Planning for the Future in HR

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The HR leaders from Sasken Communication Technologies, University of Miami Hospital, and EXL Service on:

Planning for the Future in HR: The Advantages of

Forward-Looking Metrics vs. Retrospective Data

Ramesh Soundararajan Vice President, Human Resources

Sasken Communication Technologies Limited

Errol Douglas Executive Director, Human Resources, University of Miami Hospital

Aabha Nanda Vice President, Human Resources, EXL Service

Sometimes you, as HR leader, may feel like you’re swimming in data. Headcount numbers, voluntary and involuntary attrition, compensation patterns, performance appraisal results: the list goes

on. However, which data is meaningful to your organization? That will depend on its business type and strategy. This ExecBlueprint discusses how HR can partner with leadership to produce metrics that not only report on historical progress, but can also accurately predict upcoming trends, such as the periods when employees are most likely to leave the company. While outcome and process measures will always form the basis for these analyses, HR should also not neglect the role that qualitative data (such as employee opinions) can play in developing lead indicators concerning skills/competencies that will be needed in the next year. Moreover, it’s also important to remember that, no matter how accurate your data, it will never be able to predict every individual outcome, such as how long a candidate may stay with the company. To learn that, you may just have to sit down with them and ask. n

Action Points

I. What Issues Can HR Metrics Help Identify?Because your data looks both across and within your entire company’s workforce, you can serve the organi-zation by spotting trends that could prove problematic if not addressed, such as new hires who are receiving higher pay than current staff (even top performers) with similar skills, and resignations afflicting a particu-lar job band or area.

II. The Bottom LineYour company’s workforce could be described by many metrics, but which will be most valuable to managers and leaders? While that answer will depend on your business strategy, you will probably want to collect outcome measures such as attrition, process measures such as talent acquisition efforts, and lead indicators such as attrition risk.

III. Must-Have Methods for Collecting Qualitative HR DataEmployee records may already provide a reliable source of quantifiable information about your workforce, but how will you learn what employees are thinking about the company, what skills they need, and whether they would recommend the company to people they know? You will need to ask them — in sur-veys, online, or as part of a forum.

IV. The Golden Rules for Improving Employee RetentionFor many companies, excessive turnover is costly — and avoidable. You can use your HR metrics to deter-mine whether your retention levels are appropriate, and how to increase them. Effective strategies include addressing employee feedback, rewarding top per-formers with top compensation, and providing career development opportunities.

V. Essential Take-AwaysEven though most data that HR collects is historical, it can provide a baseline for forecasting performance on certain measures when trends are located. For example, based on certain characteristics (such as how long they’ve worked on a particular project or in a particular role), you can predict an employee’s risk for leaving the company, at least on a general scale.

Contents

About the Authors . . . . . . . . . . . . . . . . . . . . . p.2

Ramesh Soundararajan . . . . . . . . . . . . . . . . p.3

Errol Douglas . . . . . . . . . . . . . . . . . . . . . . . . . p.8

Aabha Nanda . . . . . . . . . . . . . . . . . . . . . . . . . p.11

Ideas to Build Upon & Action Points . . . p.13

© Books24x7, 2013 About the Authors ExecBlueprints 2

About the Authors

Aabha NandaVice President, Human Resources, EXL Service

Aabha Nanda has 20-plus years of experience in HR. Previously, she worked with a prominent

Indian company that is known for its innovative HR practices for close to 10 years. She joined her current company, EXL, in 2001.

Ms. Nanda has managed a variety of roles in HR (from both the corpo-rate and business-partner perspectives), including serving as the HR lead for one of the largest clients for EXL,

designing and implementing strong HR systems and processes, as well as man-aging key strategic HR projects. In her current role, she has headed the trans-formation part of the business for EXL and led the HR function for the U.S. and U.K., which included managing HR for a global client services organization. She is currently transitioning back to India to head the company’s global compensation and benefits, HR policies, and HR activi-ties related to mergers and acquisitions.

EXL primarily serves the needs of Global 1000 companies from global delivery centers in the insurance and health care, utilities, banking and finan-cial services, transportation and logistics, and travel sectors.

Errol Douglas has 17 years experi-ence in human resources man-agement and is the author of

a chapter, “Evaluating Employees in the Health Care Realm,” in Inside the Minds: Capitalizing on HR Trends (2010 edition) published by Aspatore.

He has served in a variety of lead-ership roles in human resources with private and public sector organiza-tions, where he has provided generalist HR support, employee and labor rela-tions support, compensation, and workforce development expertise along with recruiting knowledge.

Mr. Douglas is currently the execu-tive director for human resources at the University of Miami Hospital, where he serves as the internal consultant to the medical school HR, hospital administrative team, supervisors, and employees on human resources and labor relations issues that affect performance and business relationships. He also cur-rently serves as the chair of the Work-force Shortage Committee (designated to address the workforce issues of the member organizations in the associa-tion), which is part of the South Florida Hospital and Healthcare Association. He

is best known for overseeing the first ever interest-based bargaining in the State of Florida with the SEIU 1199 union, where pay-for-performance metrics on length of stay was implemented as a part of the agreement versus a standard across-the-board increase.

Errol DouglasExecutive Director, Human Resources, University of Miami Hospital

Ramesh Soundararajan is an HR veteran with 21 years of experi-ence. He has worked primarily

in India’s outsourcing industry with companies such as Infosys Technologies, CA Technologies, and Sasken Commu-nications in a variety of roles. Over the past five years, he has headed the human resources function.

Mr. Soundararajan has gained exper-tise in the HR challenges faced by organizations as they go through the challenges of growth and maturity to effectively respond to rapid economic changes in an increasingly global envi-ronment. His expertise spans across HR models and management, change

and communications, organization effectiveness and talent branding.

Ramesh SoundararajanVice President, Human Resources, Sasken Communication Technologies Limited

☛ Read Aabha’s insights on Page 11

☛ Read Errol’s insights on Page 8

☛ Read Ramesh’s insights on Page 3

© Books24x7, 2013 Ramesh Soundararajan ExecBlueprints 3

Ramesh SoundararajanVice President, Human Resources, Sasken Communication Technologies Limited

Three Levels of HR Metrics: Outcome Measures, Process Measures, and Lead IndicatorsHR metrics are of three levels. In a services organization, where head-count must deliver most of the rev-enue, the headcount-related metrics are tracked as part of the business. These include headcount, head-count growth, utilization in billed positions, as well as voluntary attri-tion. These are outcome measures and are lagging in nature. These measures are also used to validate the effectiveness of talent manage-ment strategy; outcome measures are the acid test of that strategy.

However, strategy is also deliv-ered using process measures. The key processes in HR include tal-ent acquisition, compensation, performance management, HR operations, etc. For every out-come measure like number of new hires who have arrived through the talent acquisition process, we can track several process measures like number of candidates inter-viewed, selected, etc. These num-bers are reported as an absolute number as well as a percentage, and can be reported monthly, quar-terly, and annually. Assessments of operations steps can be fine-tuned

to count the tickets serviced every month, etc.

At the third level, we have lead indicators, including employee risk (of attrition) tracking, number of resignations, etc. These are a few lead indicators.

Best Practices for Choosing Appropriate MetricsThe first-level metrics choose them-selves and are also part of standard business reporting each quarter. There is also consistency across the industry in terms of measures used to track processes like perfor-mance management (adherence to

the normal distribution curve, per-centage of timely completion, etc.), talent acquisition, etc.

Second- and third-level mea-sures are chosen based on discus-sions between the function head and me. These are then reviewed for suitability for inclusion in the monthly management reviews. At that time, current specific strate-gies and outcomes need to align. For example, every company tracks turnover. While low turnover per se can represent overall success, the company may also be differenti-ating on pay and opportunities to motivate higher performers. In that situation, it becomes important to

also track the turnover of high per-formers, which should be even less than general company turnover.

These ongoing measures are supplemented by one-off inputs coming from organization-wide surveys. While this information is wholly qualitative, we can use it to create improvement plans through specific actions and dipsticks.

HR Leader’s Role in Developing MetricsMy role lies in establishing priorities for the dashboard. For example,

Ramesh SoundararajanVice President, Human Resources


“Developing meaningful metrics is an iterative process involving myself, the head of the function, as well as execu-tive leadership. Its ultimate goal is to track those outcomes that are aligned to strategy.”

• 21 years of HR experience

• Experienced in addressing workforce challenges associated with company growth in global environments

• Previously worked with Infosys Technologies and CA Technologies

Mr. Soundararajan can be e-mailed [email protected]

The challenge inherent in forward-looking metrics lies not in devising new measures, but rather in establishing correlations between metrics that can be tracked on a current basis and future trends.

Ramesh Soundararajan

Vice President, Human Resources



Ramesh SoundararajanVice President, Human Resources, Sasken Communication Technologies Limited (continued)

while the head of training can speak to training program effectiveness, he or she does not know how the pro-grams have impacted performance. Similarly, the talent acquisition per-son knows the number of ads we’ve placed, but would not be able to assess the quality of hires based on performance a year down the road.

Given my vantage point into dif-ferent processes, I also craft track-ing mechanisms and measures. They begin life as part of the HR underground before moving main-stream. We have had concerns at times about whether the people we are bringing in from the outside at higher salaries have the same skills as our current employees. We can, of course, create checkpoints to ensure that not too many people are hired at salaries in the upper quartiles. But, to ensure parity, we track the average company tenure of people in the fourth quartile for a given pay band. Ideally, it should align with the overall tenure distri-bution. However, when we are hir-ing for specific hot skills, we could end up with a skew toward new-comers. By looking at this num-ber, we have been able to address imbalances during salary reviews. This is a derived measure, but accu-rately captures the problem that we need to address. My role includes making such extrapolations so that we get a better sense of the actions we need to take.

Using Metrics to Measure Achievement Against GoalsIn general, success is measured on the basis of achieving outcomes, i.e., goals. Goals, then, are set on the basis of historical capacity and business expectations. All goal

achievement becomes “historic” in a sense, though that is an abuse of a fairly powerful word! Ninety percent of our measures are based on historic data, relating to last month, last quarter, last 12 months, or the year to date.

The specific metrics we consider include total headcount, headcount growth rate, average tenure with the company, average experience in years, gender diversity, headcount distribution across functions and locations, headcount profile, and average compensation per per-son. These are all measures that can be used to classify headcount size, maturity, diversity, and tenure.

Then we measure headcount turnover. This includes voluntary and involuntary attrition rates of each job band, function, location, technology, etc. We also track turn-over by last performance rating as well as compensation quartile. We track the reasons for exit, based on the exit feedback. Finally, we review the number of new hires, performance against goals, offer conversion rates (i.e., percentage of people who joined the company

against offers made), interview conversion rate, and percentage hired through employee referral programs.

We also review training person days spent in both behavioral and technical training as well as mea-sures from the HR service center.

Interpreting the DataAs I have said, most of our data is historical in nature. However, collected over years, historical information can be turned into a baseline that can be used to fore-cast performance on certain mea-sures. For example, by tracking turnover across different quarters over three years, we know for sure that turnover is likely to be higher in the second quarter. This insight is also supported by market infor-mation. During the period when companies go through performance normalization and salary increases, more people switch companies. On average, an employee may be get-ting an increase in the 10 to 12 percent range; someone who is not rated in the top 20 percent of

Expert Advice

Role of IT in Collecting and Analyzing Data We have implemented an enter-prise ERP across all HR processes. After automating the HR data, we expanded to include performance management and compensation. We have, in fact, built a custom application that aligns with the ERP. This has helped us do more reliable monthly reporting and handle on-demand data requests.

We are working toward creating an active dashboard that uses data from sys-tems to project trends relating to our executives. Business intelligence software will pick up both leading and lagging indicators and display at periodic intervals. It will also put power in the hands of managers to play around with the data and customize it to their needs.

Thanks to greater IT alignment, we have also been able to analyze data at the level where action can be taken. While we can look at the 1,000-employee view, the technology also enables us to zoom down to 10-member teams and create measures for them. Improvements can be more tangible when the measures to assess their impact are given to a much smaller group.



performers might get an increase of around 10 percent. At the same time, if the person were to change jobs, thanks to the premium com-manded for making a job change, they might end up with an increase of 20 to 25 percent. Hence, more people than average choose to play the resignation card around the time that performance reviews and salary raises are given. After this window has passed, the fig-ures resort back to the mean. With this insight, we can plan our whole headcount more appropriately, with spikes and troughs based on historical headcount measures.

Baselines of HR performance measures also aid in tracking pro-ductivity and informing our efforts to do more per resource year over year. In parallel, we can also work out the resourcing needs of the function itself. If we had averaged five joins per recruiter per month last year, and we need to hire 500 people all year, then even if we experienced a 20 percent increase in recruiter productivity, we would still need to have seven recruiters.

Using Metrics to Inform HR StrategyLet us take two well-worn expres-sions, “high-performance ethic” and “employee advocacy.” High performance does not end with rating people on a normal distri-bution. This normalization needs to be supplemented by differentia-tion. There is little business benefit to going through a normalization experience unless the people so chosen are given differential com-pensation. In the ideal world, there should be an overlap between peo-ple receiving the top quartile of pay and those delivering consistent

performance in the top 20 percent category of all employees. With that objective, one can then go about designing the salary reviews. Again, giving salary increases is not sufficient if enough people are not staying. So, in a high-performing company, the retention rates of top performers should be much more than that of average performers. And in a high-performing culture, performance reviews take place on time. So, even a mundane figure like appraisals completed in the first half of the cycle will accurately represent current progress.

The impact of employee advo-cacy is another area we measure. Surveys, which include questions on whether they would recom-mend the company to people they know, capture this information. Advocacy percentages are always higher than the actual percentage selected through employee refer-rals. So we also want to know not only the percentage of people who are actually joining through refer-rals, but also the percentage of employees who are actually refer-ring people. While more than 60 percent of people may be inter-ested in referring a friend for a job, only 25 percent may be actu-ally referring. Once this is clear, the whole employee referral program can work to identify which fac-tors prevent more employees from referring and then create opportu-nities for them to do it. Attendance in quarterly town hall events is another quick dipstick of employee morale and engagement.

Using Real-Time and Forward-Looking DataAbout 10 percent of our metric set is based on real-time information.

This includes the daily tracking of resignations, new joins, and rea-sons for resignations. Resignations typically are followed by a two-month “notice” period and so tracking resignations is an accurate way of forecasting attrition. Unlike in the U.S., the employment con-tract is not “at will.” The employer and employee are mutually bound to provide a notice of one to two months to facilitate a smoother transition. Also, it is important to note that any spikes in resignations can serve as an early warning that something is either going wrong with a team or that a competitor is engaged in large-scale hiring.

Over the past year, we have also pioneered a measure of “risk track-ing” of employees. This process starts off with historical data. Turn-over is higher in some job bands, as well as technologies. Typically, employees in the two- to seven-years experience category tend to move more. Reasons would include that they’re seeking higher pay or higher education, or relocating to another city for personal reasons such as marriage. While we know our average turnover rate, that number does not help address spe-cific problems. So, instead of man-aging the risk at an aggregated level, we take it down to the level of the individual employee. Any employee with certain characteris-tics (such as working on a project for more than two and a half years) is at a higher risk. About 30 per-cent of the people who leave us cite growth opportunities. For that rea-son, we need to manage job rota-tions proactively. So, on the basis of one-on-one discussions, each manager needs to develop a three-level risk profile for each employee on his/her team: high, medium, or



low. Then, based on the risk pro-file and importance of their func-tion, actions are taken around relocation, rotation, etc. This way, instead of endlessly analyzing the information of those who quit, we start working to retain the people who are with us.

In general, our consolidated attrition risk numbers are not very different from actual employee departures. Over time, managers are also improving the accuracy of their forecasts. While they are still a long way from 100 percent, even lower percentages can yield enough information to have a pos-itive impact on the business.

Upcoming Changes to the Ratio of Historic Versus Future-Oriented MetricsWe will keep working with our cur-rent ratio of historic versus future-oriented metrics. While we have conceptualized the risk tracking as future-oriented, it takes effort by all managers to capture and review these metrics. Only with practice do people get comfort-able making accurate assessments. And, to improve adoption, we also need to be taking actions on these measures. In order to motivate the managers to make this effort, they need to see some results.

Soon, we will be looking at average tenure more actively as another forward-looking measure.

In general, people spend three years in a job band. We need to look at the distribution of peo-ple across each year within the job band. If the average tenure indicates that more people have crossed two years in a band, then the expectations of a job change/ promotion are going to be higher and the company needs to gen-erate new positions to support those expectations by growing the business.

We are also planning to develop the capacity to predict attrition through events in addition to ten-ure. These include unbilled time, salary increases that are lower than market benchmarks, appraisal rat-ings trends, etc. Another mea-sure we plan to track proactively



is the manager’s span of control. While this is strictly neither his-toric nor future (but rather here and now), tracking this measure on a quarterly basis ensures that the manager-to-managed ratio does not go out of whack.

However, the challenge inher-ent in forward-looking metrics lies not in devising new measures, but rather in establishing correlations between metrics that can be tracked on a current basis and future trends. In my experience it is difficult to really establish reliable predictabil-ity using current indicators and future outcomes. I have come across several exercises wherein one tries to predict a performance level or tenure

rate based on data trends. There are organizations that look at a per-son’s average tenure track record and refuse to consider people who have jumped at an average of less than three years. However, when you interview that person, you real-ize that the case is not so clear-cut; the person does not start a new position with the idea that they’ll quit every second year without remorse!

Classic literature says that mea-surements should be a mix of lead measures on past performance and lag indicators of future potential. However, in practice, we rely more on baseline lag measures. Lead measures need a fresh approach to

create and manage. So, while they provide balance, they require effort to create and time to refine so that they are stable and reliable. Typ-ically, lead indicators work well when converting the macro envi-ronment in which the business operates. Assessing is more appro-priate if the number of jobs posted on job boards is down and con-sumer confidence is down, then it follows that we are most likely headed for a downturn and so need to be cautious about costs.

Accurately predicting human behavior remains a challenge. While it is not impossible, it can be very difficult to do reliably amid continuous change. n

© Books24x7, 2013 Errol Douglas ExecBlueprints 8

Errol DouglasExecutive Director, Human Resources, University of Miami Hospital

Roles and ResponsibilitiesI am the executive director of HR at the University of Miami Hospi-tal (UMH), so I serve on the senior leadership team and am responsi-ble for all people issues for the hos-pital. I also present to the board of governors of the hospital on a quarterly basis addressing issues pertaining to human resources. UMH is an acute care hospital and has 560 licensed beds with approx-imately 2,000 employees working at the facility.

Use of MetricsOur HR metrics measure a variety of different things, mainly through electronic media. Some are stan-dard measures, but we also do a great deal of ad-hoc reporting on the metrics, which varies. Our organization’s most important met-rics are around issues relating to patient care and retention of staff, though many of those fall outside the realm of HR.

We conduct exit interviews with our employees because even though we have already lost that per-son we can address the issues that led them to leave. Annual employee engagement surveys also allow us to see if we have lost the atten-tion of our staff so that we can quickly make the necessary adjust-ments. We also have what we call an “employee forum” that we hold quarterly. We use the information

gained from the forums to make required changes and then dis-cuss those recent changes at the subsequent forum. At the forums, the CEO of the hospital makes a 30-minute presentation to employ-ees. So, there could be 20 different sessions held over a period of two to three weeks at varying times to capture all the different schedules/shifts of employees, including weekends. Typical information that is shared includes financial news about the hospital (e.g., whether

or not we’re making budget), con-struction updates, feedback from the last forum, and other neces-sary hospital updates. Time is also allotted for feedback from the staff about the forums and for ideas to improve processes throughout the hospital.

I am intimately involved in the forum process because my depart-ment works closely with the CEO’s suite to schedule the different dates and times, and then we’re respon-sible for reminding the depart-ment heads to release the staff to attend the session. HR will also be responsible for collecting the data and extrapolating the information so that it can be relayed back to the staff at the next forum. I first present some of this information to the rest of the senior leadership team, department heads, and board of governors prior to sharing with the employee population.

Historical Versus Forward Looking MetricsI would say that about 85 percent of our metrics relate to histori-cal data. If you look at the differ-ent types of metrics that HR folks use, they are generally historic; however, there are some measures which focus on the here and now. We can present the staff with infor-mation about both the past and the present, and then ask them to give feedback on what changes they would like to see.

Errol DouglasExecutive Director, Human Resources

University of Miami Hospital

“Our goal is to make work a home away from home for our staff so that they feel compelled to remain for a lengthy period.”

• 17 years of HR management experience

• Chair, South Florida Hospital and Healthcare Association’s Workforce Shortage Committee

• Senior Professional in Human Resources certification

• B.S., HR Management; M.S., Busi-ness and Industrial Counseling, Wright State University

Mr. Douglas can be e-mailed [email protected]

One of the main workforce trends that we found is that if an employee remains for five years, we tend to keep them.

Errol Douglas

Executive Director, Human Resources

University of Miami Hospital


Errol DouglasExecutive Director, Human Resources, University of Miami Hospital (continued)

Our forward-looking metrics are mainly around education, which is not typically done from HR’s point of view, though we are still in the mode of changing certain procedures to make them more efficient. For instance, the educa-tion department conducts a needs assessment to determine necessary skills/ competencies that the staff believes are needed for the forth-coming year. They then begin to build a module (CBL based purely on the feedback. One example would be English as a second lan-guage. Our employee population has identified this need, as English competency is critical to provid-ing exceptional service to our cli-entele. Meanwhile, employees also need the confidence to interact with patients from all backgrounds. In order to develop other forward-thinking metrics, we will need to have some good research and plan-ning. I think we will be doing more of that in the next year.

Some of the here-and-now infor-mation that we have gathered from employees has been used to make changes. For example, because we learned that employees were look-ing for educational assistance, we basically used that in our collec-tive bargaining agreement to estab-lish tuition funding — a program that was developed on the basis of forward-looking data.

The Universality of HR MetricsOur metrics follow HR’s indus-try standards. We do breakdowns on race, sex, discipline, and turn-over rates on a continual basis. One of our main metrics is length of employment. However, you will find that HR principles remain the same across the board, regardless

Expert Advice

Future Plans In the future, we would like to engage in more robust and timely on-boarding processes to see if they have any effect on retaining staff. While our retention and turnover numbers are not bad, every person that we lose is still a financial hit. There has to be a best practice out there that we are not aware of or are not doing that would help us with on-boarding, such as practices that would not cost much but which would increase employee satisfaction.

For instance, one thought is to find a better way to introduce employees, particularly those in upper management, to the organization in a plain and simple way. My current organizational set-up is quite complex and may be overwhelming to some. So, simplifying the process could reduce employee stress, which will only benefit the organization in the long run. A well-reasoned on-boarding process may, in fact, actually end up reducing the length of time we have to spend on orientation and positively impact productivity.

What HR Data Does the University of Miami Hospital Collect?

Personnel records Workforce statistics,

including race, gender,

discipline, average tenure

with organization, turnover, costs

per hire

Exit interviews Issues that

caused them to leave

Annual employee engagement

surveysPrevailing

attitudes about organization

Employee forumsCurrent

employee issues that require

attention

Education assessments

Necessary staffcompetencies/

skills for the nextyear


Errol DouglasExecutive Director, Human Resources, University of Miami Hospital (continued)

of the industry you’re in. For example, companies in the truck-ing industry or corrections field also look at headcount and ways to improve efficiencies relative to those things. An early mentor of mine told me that, “HR is HR is HR.” The point is that, even though you may have to learn some industry-specific terminology, the needs of the function are the same wherever you go.

One of the main workforce trends that we found is that if an employee remains for five years, we tend to keep them. Current- ly we have 10-15 employees that have been with us for upwards of 40 years. When I first came here seven years ago, more than 60 per-cent of the employees had worked here for more than 10 years, which is amazing. I do not have current information on this, but our goal is to retain employees for at least three or four years, since once we reach that point the probability of retaining them increases with each year.

While employee retention is cru-cial, it can be a difficult task. Prior to hiring a new employee, we try to understand their goals to be sure they intend to make

a long-term commitment to the company. The cost of hiring a new employee is astounding, so you do not want to hire someone and then see them leave in one or two years. For example, we do a service agree-ment for individuals that we pay for. Their education and training, including required books, equip-ment, etc., is quite expensive. So, if those individuals leave at the expiration of the agreement, it is a financial loss for the organiza-tion. We also have a lengthy ori-entation process and have added what is called a preceptor, which is basically like a mentor for that individual for their first six weeks of employment. In the end, all of these considerable costs add up and it takes about two years to realize a profit on an employee.

Effectively Leveraging MetricsIt is difficult to effectively lever-age metrics within a large organi-zation, because you end up with a large amount of information that becomes difficult to decipher so that you can use it to inform a log-ical and sensible strategy. Another challenge is accessing the requisite

resources. IT has their own sense of priorities, which, at times, vary from the needs of HR. This creates challenges with leveraging certain specific metrics, such as quanti-fying true turnover costs per hire. Due to the requirements of the Affordable Care Act, we are put-ting core systems into place, which is a great thing for the hospitals, but they are requiring a great deal of IT bandwidth, and we still need to address their limited resources.

In itself, the data we collect is of absolutely no value to the orga-nization; we must share it with managers and the right people. For example, we share information about retention with union leader-ship because they may have more influence around whether a person stays or goes — depending on cer-tain factors, of course. This is espe-cially true in certain parts of the U.S. For instance, the unions can be quite influential in states such as those in the Northeast, Midwest, and West. Depending upon the relationship between management and the union, sharing information with the unions in those areas can possibly lead to a shared vision on which qualified and quality staff to retain. n

© Books24x7, 2013 Aabha Nanda ExecBlueprints 11

Aabha NandaVice President, Human Resources, EXL Service

A Comprehensive Approach to Measuring HRThere are many experts in this field who recommend measuring HR effectiveness on a variety of critical parameters. We all get lost between defining what our metrics are, determining how to measure them, and discerning how we know if introducing a particular met-ric will result in defining the suc-cess of the function. I believe that an important aspect of measur-ing the effectiveness of HR or any other function/organization often depends on the stage of evolution of that particular function.

Financial parameters are abso-lutely the biggest factor, and critical to any organization that wants to be scalable and profitable. Looking at G&A as a percentage of revenue is one metric most organizations would like to focus on. However, that alone is not sufficient. The key is in understanding what is critical for our business success now and going forward. Our HR metrics have to align with what the orga-nization’s strategy is, coupled with what the employee value proposi-tion is. If these are not aligned, the HR function will work in isolation, and wonder at the end why no one acknowledged their contributions. Unless someone is born wise, all of us learn this the hard way.

Essential HR Measures for Growing OrganizationsIf yours is a growing organiza-tion, creating a strong talent pool through talent acquisition, develop-ment, and retention is an absolute must. If the organization needs to be a certain size, say for the year 2015, HR metrics have to align. While the business as usual will continue, we know that the key metric for us is the creation of a leadership talent pool that will drive future growth and take on the challenges the company might face in the future as it grows. We know that if our talent pipeline is weak and unable to meet our future needs, and if we do not create and communicate a strong enough value proposition to attract and retain employees, then the func-tion will lag behind in fulfilling its responsibilities. Our talent man-agement metrics are equally well defined. Part of leadership’s goal needs to be to retain high-potential employees. Our bonus policy offers a long-term incentive for senior leadership that is tied to the over-all success of the company.

In performing its function as a growth engine for the company, the most critical HR metrics are: a) recruitment effectiveness and b) employee retention. If acquisitions are part of our growth strategy, we have to ensure that our HR pro-cesses, policies, and structure are nimble enough to integrate effec-tively without losing talent. For another part, the key is to support business profitability by helping reduce cost pressures.

Measurement MethodsOn a day-to-day basis, each sub function within HR has its own metrics. Recruitment effective-ness, employee retention, and the employee engagement index are

In the end, one mes-sage that I would like to convey is to never churn data for the sake of producing reports that may be full of numbers and impres-sive graphs but lack insight.

Aabha Nanda

Vice President, Human Resources

EXL Service

Expert Advice

Social media has seen unprec-edented growth and adoption in business in recent years. Different organizations have used it differently. What I find most fascinating about social media is the potential to use the data available to understand the feelings of employees in real time.

Aabha NandaVice President, Human Resources

EXL Service

“In my organization, we have tasted a fair amount of success in aligning our HR metrics with the future direction of the organization, and have developed a combination of long- and short-term metrics around the function and around the sub functions within the function.”

• With company since 2001

• 20-plus years of HR experience

• Has managed key strategic HR projects, including a global client services organization

Ms. Nanda can be e-mailed [email protected]

© Books24x7, 2013 Aabha Nanda ExecBlueprints 12

Aabha NandaVice President, Human Resources, EXL Service (continued)

all critical measures in our func-tional dashboard. Pre- and post-test scores that relate to the effective-ness of trainings are also measured to determine their business impact (i.e., the fourth level of Kirkpat-rick’s training evaluation model).

Recruitment effectiveness is also measured on a variety of ratios depending on the kind of hiring. If you are doing mass hiring for some basic processes, cost, turn-around time, hire-to-floor ratio, and quality of hires all will be key indicators. For niche hiring, the key factors will be finding the right talent at the right time as even a slight delay can result in losing bill-ing hours. Our bonus, as a function and as a member of the leadership team, will depend on how effec-tive we are in predicting and mea-suring the right metrics for driving the organization forward.

However, my personal belief is that while there is this huge drive to measure everything and assign a dollar value to the data, just pause

and think whether this is the right way to look at a function — HR — that has more intangibles attached to it than all others put together. In the quest for converting everything to a dollar value, are we letting go of the core? The combination of process and results has to be measured through the right met-rics. One cannot be at the cost of another. While this is a difficult bal-ance to find, it is achievable.

Use of Historical DataHistorical data is important to build the basis for actions today and plans for the future. It helps to create a baseline. But the actual power of historic data lies in how effectively we can use it. We use analytics to derive insights from historical data, and the analysis we decide to drive will depend on the questions we want to answer.

Employee performance data, if analyzed correctly, is a very pow-erful tool. It helps us to understand

trends in productivity, though we must then consider how to then put effective measures in place to ensure that we are ready to man-age those trends proactively. While we have used the data meaning-fully, I would not say that we have really tapped the full potential of analytics.

For us, being in a high-growth business, getting the right talent through the door is the number-one priority. We have used his-torical data to drive key strategic projects to reduce the cost of hir-ing, improve the quality of hires, and understand the impact of right-time hiring.

In the end, one message that I would like to convey is to never churn data for the sake of produc-ing reports that may be full of num-bers and impressive graphs but lack insight. I, too, have fallen prey to the lure of creating great-looking graphs that don’t say much. Don’t copy; create your own questions before you start seeking answers. n

If Your Organization Is Growing, What Are Essential HR Metrics?

Recruitment effectiveness • Mass hiring:

Cost, turn- around time, hire-to-floor ratio, and quality of hires

• Niche hiring: Right talent at the right time

Employee performance and

productivity

Knowledge acquisition following trainings

Employee engagement

Employee retention

© Books24x7, 2013 Ideas to Build Upon & Action Points ExecBlueprints 13

Ideas to Build Upon & Action Points I. What Issues Can HR Metrics Help Identify?The data you collect is only as valuable as the insights you can extract from it. That said, because HR is uniquely situated to access workforce-related information from across and within all of the other business units, your human-resource data can be particularly useful for locating potential problematic trends and concerns that leadership will need to address, such as:

• New hires who are consistently being started at higher salaries than current, comparably skilled staff in the same positions

• Top performers who are not receiving the top quartile of pay

• Employees who leave their positions within two years

• Spikes in resignations that can signal either problems with a team or large-scale hiring from a competitor

II. The Bottom LineIn order to maximally serve the organization, HR metrics need to align with the business strat-egy as well as the value that employees specifi-cally bring to your setting. (For example, in a service organization, employees deliver most of the revenue.) That’s why you, as the HR leader, must work closely with department heads to ensure that you are providing metrics that will enable them to accurately gauge the features and productivity of their workforce. In general, such metrics are on three levels: outcome mea-sures, process measures, and lead indicators. Examples are:

Outcome measures:

• Headcount, including demographic charac-teristics, and distribution of characteristics across functions and locations

• Headcount growth rate

• Average tenure with the company

• Average experience (in years)

• Average compensation per person

• Performance evaluations

• Performance records against goals

• Voluntary and involuntary attrition across each job band, function, location, etc. (including turnover of high performers), and reasons for exit

• Cost per hire

Process measures:

• Talent acquisition: candidates interviewed, selected, etc.

• Offer conversion rates (percentage of people who joined the company following the offer)

• Percentage of employees participating in candidate referral programs

• Percentage hired through employee referral programs

• Performance appraisals completed each quarter

Lead indicators:

• Employee engagement

• Attrition risks

• Knowledge/skills requirements

• Depth and breadth of potential leadership talent

III. Must-Have Methods for Collecting Qualitative HR DataTo efficiently store and analyze most of your quantifiable data that you collect as part of rou-tine HR operations, you will need to partner with IT. One author, for example, implemented an ERP system to automate their HR processes, including performance management and com-pensation. They then built an active dashboard that uses this data, along with business intelli-gence software, to generate reports on leading and lagging indicators for the company’s exec-utives. You will, however, need to employ other methods if you want to capture qualitative infor-mation that provides that valuable, individual-level perspective and knowledge. These include:

• Employee satisfaction/engagement surveys

• Feedback from employee forums

• Needs assessments for training/education

• Pre- and post-training evaluations

• Social media exchanges

• Exit interviews

IV. The Golden Rules for Improving Employee RetentionIt’s all in your data: Depending on your organiza-tion and the employee’s position, it can take years to recoup the investment you made in hiring and on-boarding. This is why retaining employees — especially your high-performing employees — is so critical. Using the data you collect from per-formance evaluations and employee satisfaction surveys, you can implement programs and poli-cies that will bolster morale and motivate your employees to remain with the company. They include:

• Enlisting mentors and ensuring that employees are duly introduced to their colleagues during on-boarding processes

• Hosting town hall events and employee forums to share company information and elicit feedback

• Conducting performance reviews in a timely manner

• Rewarding demonstrated top performers with top-quartile compensation

• Providing opportunities for career develop-ment through training/education and job rotation

• When applicable, involving union leader-ship in retention activities

• As much as possible, making work “a home away from home”

V. Essential Take-AwaysIt’s a fact: most (85–90 percent) data that HR collects is historical. So, the challenge inher-ent in using forward-looking metrics lies not only in devising the measures, but also in estab-lishing meaningful correlations between them and this historical data, correlations that enable HR to make reliable projections of future trends. While it will never be possible to predict every individual-level outcome (such as how long a given candidate will stay with the company), forward-looking metrics can be used to make the following useful predictions:

• Periods when turnover rates tend to be highest, e.g., after performance evaluations and raises have been given for the year

• Employees at highest risk for attrition, such as those who:

• Have been with the company under X number of years

• Have worked on the same project (or in the same job category) for X amount of time

• Are receiving lower compensation than market benchmarks

• Skills/core competency (including for leadership) requirements for the next year

• Headcount needs, based on productivity trends, business activity, and market indicators n

© Books24x7, 2013 Ideas to Build Upon & Action Points ExecBlueprints 14

Ideas to Build Upon & Action Points (continued)

ExecBlueprints is a subscription-based offering from Books24x7, a SkillSoft Company. For more information on subscribing, please visit www.books24x7.com.

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What are the top benefits of establishing future-oriented metrics? What advantages can you leverage from future-oriented data that you cannot gain from retrospective data?

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What trends have you been able to anticipate based on your data?

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Documents

Planning for the Future in HR