What HR Is Measuring: Employee Satisfaction and … Retention?

I always find studies and surveys that talk exclusively to HR people to be especially fascinating. I start scanning through the pretty graphs and data and if anything is outside of my understanding of HR, I like to call it out.

I was able to get an early peak at an HR benchmarking survey done by the folks at Focus and I’ll be honest with you, one thing did stand out right away: HR people consider measuring employee satisfaction and retention as the way to assess the success of HR in their organizations.

Does that align with your thinking on what HR should be measuring? That and some other interesting results are after the jump.

Measuring retention and employee satisfaction

Click to enlarge (credit: Focus)

When asked what the most important measurements were for gauging HR’s value in the organization, retention and employee satisfaction tied for first place. Other top factors included training and development, recruiting costs, productivity per employee and overall revenue.

Now I’m not saying that employee satisfaction and retention aren’t important to measure (in fact, there is no doubt they should be taken into consideration) but they certainly aren’t the most important metrics for assessing HR’s value. They would be valuable in determining if you have the right managers in place though.

I think as you get further down the list, you start to see more things that the CEO and CFO care about: costs, open reqs, revenue, and productivity. And at the very least, you have to connect those retention and employee satisfaction numbers with the higher concerns for your colleagues in the C-suite.

Maybe the more alarming for some of you will be the 26 percent of organizations that don’t use metrics at all to evaluate HR’s value to the company. One in four (1 in 4) not using metrics is a tough number to swallow for a function that strives to be more relevant and visible among the organization’s top leaders.

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Make no mistake about it though: measuring (and focusing on) the wrong things can be as costly as doing nothing at all.

Social media, recruiting, budgets, and outsourcing

Some of the other interesting information shared in the survey also piqued my interest:

  • Social media is becoming a key source of information for HR pros. The top sources for information that HR professionals use across the board are Industry associations, publications and blogs, social media sites like LinkedIn and their colleagues. Sites like LinkedIn are allowing colleagues to share information in a much more fluid manner. But there is still room for growth: 36 percent of those don’t use it at all.
  • Not surprisingly, finding experienced candidates is still the number one challenge facing recruiting functions. But the next two concerns are more telling of a deeper issue: compensation and cultural fit. If either one of those are getting in the way of placing candidates, I wonder how serious firms are really being about filling open positions (or if they are hoping for the miracle candidate to fall out of the sky).
  • Job boards are still the number one channel used by most recruiting functions for (what I assume to be) external recruiting. Referrals and LinkedIn round out the top three slots. Social recruiting specific services, blogs, Twitter and Facebook all netted under 11 percent usage.
  • Budgets are expected to be the same or slightly ahead of last year’s budgets. Three in four respondents said they were looking at either the same or a slight increase in the amount of budget their department would get. Some 6 percent believed it would decrease greatly, which seems to indicate some optimism.
  • Over half of the companies surveyed aren’t outsourcing any of their HR functions. Of those who are, the top outsourcing targets seem to be recruiting, back office, and payroll functions. I’m very surprised to not see more companies (especially smaller companies) take advantage of some back office or payroll outsourcing.

Does any of this seem odd or out of place? Is anything drastically different than the companies that you are aware of?

From where I sit, everything looks pretty much where I thought it would be. Now if we could only fix some of the metric questions, we might be able to do a bit better on figuring out how to explain HR’s true value to the organization.

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4 Comments on “What HR Is Measuring: Employee Satisfaction and … Retention?

  1. Lance–I challenge your challenge of the notion that employee engagement is THE metric for HR. The C-Suite understands the tight connection between engagement and outcomes like productivity, retention, innovation, and word-of-mouth advocacy (where all employees become your best marketers). Other than engagement, what other metric is more effective at understanding the root causes of those outcomes? 

    1. Indeed, I think the C-suite generally tries to understand the employee engagement metric and HR is often in the position of evangelizing it to leadership. It is an important metric for the organization but I’m not sure the HR has the span of control needed for it to be an accurate indicator of HR effectiveness. 

      If you look at other functional areas of a business, none of them are evaluated based on something that is that far out of the span of their control. Finance departments are judged based on financial forecasts and accuracy and IT departments are judged based on equipment uptime and capital costs. 

      I would argue that HR should be judged on revenue/cost impact of the work they are doing. Perhaps internal service levels or staffing forecasts too. I’m not sure employee engagement is the most direct way of measuring that. 

      1. lance, thanks for featuring this piece…i think it’s interesting context/color. i always take survey results with a grain-of-salt and never draw too deep a conclusion from any of them. but i do think it’s good food for thought…or blog. I too struggle with the “employee engagement” and “retention” metrics. but i also agree that they may be the best we have right now. the problem – as you allude to – is that HR can not carry the weight of these hefty metrics on their shoulders alone. retention is not a program (or a function). it is an outcome. it is the result of every experience our employees have from the moment they walk in our doors. having said that, HR is often in the best position to help the rest of the organization realize this, to keep them sensitive to it, to draw out those “high-impact” behaviors or practices that contribute most directly to an employee’s sense of connection and affiliation, to guide the rest of the organization in focusing on the right stuff. that doesn’t mean we ultimately control the outcome, but it certainly means we (should) have substantial influence over it. 

        i think an exercise in (truly) quantifying HR’s value contribution is compelling, but something tells me it involves a pretty complex algorithm. 

  2. Lance,

    Thanks so much for taking the time to review our study and post your thoughts. We greatly appreciate it and look forward to sharing other pieces of data and commentary from our community with you in the future.

    Best,
    Caty Kobe

    HR Community Manager, Focus.com

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