HR Metrics for HR Decisions
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understand. “If you’re not sure what [data] to go after, look at the
key performance indicators that other department leaders have,
to see how they’re going to be evaluated,” Kropp says. “Then talk
to them about those metrics.” Whether it’s customer satisfaction,
sales or revenue growth, demonstrate how a firmer grasp of labor
costs will move the organization in the desired direction.
TCOW analysis is not a once-and-done proposition. To be useful, the metric needs to be calculated frequently, compared
against past performance and continually re-evaluated to assess
At Phillips Screw Co., the management team meets quarterly
to review figures. “It’s an ever-changing environment,” Stoskopf
says. “Some items within the calculation, such as variable labor,
move with sales. Others are more static, like indirect costs.”
Consistency is key. “Whatever the number comes out to,
compare it to last quarter’s [number] and figure out why it went
up or down and how the parts interrelate,” Stoskopf says. In
this way, management can assess how various conditions and
interventions affected the outcome.
Over time, the data will reveal trends and patterns that can
be used for workforce planning. Experts say that even though
businesses have to be able to make course corrections quickly,
planning is still important. “Nowadays, [the workforce planning
horizon is] shortening dramatically. It’s not years; it’s quarters
in many cases,” Kropp says. “[Executives] need to be thinking
about how things are going to play out over the next couple of
quarters.” With solid historical data, leaders can make educated
Demand for human capital analytics is likely to grow. “
Executives are seeing analytics everywhere,” Kropp says. “There are
more and more stories of how HR analytics are changing the
decisions companies make. Your CEO and CFO are going to
come knocking on your door at some point asking for this.” Start
now, and you’ll be prepared when they do.
Jennifer Arnold is a freelance writer based in Jacksonville Beach, Fla.
This article relates to Business Acumen, one of the
nine competencies on which SHRM has based its
certification. To learn more, visit www.shrmcertification.org.