Low-performing companies put too much emphasis on employee cost metrics

i4cp study also finds HR metrics track how many people leave, but not those in pivotal roles

SEATTLE, WA (May 4, 2009) - Want to be a high-performing company? Then track your talent. A new study on HR metrics by the Institute for Corporate Productivity (i4cp) shows that higher-performing companies are more apt to measure talent-related metrics than lower performers. Common talent-related metrics include movement within the organization, quality of hires, quality of promotions and the cost of training/development.

Engagement of the workforce is one key component. Ninety-three percent of higher performers measure employee engagement, compared with 79% of lower performers. In this economy in particular, engaging the workforce is of paramount importance. Ninety-three percent of higher performers utilize employee engagement surveys, compared with 78% of lower performers. Ninety percent of high performers report the use of satisfaction surveys for such measures, compared with 68% of lower performers.

The study - commissioned internally by i4cp - also found several other significant traits for high-performing organizations. For example, 71% of higher performers measure compliance or completion of diversity plans (52% in lower-performing companies), and 61% of higher performers, compared with 39% of lower performers, consider employee referral rates.

Conversely, the study showed that 78% of lower-performing organizations measure total labor cost to cost revenue percentage, compared with 55% of high-performing organizations. A higher percentage of lower performers (44%) also measure the employee-to-productivity-output ratio than higher-performing companies (25%).

"What was most striking or interesting is that lower performers were more likely to measure ‘cost' metrics than high-performing organizations," says Mary Ann Downey, i4cp's Talent Pillar director. "While at first glance this may seem counterintuitive, it most likely reflects the attitude that low-performing organizations see their employees as a mere expense and not a source of competitive advantage."

When tracking attrition, HR is more likely to want to know how many workers leave than who is heading out the door.

Overall, 81% of polled companies use turnover and voluntary termination rates in their measurement of attrition, and 74% measure length of service. On the flip side, just 40% measure termination by variables such as job grade, costs or demographics, and just 38% measure the termination rates of both high-potential employees and termination rates by "pivotal job." Study findings showed, however, that higher-performing companies are more likely to analyze who is leaving. In companies with more than 10,000 employees, 72% measure grade, costs and demographics, while 59% track the loss of high-potentials and 55% track by pivotal job.

When it comes to employees moving within the organization, most companies are not adept at tracking those movements. Overall, 34% measure worker movement from job level, classification or rank, while 29% measure by types of move (upward, downward, lateral, short-term, etc.) and 23% track movement by demographic variables.

The HR Metrics Pulse Survey was conducted by i4cp in February 2009. The total number of respondents was 556. The full results of the survey are available exclusively for i4cp corporate members.

About i4cp, inc.

i4cp is the world's largest vendor-free network of corporations focused on improving workforce productivity. Our vendor-free community facilitates innovation by giving our members - among the largest and most respected organizations in the world - access to:
  1. Peers to spark new ideas and prevent "reinventing the wheel,"
  2. Research to enable members to understand current practices and next practices,
  3. Tools to put ideas and research into action,
  4. Technology to enable members to easily access tailored information and execute workforce strategies.
With more than 40 years of experience and the industry's largest team of human capital analysts, i4cp is the definitive destination for organizations seeking innovative ways to improve workforce productivity. For more information, visit http://www.i4cp.com/
Erik Samdahl
Erik is the head of marketing at i4cp, and has nearly 20 years in the market research and human capital research industry.