6 Cutting-Edge HR Metrics to Measure in 2019
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The document outlines six key HR metrics to measure in 2019, focusing on the importance of data and analytics in talent management, including quality of hire, career path ratio, and top performer retention rate. It emphasizes the need for effective data collection and analysis to drive strategic workforce planning and compensation practices, while addressing issues like pay equity and market underpayment. Practical advice is provided for monitoring these metrics to improve HR outcomes and enhance organizational performance.
6 Cutting-Edge HR Metrics to Measure in 2019
- 1. 6 Cutting-Edge HR Metrics to Measure in 2019 January 23, 2019
- 2. Agenda 1. People Analytics Maturity 2. Quality of Hire 3. Career Path Ratio 4. Top Performer Retention Rate 5. Comp Ratio 6. Range Penetration 7. Pay Equity 8. Q&A 9. SHRM / HRCI Codes
- 3. Presenters Eric Knudsen Manager of People Analytics, Namely Rita Patterson Sr. Manager of Product Implementation, PayScale
- 5. People Analytics Maturity Model As companies mature, data becomes increasingly important to HR teams. Many teams are taking steps to make their talent practices more analytics-driven.
- 6. What is People Analytics?
- 7. Data vs. Metrics vs. Analytics People Analytics: Utilizing analytical process across the talent lifecycle and leveraging data to drive strategic talent decisions.
- 8. The Talent Lifecycle We’ll Discuss Today Finding Talent Accelerating Talent Retaining Talent Compensation & Pay Equity
- 10. Better Hiring Data Allows Us To... ● Identify and hire top talent ● Understand the efficacy and objectivity of the hiring process ● Facilitate an understanding about which sources yield top and diverse talent KEY METRIC: Quality of Hire
- 11. Building a Quality of Hire Metric 1. Identify the critical components of your quality of hire metric. 2. Build process to collect data for each one. 3. Measure at the individual level, combine for the organizational level. Average of Performance + Productivity + Job Fit + Values Fit
- 12. Sample Quality of Hire Survey 1. This person has reached or exceeded the level of productivity expected after this long on the job. (Strongly disagree - Strongly agree) 2. How would you rate the overall fit between your new hire's competencies and the job requirements? (No fit - Perfect fit) 3. How would you rate your new hire's fit with our values overall? (No fit - Perfect fit) 4. If this person was interviewing again, I would re-hire him/her as a bar raiser (i.e., performing greater than 50% of current employees). (Not at all - Absolutely)
- 13. How to Use Quality of Hire SEND OUT QoH SURVEYS At your decided cadence, send out your Quality of Hire Survey to managers of new hires who have hit their 6-8 week mark. EXPORT & ANALYZE Open your survey data and average your component scores. Then calculate your rolled up metric. TRACK QoH OVER TIME Track and actively monitor trends in QoH across the organization and departments. Partner with Recruiting to action plan.
- 15. Better Career Data Allows Us To... ● Supplement strategic workforce planning efforts. ● Anticipate the changing shape of your organization. ● Facilitate tailored employee career growth. KEY METRIC: Career Path Ratio
- 16. Building a Career Path Ratio 1. Ensure you have Job Levels available and coded in your HRIS (Associate, Manager, Directors, etc.). 2. Define what constitutes a “promotion” versus “lateral move”.
- 17. How to Use Career Path Ratio EXPORT JOB HISTORY Export a job (or title) history report from your HRIS. Ensure data is clean (reflect true position changes rather than title tweaks). CLASSIFY LATERALS AND PROMOTIONS By observing whether or not a change occurred between or within job levels, you can determine the frequency and types of employee movement. MONITOR YOUR SPIRAL STAIRCASE By monitoring the trend in Career Path Ratio between reporting periods, you can use it to inform your workforce planning strategy
- 18. Retaining Talent
- 19. Better Retention Data Allows Us To... ● Target efforts to engage and retain top talent. ● Inform HR planning efforts (workforce planning, compensation, development). ● Balance focus between who’s leaving and who’s staying. KEY METRIC: Top Performer Retention Rate
- 20. Calculating Top Performer Retention 1. Define what it means to be a “top performer” in your organization. 2. Establish company and department baselines for top performer retention. 3. Equip managers with retention date, and help facilitate discussion. Promotions Promotions + Laterals
- 21. How to Use Top Performer Retention GATHER PERFORMANCE AND TERMINATION DATA Be sure to include Start and Termination date fields, as well as any segments of interest (department). Supplement with start-of- period performance ratings. COMPARE OVERALL & TOP PERF. RETENTION Calculate company-wide retention, then filter to top performers and re-calculate. Compare these numbers to identify gaps in retention strategy. USE RETENTION AS A WARNING SYSTEM If top performers have lower or declining retention, drill down for insight. Act fast, but thoughtfully and meaningfully.
- 23. Pay Attention To... Use compensation metrics to detect pay issues before they become more serious. ● Pay Compression: When pay for two different levels of a same or similar job is ‘compressed’. ● Market Underpayment: When an employee is underpaid relative to the market. ● Flight Risks: Underpaid high performers ● Pay Disparity: When two people in the same job or very similar jobs have large variance in pay.
- 24. Pay Compression Pay Compression: When there are small differences in pay for differing levels of a job. WHAT CAUSES IT ● The market rate for a job has moved significantly, and new hires are coming in at high or similar rate to tenured employees. ● The pay differential for varying levels of a job is minimal and/or not adhered to. HOW TO AVOID IT ● Monitor market movement for all jobs and adjust pay ranges accordingly -- regularly. ● Review internal pay ranges regularly and ensure that pay ranges for leveled jobs overlap.
- 25. Market Underpayment ● Define your “competitive” set (location, industry, org type and org size). ● Benchmark your jobs to other similar roles in the market to identify the “going rate” for a position. ● Create pay ranges based on market rate & internal value of a role. ● Align pay for all employees in the same or similar job within the market base pay range. To avoid market underpayment, regularly benchmark your positions to the market.
- 26. Flight Risks WHAT CAUSES IT Most commonly occurs when the rate of increased performance or proficiency is steeper than the rate of pay evaluation. HOW TO AVOID IT Review performance & position in range regularly to avoid flight risks. Flight Risks: Employees who are high performers and low in range
- 27. Comp Ratio and Range Penetration
- 28. Measuring Position in Range Employee’s current salary The current mid point of the internal pay range (Employee salary - range min.) (Range max. - range min.)
- 29. Comp Ratio
- 30. Comp Ratio by Job Family
- 32. How to Use Comp Ratio and Range Penetration PICK ONE METRIC AND CREATE FAMILIARITY AROUND IT Range penetration is going to land more simply with managers & employees. Stick with comp ratio if its how your finance & comp teams regularly talk about it. HAVE GUIDELINES FOR HOW TO MOVE EMPLOYEES THROUGH THE RANGE Be realistic about the financial implications of these guidelines. EMPLOYEES LOW AND HIGH IN RANGE Evaluate whether this is indicative of pay inequality, or relevant based on the employee’s tenure or performance. Confirm and acknowledge the reasoning for their higher pay.
- 33. Pay Equity
- 34. Pay Equity Can Make (Or Break) Your Brand
- 35. Pay Disparity THINGS TO CONSIDER: ● Is the variance of pay reasonable? ○ Are tenure, performance, or other factors tied to pay differences? ● Are these employees really in the same job? ○ Is one more senior than the other? ○ Is one in a newly created role that needs to be defined and benchmarked? Pay Disparity: When two people in the same job or very similar jobs have large variance in pay.
- 36. Conducting Pay Equity Analysis IDENTIFY GAPS IN PAY Identify pay gaps hidden within certain job titles or departments. Identify underpaid high performers and overpaid low performers. ASSESS SIGNIFICANT DIFFERENCES Take a look at major differences in promotion rates, raise frequencies, amounts, and/or bonus eligibility for similar employees doing similar work. REVIEW THE GENDER GAP Review men and women who do similar work at different levels or pay rates.
- 38. Job Group Gender Equity Report
- 39. Communicating Pay Share compensation reports with employees to facilitate open and honest conversations about pay and career trajectory.
- 40. Compensation Metric Use Cases ● Define & follow compensation strategies, practices & policies. ● Ensure fair pay within defined practices. ● See how your comp plan compares to the market. ● Identify over/underpaid employees. ● Uncover potential pay disparities. ● Create transparency & trust around pay communication.
- 41. Practical Advice & Considerations ● Track QoH over time using surveys. ● Study career paths to inform your workforce planning strategy. ● Monitor employee retention as a warning system. ● Start with the market -- don’t rely on it to make all decisions for you. ● Use compensation metrics to detect issues early. ● Conduct your pay equity analysis ahead of budgeting season. ○ Involve your legal team every step of the way.