Magazine article Workforce Management

Tap the CFO on Metrics

Magazine article Workforce Management

Tap the CFO on Metrics

Article excerpt

I find that most HR metrics fail to excite anyone in the executive suite because the ones selected are the wrong metrics.

THE LAST WORD

LET'S FACE FACTS: Numbers and dollars are the language of business. If you have been in an executive eommittee session you already know that results are what executives talk about. Steve Ballmer of Microsoft is famous for describing the company culture as being a "summer math camp," saying that "people have to prove they have the right answer."

Yet the HR metrics currently in use by most organizations prove nothing. Having written a book on metrics and having advised dozens of companies on the subject, I find that most HR metrics fail to excite anyone in the executive suite because the ones selected are the wrong metrics. The reason isn't surprising. Few organizations involve the owner and "godfather" of all numbers, the CFO, in developing a suite of measures that have real meaning and value.

CFOs are generally the first to ruthlessly pick apart HR metrics and the process used to derive them, so it just makes sense that they be involved in the process from the beginning to ensure that what is produced is valid and of value. Professionals in marketing and product development don't blindly select new features for what they plan to sell to a customer. They conduct surveys, focus groups and product usability tests to help ensure that what is delivered is something the customer wants and needs. HR must learn to do this with its internal customers as well.

I first learned the value of involving the CFO's office during a conversation many years back with Phil Wilson, who at the time was senior VP of human resources at Oracle. I asked him: "What is the smartest thing you have ever done in HR?"

He said that he had hired away one of the CFO's analysts to work in HR and develop its metrics. The benefits of this approach include the following:

* HR can learn to use the language of the CFO. That means using business terms like "dollar impact on revenue," "productivity," "ROI" and "payback period."

* HR can learn to convert metrics into dollar impacts. For example, instead of reporting that the turnover rate was 20 percent among mission-critical positions, you would report the dollar impact, such as a loss of $6. …

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