Performance Metrics: Beyond the Numbers

by Sharlyn Lauby on March 9, 2010

Peter Drucker once said, “What gets measured, gets managed.”  It’s very true.  Tracking the numbers is essential to running your business.  But it’s also important to not just calculate numbers. You need to have a good understanding of what they mean.

I’ve always enjoyed math and accounting, so I’ve never really shied away from formulas.  But over the years, I’ve learned some very valuable lessons about how to appropriately use the information.  Not just human resources metrics like turnover, cost per hire, etc.  But the need to understand the metrics your CEO is paying attention to.  There are some obvious ones like EBITDA, market share, and profit margin.  And don’t forget to look at industry indicators as well.

For example in the airline industry, on-time performance was (and probably still is) a key performance metric.

My career has primarily been as a human resources generalist, but I did spend a couple of years totally focused on recruitment.  I had always hated recruiting up to that point and when my director gave me the role, I figured it was some sort of punishment.  I was so wrong.  I quickly realized that recruiting was about more than just interviewing people.  There’s a huge strategy component.  And, as a recruiter, I needed to be keenly aware of what was happening in the business in order to be successful in my job.

I remember one day being in a meeting with a senior vice president of airline operations.   We were discussing his future staffing needs and I thought I was dazzling him with my recruitment statistics about time to fill and onboarding completion rate. But, then he asked me a question.  “What was yesterday’s on-time performance?”

I didn’t know the answer.

He proceeded to tell me the number.  Then he explained to me (in a very stern way, I might add) why I needed to know that number.  Because the last thing I ever wanted was to be responsible for a flight not going out on time – because I hadn’t found the right person at the right time to fill the job.

Several weeks later, I was in a team meeting with that same senior vice president.  People were talking about staffing, training, etc. and it was obvious he was getting frustrated.  He asked the group, “What was yesterday’s on-time performance?”  No one responded.  He looked at me directly and I answered the question.  [Oh, I scored some major brownie points that day…]

Just knowing how to calculate a number isn’t enough.  While HR or department metrics are important, you have to understand how they fit into the overall operation.

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