Vanity metrics are metrics that make you look good, but don’t help you understand your performance in a way that informs future strategies or decisions. Vanity metrics are exciting to point to if you want to appear to be improving. But, they often aren’t actionable and aren’t related to anything you can control or repeat in a meaningful way. They are, therefore, hollow metrics that look nice on the surface but hold little substance.
What are some of HR’s Vanity Metrics? Metrics that you may see in the financial reports, for instance:
- Revenue / FTE
- Profit / FTE
- Total Cost of Recruiting
- Training Days / FTE
- Staff Turnover Rate
- Total Compensation Cost
- Employee Satisfaction
- And other
From our “definition” above, how do any of these metrics, on their own, reliably inform decisions or future strategy. They don’t! They can’t!
Many KPIs fall into the Vanity Metric bracket. And, as we know, KPIs can be notoriously unreliable, especially when they are not well thought-out. Some examples I have come across include:
- Project Management Tool utilised for all projects – what “tool”, how well, what is the outcome?
- Comprehensive and effective business models – really? By whose definition? Who will judge?
- Produce month-end report – to what end? What information? Or is any old report OK?
Metrics that can be Actionable
Then there are HR metrics that, on their own are Vanity Metrics, but together with other information they become “actionable” metrics. Staff Turnover Rate is one of those. If we differentiate, then we can look at Staff Turnover Rate for Critical Roles, for instance, and compare that with Turnover Rate for Non-Critical Roles. If the former is higher – we have a problem! We can take some appropriate and relevant action. Can you see the difference?
Time to Fill Vacant Position is another such metric. On it’s own it’s is a Vanity Metric. However, if we again differentiate Time to Fill Vacant Scarce Skills Position vs Non-Scarce Skills. If the former is longer, we have a problem and can take appropriate action.
Actionable Metrics are metrics that tie specific and repeatable actions to observed results. So, for the Time to Fill example, once we realise that it takes much longer to fill a Scarce Skills position, we can experiment with different actions and measure the result. That would be the Agile way of addressing the problem.
Better HR Metrics
Other, more meaningful and actionable HR metrics are:
- Revenue / Total Cost of Workforce – sometimes we have fewer employees, but they cost more – something we need to know before a retrenchment process
- Total Cost of Workforce / Total Expenses – this concentrates our attention on the costs that need focussed management
- New Products and Services Revenue per FTE – are we directing attention to innovation and new product development?
- Internal vs External Hire Rate – is an indicator of internal mobility, but is also a predictive metric for reduced cost of hire
- New Hire Engagement Rate (preferably by manager) – tells us how well managers are onboarding new hires and is a predictor of possible early turnover.
- Cost of Staff Turnover (preferably by role criticality and/or scarcity) – tells us how much it will cost to replace an incumbent with the skills so that we can make a decision on how much to spend on engagement strategies.
There are many, many more such useful and Actionable HR Metrics. I would really like to see much more use of these in HR, and especially People Operations, organisations going forward.
Remember, the wrong metrics can lead to the wrong behaviour in your work force.
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