September 19, 2014

101 Views

What gets measured isn’t only what should be measured!

Most enterprises lay a lot of emphasis on the old management adage, “What gets measured gets done”. Invariably all HR systems and processes are aligned to KPPs. So much so, that nothing moves at the start of a fiscal till the KPPs are signed and submitted.

However, there are still some chinks in the armor. Let us take the case of a recruiter in the resource management group.

Typical KPPs are around “On Time Fulfillment of Resource Requests” and “Time to Hire” as the attempt is to improve operational efficiency.

If a recruiter performs very well on these parameters is he/she still effective in the role? What if a majority of the candidates recruited perform very poorly in their new roles? Unfortunately, this can only be measured in the next appraisal cycle. The overall effectiveness of the recruiters’ activity can only be measured over the medium term, in terms of the tactical outcome.

Even if the performance of those recruited is good in the first cycle, does it mean that there is a lasting business impact on the enterprise? What if there is a cultural mismatch with the recruitees’ core values and they are not able to settle down in the enterprise? (Employees who are used to a very process-centric organization might feel quite out of place in an organization where they have to create their own rules or bend existing rules, or vice versa). While they may be good performers, it would be very difficult for them to accept the organization culture and they might leave in a few years.

Hence, only if we were to measure the longevity of recruitees hired by the recruiter, can we measure the strategic impact of the recruiter’s activity. Smart managers try and leverage this to their advantage by trying to pick FTEs recruited by a specific recruiter (to improve the odds of getting a good long term high performer).

However, most systems do not track this as they rely more on the short term “stick and carrot” method of annual appraisals.

It might be difficult to penalize an employee for activities pertaining to past years. However, it would definitely be a big learning and improvement opportunity for an individual to learn the impact of an activity executed in the past. In addition, if there was a carrot system (accumulation of multiple small, yet substantial, and totally unexpected bonuses) to recognize the strategic impact of an employee's activities, it could really improve the retention of exceptional employees.

The implementation of simple logic models can go a long way in taking this further.

The same holds good for every other function. If one were to consider Sales, one could look at revenue generation and margins as short term performance KPPs, from an operational perspective. On the other hand, use of lead indicators like booking, along with medium term KPPS like book to bill conversion and revenue leakage can improve business outcomes from a tactical perspective. And customer quality, in terms of creation of key accounts, would be an excellent measure to incentivize sales folk who opened the right doors (albeit, a few years past) from a strategic perspective.

As they say, “Even the mighty Oak was once a little nut that stood its ground”.