TrendWatcher 501

I know he stole it from the great Peter Drucker, but for years now I've heard this constant refrain from my boss: "What gets measured, gets managed." I always want to respond, "Stop already! I get it! I got it the first thousand times, too!"

The crazy part is that sometimes I still ignore that advice. Managing people is, after all, about much more than metrics, and you can't reliably measure everything that's important. What's more, you don't want to become one of those soulless, number-crunching automatons for whom numbers are all that matter. At the same time, I also believe that managers responsible for talent who ignore all metrics do so at their own (and their organization's) peril. And now I, appropriately enough, have the numbers to prove it.

First, let's state what most enlightened managers already know and what various previous i4cp studies have demonstrated: Companies that are higher market performers are also more likely to say they're good at managing talent. That is, good talent management seems to pay. Our newest study, Talent Management Measurement, corroborates this.

But is metrics a critical piece of the puzzle? To find out, we asked about firms' "workforce measurement strategies," which we defined as "disciplined and cohesive efforts - as opposed to ad hoc efforts - to gather and use employee-related metrics in the organization." Sure enough, higher-performing organizations are more likely than lower performers to have metrics strategies, and those that excel at talent management are nearly twice as likely to use workforce metrics strategies to a high or very high extent.

So, yes, our study supports the notion that what gets measured (in this case, your workplace talent) gets managed more effectively.

The bad news is that, although Drucker's wisdom has become a management truism by now, the vast majority of firms are still mediocre or worse at workforce measurement. In fact, a paltry one fifth of all our study participants said that their organizations have such a strategy to a high or very high extent. (Perhaps we should all take a moment to envision Peter Drucker sadly shaking his head at the state of talent management circa 2010.)

Bottom line: most organizations have a problem with measuring their talent, and we have some ideas for solutions to this problem. These ideas are still percolating amid the corporate practitioners participating in i4cp's Talent Management Accelerator, which is studying best practices around this issue. i4cp's Human Capital Management Practice Leader, Mary Ann Downey, states, "Talent management measurement isn't exactly uncharted territory, but it hasn't been executed very well, either. Practitioners still have an awful lot to learn from one another about what works in the real world."

i4cp's study of this subject is far from complete but, so far, there are some tantalizing clues about what distinguishes firms that use metrics well from their not-so-competent counterparts. One characteristic of higher performers - in terms of talent management prowess - are that they tend to focus on certain outcomes more than others, especially these four:

• Leadership success
• Robustness of talent pipeline
• Overall employee engagement
• Management satisfaction with the talent management process

Of these four outcomes, the most important is leadership success. That outcome, via a regression analysis, is linked with both talent management success and market-performance success. In other words, the more that organizations use the measurement of leadership success to gauge the quality of their talent management practices, the more likely they are to say they're good at talent management and to have higher market performance.

We also asked participants about more specific types of workforce metrics; everything from internal placement rates to new hire separation rates. Virtually all respondents said their firms should be using these metrics to a higher extent than they actually do. There's no mystery there, given the earlier finding that so few businesses excel in measuring talent management. But what was more interesting was that there are certain metrics that high-performers are a lot more likely to use than lower performers. "Quality of hire" is a case in point and "regrettable termination rate" is another. Based on the greater use of these qualitative measures, we contend that sophistication counts. Good metrics don't just describe whether you are losing or gaining employees, but whether you are losing or gaining really good employees.

i4cp's 4-Part Recommendation:

1. Start by analyzing your current set of workforce-related metrics. Is there an organizing principle behind them or are they all ad hoc? The more you can devise a set of metrics that lend support to one another and provide coherent pieces of a larger pictures, the more success you're likely to have finding meaning in your metrics and understanding the story the metrics are telling.
2. Determine what you're really trying to accomplish. It doesn't have to be just one thing, but you should have specific goals in mind, such as making sure your organization has a strong leadership pipeline. In a larger organization, these goals can't be effectively set up by just one person. They need to be decided in conjunction with an executive team that represents the needs of various parts of the organization. As part of i4cp's ongoing research in this area, we interviewed Larry Israelite, Vice President of Human Resource Development at Liberty Mutual Group. He notes that in his organization, "The management team has agreed on the data dictionary. The team must agree to changes to people measurements, which ensure alignment and consistency."
3. Put a plan in place to improve your metrics over time. Accurately calculating metrics such as quality of hire and regrettable termination rates is not a simple task, but it's probably worth the time and trouble. When determining a method and process, test it with a pilot group before applying it to the whole organization. Present the metrics and processes for determining the measurements to managers so they will understand the purpose, provide feedback and eventually buy into the authenticity of the metrics. The last thing any company wants is to invest in producing good metrics that no one believes or will act on.
4. Know how to tell a story with the metrics. Human beings are wired for narratives and stories. Data-heavy reports, no matter how accurate, will do little to convince others of the legitimacy of your analysis. The numbers must tell a story that makes sense to others, and reports should make their conclusions and recommendations clear. It's not enough to be correct; you must also be compelling.

Comments