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Useless HR KPIs

My favourite HR person raised this question last week: "How do we know what good HR looks like? What is the measurement?" The short answer is that we don't because everything we know about HR or how they do things is based on century-old practices.

What are the indicators of a good HR person or department? I am afraid everything we believe that indicates good HR needs to be re-visited. Let's look at a few.

  • Cost of hire. What a redundant KPI that is! Measure the cost of failure in leveraging employees' competencies and talent and compare that with the cost of hire. If you do that, you will immediately remove this KPI from your list. Read more here.

  • Turnover rate and tenure. Don't get me started on this. Retention rate is not an indicator of success or successful employment. People stay in bad, dysfunctional marriages for many reasons. This data doesn't show why people are staying. Are they staying because they are so bad that they cannot get a job? Or are they within their comfort zones and don't like moving beyond? How does that impact their work? How many employees do you know with 10+ years of tenure who contribute absolutely nothing? Why don't we have data on why people stay? If they stay because of a great working environment and leadership, link that to KPIs. If they stay because there are no jobs around in a 50-mile radius or because change of employment is restricted by law, it is not a credit to be given to HR, right?

  • Engagement or happiness. I never understood why HR is busy measuring my love, happiness, and loyalty to the company instead of making it clear how I contribute. That's because we don't have the slightest clue of what is expected from us daily, weekly or monthly, we cannot measure it. Engagement cannot be measured it is all made up. Employee experience, on the other hand, can be understood through qualitative surveys. We love putting numbers to human experiences, but it doesn't work. But if you have to, just ask one question daily, "How happy are you to come to work today?" and leave the rest. We don't need questions about how the food is in the canteen, we would recommend the company to others, what I think of the management, or whether or not I am looking for a job. The answer to that one question will give you the answer to it all. Supplement this with qualitative feedback that's more useful and exciting to read:-) More here.

  • Dismissal rate. Can I ask what is the point of this if we don't know why people were dismissed? Even if we know but don't undress those points, why do we bother? The same applies to exit interviews. We collect them but never look at the data or use it for actions. Exit interviews are like pulling out dead bodies at the bottom of a river. At some point, it makes sense to go upstream and start looking at why people fall in in the first place, right?

  • Training spending or cost. How much you spend on training has no relevance. How competent your staff are is more important to measure. If you have a highly incompetent workforce, it makes sense that your training budget is high, as you have to invest to get something out of them. I love it when companies say, "We have spent millions on training.." I always ask, "Why? Is your workforce that unskilled or incompetent?" Measure competence instead of your training budget.

  • Training hours. Are we actually crazy with this one? Once again, measure competence, not hours or number of training. Make competence mandatory, not training. Training completion data tells you absolutely nothing useful! Read more.

  • Male-female ratio. This data fails very quickly when we look at a diverse range of jobs. It is a good statistic to have but must have never been made as a KPI because it is used to satisfy social narratives, create marketing campaigns, and lead to tokenism. I will never forget our COO saying, "I have been given this target (raise female representation to 40%), make it happen somehow." So, we ended up hiring for genitalia rather than competence. Is this what we need in business? Is this how we view competence for the role? If so, let's get rid of competency frameworks and the recruitment process based on that because we cannot do the two together.

The list goes on, and it is time to look at what good HR looks like because, let's face it, we have no idea. It is not about employee happiness, it is not about any of the KPIs that we are currently measuring. But what is it about then?

Maybe it is about how competent HR is in building a sustainable business. What do I mean by that? A recent study by McKinsey found that the average lifespan of companies listed in Standard & Poor’s 500 was 61 years in 1958. Today, it is less than 18 years. McKinsey believes that, in 2027, 75% of the companies currently quoted on the S&P 500 will have disappeared.

Should HR have hired competent people or stepped in to avoid unethical conduct that led to the demise of some of these companies...........

What is good HR? And what happens if we cannot find the answer? Shall we make them redundant? We know what good finance, sales, research, revenue, engineering or other departments look like. The only thing we don't know is what good HR looks like.

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