Employee performance data is like a coal mine full of diamonds that no one has discovered yet.
Tell me if this scenario sounds familiar:
It's performance review time and HR is making sure managers complete all their performance appraisals.
The list is checked - you know who submitted their appraisals and who didn't.
The appraisals are filed. Rinse and repeat this process next year.
Once your appraisals have been completed, this is when the real work begins. You can learn so much by analyzing your performance data.
Think about these metrics:
- High performer average engagement score vs. all others
- High performer growth rate
- Average employee performance rate increase
- High to low performer ratio
- Performance appraisal participation rate
- Critical competency scores
- Sustained high performer rate
- % of employees tracking goals
- % of goals obtained
- % of sales quota exceeded
- % of bonuses paid on goal attainment
- % of goals exceeded
There are a couple of assumptions to be aware of when analyzing the above data:
1) High performers like to be promoted and if they don't, they leave
2) High performers don't like to "put up" with low performers
3) Organizations do a terrible job of cascading organizational goals down to the frontline where it matters
4) Your performance management system is aligned to organizational strategy and is measuring what it should be measuring
5) The current performance management system needs revamping so that metrics like the ones above can be utilized and acted upon
Assumption 4 is where we have huge issues. We all know that performance management in a lot of organizations is broken. Even worse, we aren't working to correct this process as we should be.
Yes, we have great technology out there to manage the process, but in order to know if the process is working, we need to know what to measure first.
Measure what matters
Understanding the performance metrics that matter to your business goals also helps you to use performance data from one talent program to feed another. This approach can help drive better decision-making about your people.
So measure what matters. What do you need to know in order to demonstrate how your workforce is helping the organization achieve its strategy?
It's interesting to me that execution of strategy is cited as the number one reason for strategy failure and goal setting is always discussed as a missing link in the strategic execution process. In a recent HR Magazine article, authored by Adrienne Fox, "Put Plans Into Action," Clinton Wingrove states:
"Goal implementation is not an incentive-setting process, it's a direction setting process."
This statement is so true; strategy will not be implemented unless all employees are moving in the same direction. Why not kill two birds with one big stone? Let's revamp our performance management tools and put rigor around goal setting, which should be a part of performance management anyway.
Then, we'll be ready to start measuring things that matter in regards to employee performance and its impact on the strategic goals of the organization.
HR - be a performance architect
To further complicate things, it's difficult to have credibility around performance data when managers and leadership see the whole process as a "paperwork" exercise and not one that is critical for strategic execution.
HR, you need to "re-brand" performance management as critical to your organization's business strategies - and then demonstrate the link between the two - for this mindset to change.
I see HR's role as being one of performance architect. HR has been screaming for a strategic role - well, here it is. The business has difficulty with implementing and executing strategy.
HR has the capability to design a process that will ease this pain and have REAL impact for the organization. It's in our hands to make this a reality.
Your turn: What is the most important performance metric(s) to your organization?
For more insight from Cathy on HR metrics read are you using HR analytics and metrics effectively?