the capacity to identify through normal

business processes.

Data metrics focus on identifying a trend in a specific

moment in time, and in making fast predictions about

ongoing trends as they occur. They are frequently

concerned with challenges that have some information

technology component and that describe behavior.

Data metrics are about the here and now.

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Traditional linear view…

Recruiting Supply Chain

Sourcing Screening Interviewing Selection Finalization

D: # clicks to application

Ads Reach

Time to Screen

Average Response Rate

Applicant/Impression

# Qualified Applicants

% Qualified

Time to Intervie

w

Interview Quality

Hire Potential

Stage Flow Rate

Time to Selection

Stage Flow Rate

Primacy/Recency

Demographic Selection

Selection Rate

SI Success

TTF/TTH

Stage Flow Rate

QOH

Cost/Hire

OA%

Referral Location

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Where the data is… core capabilities

Organizational Life

Hiring Managing/Developing Collaborating Creating Value Delivering Service

Diversity

Process Cost

Value Networks

Homophily

Success Rate

Logon/Activity

Turnover

Time to Intervie

w

Engagement

% Network Brokers

Email Density

Succession

# Redundant Transactions

Reviews

Alignment

EmployeeResponsiveness

Employee Sales

Income Factor

ROI

Cost/Hire

Employee Profit

Hiring Speed

The Metrics Decision-making Process

Begin with a high level (strategic) view, focus on tactical level

analysis, and finalize with transactional metric design/adoption.

DACEMI

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Implement & Improve

Implement your metrics,

processes, designs, and

improve them.

Strategic View

Identify your goals,

relevant KPIs, and core

strengthsTactical Assessment

How will you implement

change, what will be our

focus for improvement,

model analysisMetrics Design

Use the DACEMI model

to design your metrics.

Without the model, this is the

best way to begin the

process.

Aggregate Process

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Strategic View: Effective Metric

Effective MetricsMetrics that help to improve the

state of the objective, while maximizing value to performance

indicators, utilizing core capabilities.

KPI(s)What are the indicators for successful company

performance..

Core CapabilitiesWhat is the organization

good at..

Objective(s)What specifically needs

improvement…

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What are our objectives?

What are the relevant key performance indicators?

What are we good at as company?

What will we do with the metrics?

How will we maintain our commitment to measuring?

How will we use the data to improve?

Do we have a plan to drive the change?

Do we know what success or failure looks like?

Strategic Level Questions

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Required Tools

Tactical Assessment

01 02 03 04

05 06 07 08

What? When? Where? How?

Change Plan ExecutionFocus of Improvement

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What will we do once these metrics are in place?

Who will be affected? (where)

How will we implement changes, if any?

What will need to be done (in much more detail)?

How will we model behavior, systems, changes?

Tactical Level Questions

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DACEMI

Borrowing from Six Sigma and LEAN Concepts

DACEMI

The DACEMI model was developed based on the DMAIC six sigma model of

improvement that is specifically targeted towards better decision making in

metrics usage and design. Borrowing from six Sigma and LEAN, it integrates proven

steps into a new model.

Define Analyze Categorize Experiment Measure Improve

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DACEMI

• Define your objectives, the challenges that need to be resolved, the tools/tech. that you have available, and the questions that must be answered as you begin to take on the challenge of measuring performance, and organizational life.

Define

• Analyze the factors and components that will affect metric design and that will tie in to the end measurement, based on business needs and requirements.Analyze

• Categorize those elements into metric categories in order to guide your metric choices, and development.Categorize

• Experiment with different metrics, measurements by developing custom measures or off the shelf metrics.Experiment

• Measure the intended values and track over a preliminary period to assess their performance.Measure

• Implement full metric adoption, and improve metrics utilization and development over time. Improve

Case Studies1- Recruiting & 2- Restructuring

Seeing the model, metric design process, and operational methods

in action

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Washington Metro: Recognizing Simple Metrics

• Turnover challenges

• Reporting structure challenges

• Tech. support challenges

• Administrative support challenges

• Fundamental challenges on how the business works

• No measurement or metrics beyond the basics

• No standard process

• No overarching coordination between stakeholders

• Lack of process ownership

• High-level involvement of non-relevant parties

• Process was stagnant

• Process was unfair

• HR support not interested in solving problems

• HR support not capable of solving problems

• HR support did what “we” told them to

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4.8%

7.1%

9.5%

9.5% 17.9%

21.4%

32.1%

71.4%

Job Segments

Project Manager Construction Inspection Facilitator Assistant PM

Office Engineer Construction Engineer Specialty

Construction Inspector

%𝐽𝑜𝑏𝑠

𝑆𝑒𝑔𝑚𝑒𝑛𝑡

Noticed through

exploratory analysis that so

many of the jobs open and

unfilled belonged to a few

“positions”.


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0%

2%

4%

6%

8%

10%

12%

14%

Positions Per Manager

%𝐽𝑜𝑏𝑠

𝑀𝑎𝑛𝑎𝑔𝑒𝑟

Found that there were 3

distinct groups of manager-

position hire groups, which

foretold of bottlenecks

occurring because of

manager-specific reasons


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0%

5%

10%

15%

20%

25%

30%

35%

[Position/Manager x HM Days Delay]

𝑀𝑎𝑛𝑎𝑔𝑒𝑟 𝐷𝑒𝑙𝑎𝑦 𝐹𝑎𝑐𝑡𝑜𝑟 =# 𝑜𝑓 𝑃𝑜𝑠𝑖𝑡𝑖𝑜𝑛𝑠

𝑀𝑎𝑛𝑎𝑔𝑒𝑟× 𝐻𝑀 𝐷𝑒𝑙𝑎𝑦 %

max# 𝑃𝑜𝑠𝑖𝑡𝑖𝑜𝑛𝑠≠0

(𝐷𝑒𝑙𝑎𝑦 𝐹𝑎𝑐𝑡𝑜𝑟) =

𝑇 # 𝑜𝑓 𝑃𝑜𝑠𝑖𝑡𝑖𝑜𝑛𝑠𝑇 # 𝑀𝑎𝑛𝑎𝑔𝑒𝑟

× 𝑇 𝐻𝑀 𝐷𝑒𝑙𝑎𝑦

𝑇𝑜𝑡𝑎𝑙 # 𝑜𝑓 𝑃𝑜𝑠𝑖𝑡𝑖𝑜𝑛𝑠


Delay Factor=2.18Delay Factor (top 5)=3.16

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Government & Defense Contractor: Restructuring

Sequestration cause many issues in the government services sector. In addition to the cancellation of critical government contracts, many were delayed, and the general outlook on growth in the sector was estimated to be much lower than what it once was. This, like in any other industry means restructuring, layoffs, and workforce reductions.

• Excellent process, metrics, staff, and strategy

• Little use of advanced metrics or measurements but solid use of standard metrics

• Business model restrictions.

• Planned to use standard restructuring methods

• Gained risk of restructuring and destroying collaborative behavior, and/or cutting crucial employees, and/or releasing employees unnecessarily.

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𝐸𝑟𝑑𝑜𝑠 = 𝐷(𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒(𝑛 → 𝑁) ← 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒(𝑛 − 1 → 𝑁))

To understand where duplication of effort and resources exist, the

geography of the organization is important to understand. Erdosdescribes distance from a given employee of the company: for

example, the CEO

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𝐼𝐵𝑇 =

𝑠≠𝑣≠𝑡

𝜎(𝑣)𝑠𝑡𝜎𝑠𝑡

In workforce reduction and streamlining efforts often times,

some subjective assessment is made on employee retention efforts based

on some arbitrary guideline. Network metrics like IBT allow you identify and

secure key leaders who may not be visible through the aforementioned.

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𝑀𝑎𝑛𝑎𝑔𝑒𝑚𝑒𝑛𝑡 𝑅𝑎𝑡𝑖𝑜 =# 𝑜𝑓 𝑀𝑎𝑛𝑎𝑔𝑒𝑟𝑠

# 𝑜𝑓 𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠

Management ratio is a simple static metric that allowed us to understand the level of hierarchy and hiring trends in the organization. As it turns out this metric

was key to understanding what was happening and how to solve it.

0

2

4

6

8

10

12

14

16

0 2 4 6 8 10 12

MA

NA

GER

PER

EM

PLO

YEE

(S)

MANAGEMENT LEVEL (TOP=0; BOTTOM=10)

Management Ratio

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Manager Hierarchy = 𝐸𝑟𝑑𝑜𝑠 ×𝑀𝑅

Creating a traceable hybrid metric that measures and explains each manager’s

hierarchy in the organization and includes his/her own level of internal hierarchical

buildup.

ActivityCase Study (5-10 minutes)

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-Dona Doni-

Chief Executive Officer

your new CEO enjoyed your conversation last time, but she wants more. After carefully looking at company financials and

speaking with other departments, Jane feels like we will not be prepared, from a leadership standpoint, to meet the

demands of a new expansion. She asks you to confirm or deny, to develop a system for measuring our leadership state, and

from that a plan to improve our leadership state.

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3 years?Missing bachelor’s?

Ready?

VP Sr. VP CHRO

Director Sr. Director VP Managing Director

Case Activity: Explaining Succession

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Improve

• Implement fullmetric adoption,and improvemetrics utilizationand developmentover time.

Measu

re

•Measure theintended valuesand track over apreliminary periodto assess theirperformance.

Experim

ent

•Experiment withdifferent metrics,measurements bydeveloping custommeasures or off theshelf metrics.

Categor

ize

•Categorize thoseelements intometric categories inorder to guide yourmetric choices, anddevelopment.

Analyze

•Analyze the factorsand componentsthat will affectmetric design andthat will tie in to theend measurement,based on businessneeds andrequirements.

Define

•Define yourobjectives, thechallenges thatneed to beresolved, thetools/tech. that youhave available, andthe questions thatmust be answeredas you begin totake on thechallenge ofmeasuringperformance, andorganizational life.

Case Activity: Use the Model

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[email protected]

Phone: +1 571-312-4420

4th Floor East2200 Pennsylvania Ave. NWWashington, DC 20037

Facebook.com/humanallianceco

Twitter.com/humanallianceco

Contact me: ONTHEWEB

www.humanalliance.com

www.josephshaheen.com

www.humantalentnetwork.com

Twitter.com/josephshaheen

Metrics for Organizational Life · 2018. 4. 1. · 16 Classifications: The 4 Types of Metrics...

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