Archive for May, 2012

Are you reporting the #1 metric the CEO needs to know?Do you know what your CEO wants to know?  Recently this question was showcased in Workforce Magazine’s  Q&A section.  The article got me thinking about a related and perhaps more critical question:  Do you answer the CEO in ways that give clarity to his/her questions? It may be the key to an age-old HR question.  You know the question about the vacant seat at the table which HR endlessly tries to claim as their own?  What does it take to sit in the ‘seat’?

Will HR ever land that seat at the table? This is what I tend to hear:

  • From the CEO: “HR is important in an administrative sort of way; mostly it’s overhead to us.”
  • From the business owners: “We really don’t need HR; we have ‘people’ to manage the paperwork.  Our managers take care of the rest of the stuff.”
  • From the human resource professionals: “Why doesn’t the c-suite/owners recognize the value we create?”

Today,  I am more convinced than ever that effective communication is THE key.   The problem is business owner’s/CEO’s and human resources speak different languages.  Start reporting the #1 metric the CEO needs to know and the language barrier disappears and the seat at the table will probably appear.

HR’s hard work will be rewarded.  If HR really wants to be recognized, wants to be seen as adding value to the company, and wants credibility they yearn for, they must first communicate in a language the c-suite and business owners care about.  Forget talking about ‘intangibles’ and activity reporting. That is the sort of language that got HR in this mess.

Smart HR professionals have figured this out.  The answer lies in what is communicated and how HR draws a line to profit or at the least improved results.  Consider these two statements about an HR departments hiring results; which do you think the CEO would rather hear?

“This month we reviewed 437 applications; interviewed 180  people; facilitated 102 management interviews; checked backgrounds on 73 and assisted with hiring of 48 people including 4 key people.”

“This month we facilitated the hiring of 52 people; as a result customer loyalty is up 2 points which equates to $7,384 in additional sales.  Also, of the 52 people, 4 were key hires who have already had an impact on their departments, lowering expenses by half a percentage point saving the firm nearly $9,000.  Plus employee engagement is up in those departments which is driving us to a record sales month.  Those departments combined surpassed their sales goals by $27,000 for the month.  That nets to about  $43,000 as a result of effective hiring and working in tandem with department heads to exceed company goals for the month.”

It doesn’t take a rocket scientist to do this.  Yet HR tends to excuse itself by saying they don’t have access to “those kinds of numbers”.  But the right numbers may very well be the magic pixie dust to the seat at the table.  There are books with ideas and suggestions for metrics HR can track and use to prove worth.  They key is not to crunch every number HR can find; it’s about knowing your CEO and what ONE metric is the real key for him/her.  Let me save you a few bucks and share with you what I have found to work.

7  Steps to Identifying the #1 Metric the CEO Needs to Know.

  1. Ditch the activity based metrics and reports.  Nobody cares what HR did today if it is merely summed up by activity reports.  Everyone is busy.    Accept that HR isn’t valued for being busy.
  2. Understand the company goals and the CEO’s agenda.  Data is just data when it doesn’t connect to something the c-suite or business owners care about.  Know which goals hit a pulse point.
  3. Identify metrics to match the pulse points. Did you notice I didn’t say ‘HR’ metrics?  Typically this is one place HR mis-communicates.  HR believes the CEO cares about HR metrics but they don’t.  What the CEO cares about are metrics that make their blood pump; the ones that drive company goals and their personal agendas.  Identify those metrics whether or not you see or believe there to be a link to HR.
  4. Clarify the metric path.  Talk through HOW the various metrics develop. It doesn’t take a finance expert to follow a sales metric from a starting point to the customer. Work through each metric to identify the path it takes before it gets to the reporting point.
  5. Look for ways HR impact the metric path.  Take each metric path and identify ways HR affects or could affect the metric.  Consider what improvement in the end metric is possible if HR were to do something different.  Brainstorm what those ways might be.
  6. Track HR’s effect on the metric path but report the end number. By starting with the end metric you can backtrack along the metric path to show HR’s contribution to the end number.  You’ve just drawn a solid line from HR to something your CEO will actually care about.  Pay attention to his/her reaction.
  7. Report the #1 Metric the CEO needs to know.  If you paid attention in that last step, you’ll know which metric result hit the pulse point of the CEO.  In following reporting periods, start with this metric.

The hardest part of contribution reporting may well be effectively communicating with other leaders.  Determining the link between HR and the metrics the CEO cares about is crucial. It takes clear, effective communication and a willingness for HR to realize they need to be a part of the team in order to be seen as a part of the team. Take time to communicate with leadership to understand how the various metrics come to fruition.  Learn more about how the company operates and you’ll gain clarity on ways HR can have an impact on operations. Measure and report the impact and you’ll be surprised how quickly the seat at the table appears.

Nikki Ellison is a business advisor, executive coach and founder of Ellison Partners. Through effective leadership coaching, proprietary skill acceleration programs and assessments, Ellison Partners helps businesses and their leaders achieve results.

© Ellison Partners 2012.


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