TEESSIDE UNIVERSITY

Appropriate Metrics And The Design Of Measurement Processes For Information Systems At Teesside University

Appropriate Metrics And The Design Of Measurement Processes For Information Systems At Teesside University

PART 01: BUSINESS RELATED METRICS

1.1.1.Introduction to metrics

A business metric is any type of measurement used to gauge some quantifiable component of a company's performance, such as return on investment (ROI), employee and customer churn rates, revenues, EBITDA, and so on. Business metrics are part of the broad area of business intelligence, which comprises a wide variety of applications and technologies for gathering, storing, analyzing, and providing access to data to help enterprise users make better business decisions.

Systematic approaches, such as the balanced scorecard methodology, can be employed to transform an organization's mission statement and business strategy into specific and quantifiable goals, and to monitor the organization's performance in terms of achieving those goals.

1.1.2.Characteristics of good metrics

To be effective and reliable, the metrics we decide to use need to have five key characteristics. Each metric must be:

Aligned with business: In a Corporate Leadership Council survey, 62 percent of respondents cited “to better align HR strategy with corporate strategy” as the number-one goal for HR. More than half the respondents in a Towers Perrin study considered “shifting HR's role to help address critical business issues” as the most significant challenge for HR leadership. Clearly, HR alignment with business goals is a priority to measure and improve upon, but it is also difficult to achieve. First, corporate business targets (direction set by the CEO) and HR strategies need to be synchronized, and then translated into the tactics HR implements.

Actionable and predictive: A good metric must provide information that can be acted upon. Too often, HR measures for the sake of measuring, without really thinking, “What do I do if the metric is lower or higher?” A clear plan of action and causality relation is a key element for successful metrics tracking. A metric that merely measures finite or completed actions, not ongoing activity, is only of forensic interest. Metrics must be regarded as a trend and must trigger appropriate action.

Consistent: A good metric is consistent in what it measures. Comparisons are made of equally weighted criteria. Cost per hire, for instance, has been a popular HR metric. Yet a SHRM/EMA Staffing Metrics study identified more than a dozen components included at widely varying degrees by different companies to calculate cost per hire. Make sure that the data included in any metric you use is defined at the outset and remains consistent. Otherwise, the value of its comparison is useless.

Time-trackable: A good metric must be able to be tracked over time. It is not a snapshot of an activity at one moment in time. One example is the number of job applications received per week. That metric can be tracked and graphed to see both the weekly trend, as well as a monthly, quarterly, or longer interval, and forecast whether there will be a shortage or not. The frequency of reporting for a metric varies with ...