Effective HR metrics are not developed in a vacuum. The "right or best" metrics require a detailed understanding of your organization: how it generates revenue, its business strategies and objectives, its business imperatives, the risks it faces, the opportunities to be seized, and what it already measures.

Thus, HR metrics should not be developed in a silo or owned exclusively by human resources. To be of value, HR metrics should measure the business factors that are important to the organization - not just HR - and should be co-owned by HR and the C-suite, other departments, and line managers. The right or best metrics are HR metrics that incorporate the input of stakeholders and contribute to informed decision-making. From this perspective, HR metrics should be predictive and action-oriented. HR metrics that do not assist organizational decision-making are of little value. The issue is not the number of metrics. As Albert Einstein noted: "Everything that counts can’t be measured and everything that can be measured does not count."

As noted, the measurement of business outcomes is a critical component of the HR auditing process. Thus, your organization’s HR metrics should help you assess the value and contribution of your organization’s human capital; should focus your organization’s attention on how human capital helps it achieve its business objectives; should help you measure and assess human capital management and employment practices liability related risks; and should help you assess individual and organizational performance.

Since HR metrics can assist your organization to identify weaknesses and failures in its human resource management and employment practices compliance activities, your organization’s selection and use of specific HR metrics is not only an indicator of what issues it considers important but is also an indication of your organization’s commitment to identify and ferret out ineffective or unlawful practices and processes. Thus, your organization may be scrutinized not only on the issues it chooses to measure but also on the issues it chooses to ignore.

Your use of HR metrics should consider both quantitative and qualitative methods and measurements should help you assess your organization’s performance, and should provide you with data that will allow you to evaluate human capital outcomes.

Governmental and regulatory agencies have put employers on notice that they must create, maintain, and demonstrate procedures and activities that they are in compliance with federal, state, and local laws and regulations - and these laws are numerous. At the same time, investors, lending institutions, and third-party administrators are constantly imposing requirements upon employers that seek to ensure resources are properly used and that results are properly reported. In this environment, organizations must be able to demonstrate compliance through objective measures. Failure to demonstrate compliance with these requirements can impose significant liabilities.

Thus, employers need metrics and measurements that are strategic, operational, and transactional. They need metrics that help them identify monetary and non-monetary risks and help them manage revenue generation, productivity, labor costs, and profitability.

Further, they need metrics that help identify non-compliance. These metrics measure the employment brand and organizations’ ability to attract and retain top performers. They also measure legal and statutory non-compliance, which may result in fines, penalties, debarment, and lost business opportunities.

This webinar discusses the transition of HR metrics to business analytics in helping organizations assess these risks and discusses the use of HR-related Key Compliance Indicators (KCIs) that can be used as an element of a continuous audit process that provides assurance of compliance.