Canadian HR Reporter

CANADIAN HR REPORTER October 19, 2015 NEWS 3 HR metrics not regularly used by finance departments: Survey What's behind the disconnect – and what numbers would CFOs like to see? BY SARAH DOBSON THERE has been plenty of dis- cussion and focus around HR metrics in recent years, but are CFOs actually interested in the numbers? Maybe not — nearly two-thirds (64 per cent) of senior financial executives do not regularly use HR analytics to better under- stand the costs associated with their workforce, according to a survey by the Canadian Financial Executives Research Foundation (CFERF), the research institute of Financial Executives International Canada (FEI Canada). Why? Trust could be an issue — just one-third said they fully trust the data received from their HR team in making business deci- sions while another third "some- what" trust the data. It really highlights that more training might be required to bet- ter understand what it is finance people are looking for in terms of information from HR, said Laura Pacheco, vice-president of re- search at FEI Canada in Toronto. "Finance people need to better understand the underlying data that's being provided from HR and if its not quite what they're looking for, then it's a learning opportunity for them to reach out to them and collaborate and work better together because, ultimately, it does represent a sig- nificant amount of the expense so you want to have a really good understanding." e lack of faith in HR metrics suggests the right things are may- be not being measured, and how things are measured hasn't been validated or vetted, said Lois Mar- tin, executive vice-president and CFO of Ceridian, which spon- sored the report Measuring HR: Moving Beyond Number Crunch- ing, based on the survey and a roundtable discussion. "e partnership with finance is so critical because finance can bring that objectivity but also the discipline of the analytics dis- cipline — how you ensure data integrity, how you make sure the data's clean and you're measuring it accurately and consistently." ere is clearly a great deal that can't quantitatively be measured about HR, which is the same for every function, she said. "At times, it can be difficult to quantify something. On the other hand, I think there's a lot of tools out there, including things like en- gagement surveys, which actually have been able now to quantita- tively calculate for you an engage- ment score." It's about understanding the purpose of the measurement, said Greg Trok, vice-president of consulting services at Ceridian in Minneapolis. "If it's not a business-driven type of activity and you're just measur- ing for the sake of measuring it and you can't really bring it back to 'How does this increase the value of the business or the organization, how does it make people happier at your company so you can be more productive?' or what have you, you're missing the point of what you're trying to do with these par- ticular measurements." If finance had just one finance- type metric to measure the health of its workforce, the top metrics preferred are revenue per full-time employee (FTE) or labour costs as a percentage of revenue, both at 26 per cent. ese were followed by human capital return on invest- ment (23 per cent) and profit mar- gin per FTE (15 per cent), found the survey of 107 respondents. "Some measurements are so basic — they're informative but you can't really do anything with them, they don't tell you a story," said Martin, citing as an example revenue per FTE. "I certainly still measure it myself and it's one that shows you some level of productivity but it also is hard because it doesn't reflect what are you paying for all those levels because your salary range can be so significantly different between positions. It's interesting but it's not hugely actionable." e challenge is getting hard data from human capital, said Catherine Fels-Smith, CFO and COO at the Toronto Region Board of Trade. "It's really easy to do revenue per full-time employee, and that's something I do every year as part of my planning, but that's more giving me more of a continuity base — you know, if I start see- ing blips, then I now have to start peeling down to get more details — but in the area of my employee engagement and my x number of dollars, I can't tie back and say, 'I'm FINANCE'S > pg. 21

• Cover