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Metrics for Dummies
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Much has been written about metrics of late, and I fully agree that this subject is long overdue. Recruiting is probably the last business operation within the organization to treat itself and run itself like… well, like a business! But I think that with all the hype surrounding recruitment metrics, many folks are starting to lose sight of why they want to track them in the first place. I also happen to think many are making the business of “managing by metrics” more complex than it needs to be. Why Do We Need Metrics? A well-defined suite of performance metrics should help you accomplish the following:
For the past 10 years, I’ve been helping recruiting organizations develop performance metrics to manage their business operations. Through trial and error, I have found some powerful rules that all organization should consider ó both to successfully implement metrics and to develop a performance-based management culture within your recruitment operation. This article contains some of the golden rules I’ve found to be true for all metrics initiatives. None of this is that difficult, which is why I also call these rules “Metrics for Dummies.” 1. Keep it simple. A big problem I have with the business metrics many companies have established (or some of the new theories on metrics in the industry today) is that they are way too complex! If a metric is not self explanatory, or can’t easily be defined with a simple description, then it is way too complex. For metrics to take root and become part of an organization’s culture, they must make sense to recruiters, HR management, and your board of directors alike ó not just other HR/recruiting experts in the field!. If you make them metrics too complex, you’ll probably fail at all three of the metrics goals I defined at the beginning of this article. Some might argue that executives and CFOs will easily grasp complex metrics. But from my experience, I’ve found that while they might understand the logic or theory behind complex metrics, they are also likely to dismiss them as too “scientific” or “academic.” More importantly, you will lose your frontline recruiters (the most important audience for developing a performance-based culture) if you make them metrics complex. Recruiting is such a simple business process, why complicate it with complex measurements? If you need a PhD in statistics to understand some of the metrics you track, I would advise you either alter the metric or discontinue tracking it. 2. Only measure what is important to your client. What do your clients/hiring mangers really want from recruiting? In the past six years, I have never worked with a recruiting organization that hasn’t quickly identified what clients (hiring managers) want from their recruiting organization (or recruiting vendor): they want quality candidates, quickly, at a fair price (or low cost). Pretty simple! Yes, there are other things important (like understanding the business, excellent customer service, etc.), but when you sum it up, the three most important things to our customers are:
(Note: In my organization’s metrics-based, performance management system, we include a fourth category: efficiency. It is so important and so powerful (it impacts cost, quality and responsiveness) that it deserves more attention. More on this topic in a future article.) If this is what our customers care about, then every metric you track should directly relate to one of these three categories. In other words, you should be tracking metrics to see if you are:
If you’re currently tracking metrics that do not fit into one of these categories, I would seriously consider whether those metrics are worth tracking at all. 3. Only track metrics you intend to use. I often run across companies that are metrics junkies. They have attended every industry conference, read every book on business improvement, and implemented every metric they have found. You go into their office and they enough charts, graphs, and complicated excel spreadsheets to make Bill Gates proud! Then I ask a few simple questions. How many of these metrics do you actually analyze on a regular basis? Have you developed continuous improvement strategies based on your analysis to:
Typically, it is only a few ó if any! If you do nothing with your metrics except create pretty charts and graphs that you show your peers or managers, then I believe you are missing out on the core reason why you are tracking them: to develop continuous improvement strategies. If you are not using your metrics to develop continuous improvement strategies, the I would also bet your recruiters resist tracking metrics or don’t see the value in doing so. Why? Usually because they can’t see how these metrics impact the big picture, or they never see their managers do anything with them except create pretty charts, graphs, and excel spreadsheets. They never see any positive rewards (performance improvement, satisfied customers, etc.), so to them, tracking metrics has little value. If you are a metrics junkie, I would encourage you to review your suite of metrics, identify which ones your team actually understands, and consider using only those that relate to cost, quality, and responsiveness. As a rule of thumb, if you are measuring more than four to six key metrics (I like to call them vital signs) for each category (cost, quality, responsiveness), you probably have too many or are using the wrong metrics to analyze your performance. (I understand you might track other “sub-metrics” to measure your business processes in addition to your key metrics. This is okay, as long as you use them! When presenting your value to executive management, I would only present your key metrics ó keep it simple.) 4. Keep goals realistic. When setting goals for metrics, remember to keep them realistic. I have seen some articles of late challenging recruiters to meet or exceed targets that I don’t believe are humanly possible. There is no quicker way to lose your audience than to set a goal that is unrealistic or unachievable. In setting goals for metrics, use past historical performance and industry benchmarks to set your targets. But beware: I see many people who are so concerned about finding the right benchmark that they forget why they are “benchmarking” in the first place. Don’t get me wrong; I encourage you to seek good benchmarks ó that’s the only way to measure how well you are doing. But while you gather that information, don’t be afraid to set a realistic goal based on your past historical performance. In setting goals, I would also encourage you to follow the sound advice we get from experts in self improvement, personal achievement, and behavior modification: “Incremental improvement over time will result in exponential results.” Setting realistic quarterly goals will allow you and your staff to see results. This is the quickest and easiest way to foster a positive attitude around continuous performance improvement. The absolute worst thing you can do is set “pie in the sky” goals (some people I believe call them stretch goals; I call them dreams) that are not humanly possible or will take years to achieve. This will only hurt the motivation of you and your team. 5. Constantly reinforce why you are tracking metrics. I would encourage you to make sure you are constantly reinforcing the value of tracking metrics for your team (and for you!). The message is pretty simple:
Our job is to find quality candidates, quickly, and at a fair (low) cost for our customers. In order to make sure we are doing this, we need to track metrics (vital signs) that validate our performance with regard too:
- Cost
- Quality
- Responsiveness
- Efficiency (if you choose to add this as a fourth category)
If we are performing better than our competition, we want everyone to know about it. To remain the best, we need to develop continuous improvement strategies to keep us on top. If we are not the best, we need to develop performance improvement strategies to catch our competition.
This message needs to be constantly reinforced with you and your team to foster a positive attitude around metrics and continuous improvement 6. Keep your metrics visible. To help develop this culture, I would recommend you post all your key vital signs in a highly visible place for all to see. I would recommend using colorful trend charts that show:
Trend charts (over time) are great visuals to quantify how well you are performing. By putting them in a visible spot, it will keep them in front of the recruiting team and ó just as important ó in front of your clients or key stakeholders. What better way to demonstrate your commitment to running your organization like a business and your pursuit of ongoing continuous improvement? 7. Celebrate metrics and have fun with them! Metrics get a bad rap. Why? Because we typically use them to show all the things we need to work on or improve upon. To develop a positive culture that embraces metrics and continuous improvement, don’t forget to use them to demonstrate all the things you are doing right. Reward incremental improvement. Provide positive recognition for those people that are demonstrating continuous improvement. Implement contest or games that reward performance improvement. If discussions around metrics are always punitive in nature, you will have a difficult time getting people excited about them. Remember, recruiting is a simple process. Don’t make the business of “managing by metrics” more difficult than it needs to be!