This module considers HR metrics that can be used to further consider in a deeper manner information that can be used for better decision making in the learning and development space. In addition, further consideration will be given into what specific metrics can help organisations improve their identification and understanding of their needs and use this information to build initiatives around learning and development.
Much of this work continues the process of gap analysis, not forgetting to analyse why that gap exists in the first place. At times, this may not be readily visible.
Performance gaps can exist for many reasons and will vary between organisations. Reasons can include poor leadership, lack of strategic planning, lack of any training strategy, lack of skilled labour and unrealistic expectations of people (Taylor 2021). One example of this last item is the expectation in community organisations that there will be a member who has the skills, knowledge, training, and capacity to act as a bookkeeper and treasurer.
Establishing both the performance gap and the reasons for it require the collection of data and then the interpretation of the data with critical thinking and application of experience. Another factor to be taken into account is whether the performance gap is the result of a learning deficiency or an external issue. If the latter, then intervention may be required to provide personal support for the employee such as through the Employee Assistance Program (EAP), if one exists. This raises the point though about including such training as Mental Health First Aid programs in the workplace as a part of the Learning and Development planning to assist in averting such issues or at least identifying them and being proactive in terms of action.
Identification and Diagnosis with Common Data Sources
There are many sources of data that can be utilised to gain information for analysis. These sources can be used in a reactive and proactive manner to gain the evidence needed and are similar to methods used by researchers in the academic fields to support papers (Delahaye & Choy 2018).
Information gathered from many sources still requires professional expertise in assessing its value. For example, data gathered in a organisation wide survey on employee engagement may present one picture, but the data gathered through exit interviews may provide much deeper understanding of issues because of the timing and nature of the questions. Either way, the utilisation of various sources and methods will have the effect of increasing the overall quality of the data. This process of determining performance gaps is referred to as triangulation (Nightingale 2009).
Surveys and Questionnaires
Surveys can be an excellent way of collecting data because they are scaleable, can be produced in volume and the data collected can be quantified based on scaled answers. There are disadvantages however in that responses can depend on mood, interpretation of questions and if the data is attributed directly to the respondent, then answers may not be as honest as if the survey was blind. The timing of surveys can also reflect the quality of responses, particularly if there has been a change in the organisation.
Unlike surveys, interviews can provide much deeper data. For one, they are usually on a one to one basis where a conversation takes place and responses are not just yes or no. Secondly, follow up questions can be asked to obtain deeper insight into responses. A skilful interviewer will be able to gather considerable valuable information. Questions in interview situations can be both open where a person is given free rein to express their opinions, or closed questions which can require a definitive response. A skilled interviewer will have both excellent questioning and listening skills to maximise the value of the interview. If possible, recorded interviews can provide deeper insight because they can be transcribed and reviewed for accuracy which can assist in removing any bias or subjectivity on the part of the interviewer.
Observation can provide both first hand and anecdotal evidence of performance gaps and identify where learning and development is required. This is information that cannot necessarily be deduced from surveys or interviews. Areas of performance gaps where observation is valuable are skills where the person may not even know they have deficiencies. They may even believe they are doing something the right way. Observation can also be useful in identifying bottlenecks and limitations in process flow. Once identified, these observations should be triangulated by collecting additional data about the issues from other sources for confirmation.
Similar to the interview except these are normally a formal process that may even require the filling out of a form. The information gleaned will only be as good as the interviewer and the composition of the questions. These appraisals should include feedback and planning for the future both on aspirations for the individual and on what learning and development may be required.
One of the most simple components for a role is the position description which would include details of the skills and competencies required to perform the role to a satisfactory level. Analysis of the job description and comparison to the person performing the role can be of great assistance in identifying performance gaps where learning and development is needed.
Industry standards and benchmarks together with any regulatory requirements can also provide useful data on performance levels. People within an organisation can be compared to these standards to identify performance gaps. They can also provide information on the adoption of new standards that an organisation may need to consider both on a local or international basis.
Organisational records can provide a valuable source of information for performance gaps and learning and development. For example, is the Customer Relationship Management (CRM) system being used and up to date? What information can be gleaned from the Incident Register? What customer complaints are being lodged and how are they being dealt with by staff? Again, this data needs to be triangulated with other sources, but the level of information is only limited by accessibility and imagination for improving learning and development and identifying performance gaps.
What Are HR Metrics
The need for triangulation of data has already been discussed which demonstrates the range of data that can be available for approaching learning and development in organisations. This information is then used to determine an organisations strategic goals and align them is learning and development requirements (AIHR 2021). The collected data gathered is known as HR metrics.
Table 1: Proposed ANSI guidelines on reporting on human capital
HR metrics, like any metrics, form a valuable component for organisations providing them with the ability to measure programs and outcomes. At the same time, they can also provide action to be taken and data on efficiency (Schwartz et al. 2017).
HR metrics should focus on the overall strategic objectives of the business. They are at their best when they can:
- provide detail about what is happening in an organisation and why it is happening
- create a relationship between people and the organisation from a business performance perspective
- assist management in identifying issues and delivering on continuous improvement.
Organisations should also be conscious of selecting the right HR metrics that are in accordance with their goals and strategies. This can be achieved by the adoption of the CARE model created by Levenson (2015 cited in Feffer 2017):
- Consistent – The data underlying the metric must be measured steadily over time
- Accurate – Information should be precise, with few to no errors in recording it
- Reliable – Your metrics must be a dependable proxy of what you’re ultimately trying to assess
- Efficient – The cost of collecting the data must be minimal.
There are several examples of where HR metrics have been used to great effect within organisations. Atlassian is one example, (Petrone 2015) and Nielsen is another documented case (Steiner 2017).
HR Metrics Examples
The examples of HR metrics below show a wide range that could be considered to generate the triangular factor in considering learning and development opportunities in organisations.
As I consider these from a community organisation standpoint, I can see the following as useful tools as HR metrics:
- Turnover – how long are members staying with the organisation
- Engagement – attendance at meetings, working bees and other activities
- Absenteeism – also relates to meeting attendance and engagement
- Time since last promotion – but instead, service on committee and abilities to serve
- Performance and potential – does the organisation have a skills audit and what training exists for committee positions and beyond?
14 HR Metrics
Return on Investment is another metric that can be applied and utilised. It is effectively the value that is returned from an investment and in this case, an investment in learning and development. Kaminski and Lopes (2009) provide a number of reasons for calculating ROI which include:
- justifying the program’s budget
- providing evidence to management and key stakeholders
- building trust and respect for HR and gaining credibility with executives.
- To determine the effectiveness of training.
- To evaluate the training method used and the use of time for trainer and employee.
- To determine if there was a change in time, cost, or behavior.
- To identify areas for improvement.
Return on Investment can be defined as the return in percentage terms on the costs incurred in an investment. Because this is a standard form of business measurement, it is common language and of interest to management and executives (Kaminski & Lopes 2009). The formula for calculation is as follows:
ROI can be a useful indicator when speaking with people who measure returns purely on a financial basis, but investment in people is not always just about money. How do you measure personal growth? It can also be difficult to collect such information and the returns may not be evident immediately, but accrue over time. Matters such as customer satisfaction, quality control, sales increases are all relative metrics that can be best described as moving targets. In reality, it can take quite some time for hard evidence of returns on learning and development to be seen and even then they can be difficult to measure.
If access is available to LinkedIn Learning, there is an excellent video there about Return on Investment. The ROI of talent development – Organizational Learning and Development Video Tutorial | LinkedIn Learning, formerly Lynda.com
Attrition and Engagement Estimates
Published figures exist for the calculation of the costs around attrition and engagement of personnel. Whilst the figures are in dollar terms for industry, they would also apply in the community sector if you attributed a dollar rate to time and sourcing of volunteers.
When it comes to attrition costs for an organisation, these have been estimated to be between one third to double an employee’s salary depending on their level of seniority in the organisation (Heinz 2022; Andre 2022). Another figure comes from the Society for Human Resource Management (cited in Andreatta 2019) who estimate the cost of employee replacement at between 50% to 250% of annual salaries depending on skill levels.
A further important metric that can often go unnoticed is the level of disengagement in an organisation. It may go somewhat unnoticed because nobody has left and things become the norm. However, on deeper analysis on engagement based on surveys, Gallup (cited in Andreatta 2019) estimates that a disengaged employee can cost an organisation $3,400 for every $10,000 in salary. Gallup’s figures are based on 17% of workers being disengaged, 32% engaged and the other 51% are moderately disengaged. It appears though that the $3,400 is the cost for disengaged employees and no amount could be found for partially disengaged employees. No doubt the figure will vary by the degree of disengagement.
Levels of Need and Impact
The development of the HRDNI forms the basis for developing learning initiatives. This can be at any level of the organisation from individual, to teams and groups or even around tasks. It could also apply to generic needs based training such as safety or cultuaral awareness or programs around mental health. The diagnostic around these needs can not only justify the needs, but also demonstrate the ROI and other impacts the learning and development can have on the organisation. This is all done as an objective in addressing the learning gaps in an organisation. Part of any diagnostic report should also include the costs of not addressing the gap. In turn, this strengthens the business case around the implementation of the program.
HRDNI Next Steps
Step 2 – Identify the Learning Need
Step 2 of the model for the HRDNI is to Identify the Learning and Development Need. This process is essentially all about gap analysis and involves:
- determining the existing level of skills
- determining the benchmark level of skills required
- identifying the gap between the two
It will be important when undertaking this work to find evidence to support the claims made in the HRDNI so that the performance gap is clearly evidenced through support from the existing situation and required situation. There may well be anecdotal knowledge around this performance gap so evidence will often need to rely on comparisons between existing skills and required skills.
Step 3 – Diagnose Why the Need Exists
Step 3 requires further analysis of the gap to establish why it exists. Why has this situation arisen? What are the reasons behind its existence. What factors have come into play in contributing to this gap? It is also important at this stage to identify if the gap is a learnable need or a non-learnable need. Consider aspects such as engagement levels for example. It may not be a knowledge problem, it may be a caring problem.
This module has looked more in depth at the two steps of identifying gaps in learning and development and also establishing why they exist. There has also been valid discussion around the importance of considering whether the gap can be solved through learnable skills or if it results from non-learnable skills in origin.
The module has also emphasised the importance of triangulation of metrics to support evidence of gap analysis and the use of Return on Investment (ROI) where possible due to it being a common language model at executive level. This all provides the ability to “sell” the learning and development needs to senior management for authorisation of the expenditure.References
- Taylor, TC 2021, ‘How to Close a Performance Gap in Your Team’, AIHR, 17 November, viewed 16 March 2023, <https://www.aihr.com/blog/performance-gap/>.
- Delahaye, B & Choy, S 2018, Human resource development: Learning for innovation and productivity, 5th edn, Mirabel Publishing, ., Prahran.
- Nightingale, A 2009, ‘Triangulation’, in R Kitchin & N Thrift (eds), International encyclopedia of human geography, Elsevier, Oxford.
- Source: Bassi et al (2015, p75) cited in CIPD (2017)
- Feffer, M 2017, 9 Tips for Using HR Metrics Strategically, SHRM, viewed 14 March 2023, <https://www.shrm.org/hr-today/news/hr-magazine/1017/pages/9-tips-for-using-hr-metrics-strategically.aspx>.
- Petrone, P 2015, Atlassian’s 5-Step Strategy for Recruiting European Tech Talent to Australia, viewed 14 March 2023, <https://www.linkedin.com/business/talent/blog/talent-strategy/atlassians-strategy-for-recruiting-european-tech-workers-to-australia>.
- Steiner, K 2017, How Nielsen Used People Analytics to Increase Retention (and Saved Millions), viewed 14 March 2023, <https://www.linkedin.com/business/talent/blog/talent-engagement/how-nielsen-used-people-analytics-to-increase-retention>.
- Kaminski, K & Lopes, T 2009, Return on Investment: Training and Development.
- Heinz, K 2022, The True Costs of Employee Turnover, viewed 15 March 2023, <https://builtin.com/recruiting/cost-of-turnover>.
- Andre, L 2023, 112 Employee Turnover Statistics: 2023 Causes, Cost & Prevention Data, Financesonline.com, viewed 15 March 2023, <https://financesonline.com/employee-turnover-statistics/>.
- Andreatta, B (dir.) 2019, The ROI of talent development, 14 August, viewed 15 March 2023, <https://www.linkedin.com/learning/organizational-learning-and-development/being-a-strategic-partner-to-the-business-3>.