Performance management is one of the most important tasks performed by HR professionals. It encompasses almost everything critical HR activity including planning work, setting expectations, developing capacity, monitoring performance, rating and rewarding good performance.
Given its importance, performance management can have tremendous impact on a company’s success. When well executed, it can maximize employee productivity and thereby enable the company to achieve its objectives faster. When poorly executed, it can curtail a company’s progress. Performance management can have a similar effect on an HR professional’s career.
Therefore, every savvy HR professional finds great tools for carrying out performance management. One of the best tools today is through HR analytics and metrics. These can produce useful data on which performance management decisions can be based.
As such, every HR professional needs to master how to use these tools to super-charge their performance management. Fortunately, using analytics and metrics is quite straight forward. Here is a simple four-step guide which can be used to maximize the power of metrics and analytics for performance management.
Step 1: Begin With A Specific Objective
Performance management is so broad that it covers almost 75% of the total work performed by HR professionals. As such, it is impractical to attempt to use metrics and analytics for performance management in general. A more effective strategy is to consider specific aspects of it. For instance, you can use metrics and analytics to determine the impact of absenteeism on overall productivity.
The starting point is to have a specific objective in mind. Remember, metrics and analytics are precision tools. They are most effective when being used for accomplishing specific goals. Therefore, before even thinking of using analytics and metrics, you need to decide exactly what you want to accomplish. The more specific the objective, the better the results analytics and metrics will yield.
Step 2: Set Clear Metrics
Metrics are simply measurements. When HRs mention phrases like “our turnover dropped by 30%” or “the rate of absenteeism is currently 12.5%”, they are quoting metrics. In order for such phrases to be meaningful, there is need for clear metrics. In other words, if an HR mentions “turnover”, they need to have a clear way of measuring it.
Setting clear metrics is simply a matter of identifying data points. In most cases, such data points are aligned to key performance indicators. For instance, let’s assume our goal is to “determine the impact of absenteeism and productivity.” We would need clear metrics for absenteeism and productivity.
For absenteeism, the metrics could include: number of absent employees, absence days per employee, unscheduled sick days per employee, etc. For productivity, the metrics could include: number of units produced, number of customers served, total work hours accumulated, etc.
The point here is that you need clear metrics. The key word here is “clear”. Unfortunately, HRs have a tendency for throwing up generic metrics. For instance, an employee’s performance can be described as “above average” without clearly spelling out what that entails. To reap maximum benefits from the metrics, you need clear metrics to begin with.
Step 3: Collect Data
There are numerous ways of data collection. Examples include surveys, interviews, performance records, work logs and so on. The method which you use will of course depend on the kind of data you are trying to collect, and the purpose for which you intend to collect it. For instance, using our above examples, we could collect absentee data using employee daily logs and productivity data using production records.
The biggest challenge faced by HR professionals today isn’t the lack of data. It is the overabundance of it. After all, we are now in the era of Big Data. There is too much information which is collected that most HRs don’t know what to do with it. This is why Steps One and Two. Once you begin with a clear objective in mind, and have clear metrics, collecting data becomes a breeze.
Step 4: Perform Specific Analytics
Analytics is basically finding a correlation between two metrics. It is identifying a pattern of similarity or dissimilarity. At its simplest level, analytics involves carrying out statistical analysis on the various metrics and then comparing the results.
For instance, in our above example, we’d determine the rate of absenteeism in a given time period, determine the rate of productivity, and compare the results. This is of course an oversimplification. In real life, analytics is quite sophisticated – and is often carried out using complex algorithms.
Analytics is invaluable in performance management for one simple reason – it can be used to make predictive postulations. For instance, analytics can help you to predict the impact of training programs on performance, the rate of turnover, and even the overall performance of employees. Such predictions can enable you to make smarter performance management decisions.
Step 5: Utilize the Results
This seems a no-brainer. However, the number of HR professionals who ignore results thrown up by their metrics and analytics is amazing. In most cases, they ignore the results especially if they don’t like their implications. For instance, an HR manager who personally appointed a team leader may not be very receptive to data which suggests that the team’s performance has slumped ever since the appointment.
To enjoy the full power of metrics and analytics, an HR professional needs to keep an open mind. The simple fact is that sometimes even the most experienced HR professional can be wrong. Being able to admit that is part of growth. This, however, doesn’t mean that any analytics and metrics HR data has to be accepted without question. Sometimes mistakes can be made in data collection or analysis. However, you shouldn’t reject the data simply because you don’t like the story it is telling.
In a nutshell, analytics and metrics can play an invaluable role in performance management. If utilized properly, they can provide an HR professional with data which they can use to make evidence-based decisions. Conversely, if poorly utilized, they can be a waste of time and resources. Fortunately, tapping the power of metrics and analytics isn’t rocket science. The five simple steps listed above can enable any HR professional to maximize the power of metrics and analytics to improve their performance management.