HRMN 395-Week 5 Discussion: Possible Pitfalls, Evaluation, & Metrics AND Assignment 2: Report on Metrics

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HRMN395MetricsExplanation-2.pdf

Assignment Two HRMN 395 Total Rewards

Metrics for Evaluating the Effectiveness

of Total Rewards in an Organization

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Deliverables for Assignment Two

Design and share a PowerPoint presentation that:

Describes and justifies three metrics that evaluate the effectiveness of the total rewards for the organization used in the first assignment

Provides a “script” in the notes section articulating the bullet points as if you are making a presentation to the class

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Metrics are a Core Element of the Total Rewards Philosophy

Source for definition: UMUC Course Module 1 Commentary

Why measure?

Organizations measure what matters for the success of their organization. What gets measured, gets managed.

With the right measurements in place, an organization can gauge the effectiveness of their Total Rewards programs and make changes, if necessary.

Metrics answer questions - so the right questions need to be asked.

Source: UMUC Course Module 5 Commentary

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The Language of Business is Numbers – Numbers that Communicate Success or Failure of Initiatives

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Sales are up by 10% Market share has increased by 20%

Profits have eroded by 3% Stock price is up by 2 points

Our brand has 50% name recognition

Customer satisfaction has Increased by 12 percentage points

HR Professionals Must Communicate in the Language of the Business (Numbers) in Order to be

Credible, Heard, and Understood

Intent to leave due to the rewards offered is down by 10%

Market comparison of compensation shows our organization in the upper 1/4th

Skills training of employees has resulted in 100% availability of requisite competencies for expansion of production

Exit interviews report that 80% of the employees leaving is due to rewards offered and 20% is due to negative culture of the organization

What is a Metric? • Metrics, also known as measures or key

performance indicators, are tools that assess and report the impact of a particular project or activity.

• Metrics may be quantitative or numeric in nature such as increased in retention because of rewards by 20 percent. Metrics may also be qualitative such as improved staff satisfaction levels with rewards from 55% to 75%.

• Both quantitative and qualitative metrics are typically reported in numbers such as percentages or indexes.

• Metrics answer questions – such as - is the organization meeting its goal to offer rewards that attract, retain, and engage employees?

Source for definition: UMUC Course Module 5 Commentary

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Metrics Need to Matter to the Organization • What Human Resources assesses and

reports to the organization should be important to the organization or else it is ignored or marginalizes the work of HR

• CEOs report that Human Resource professionals do not share metrics that matter. Instead they report useless ones.

• How do we determine if our metrics are important? Ask, do they link or align with: • Organizational capabilities • Requisite employee competencies • Challenges of the organization • Strategic plan for the organization

• Recall that these 4 items were presented in Presentation One

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Metrics are key performance indications of the successful

achievement of goals

Metrics are important key performance indications for organizational goals; they track success related to financials, customers, and business processes and can be used for Total Rewards

Metrics need to measure the outcome in a direct, not indirect manner

The direct linkage between rewards and customer satisfaction, employee satisfaction, revenue, profits, and productivity are hard to prove

What are the Right Questions Metrics Should Ask About Total Rewards?

• Are we offering rewards that attract, retain, and engage employees?

• Are we offering the right rewards? • Are our rewards competitive? • Are we communicating our rewards to the

employees effectively? • Are our rewards such as training and

promotions preparing the organization for tomorrow?

• Are our rewards retaining our key essential employees?

• Do our rewards allow us to distinguish between the top and lower performers?

• Is the cost of the rewards offered worth the price?

• Are our rewards helping the organization achieve it’s major objectives or organizational capabilities?

Evaluate the Metric – Does it Matter? Does It Answer the Right Question?

The right metric will directly assess Total Rewards (monetary, non-monetary, or the work environment such as training, promoting, or the work itself)

Total Reward Metric Example 1:

Percentage of employees who intend to leave the organization because of rewards

Total Reward Metric Example 2:

Percentage of employees in key positions rating rewards as satisfactory or above

Total Reward Metric Example 3:

Comparison of compensation for key positions to the competition for same potential applicants

The right metric will be linked to the organizational capabilities, requisite competencies, challenges, or strategic plan

If a core capability is to be mission ready, retention of employees is critical

Employees must be retained and if the rewards are not attractive, they may leave

With unemployment low and wages not increasing significantly over the past 5 years, employees may leave if they can receive higher compensation elsewhere

Metrics Answer the General Question: Are our Rewards Effective for Attracting, Retaining, and Engaging Employees with the Requisite

Competencies our Organization Requires?

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Before finalizing your metrics, ask yourself if each metric ...

• Specifically measures total rewards and not another organizational outcome such as customer satisfaction, revenue, or profit that is only indirectly related? Does it prove that the rewards are worth the cost?

• Reports on a specific outcome related to total rewards rather than a broader, albeit important, HR metric such as turnover, retention, time to hire, cost of benefits, or employee satisfaction?

• Matters for achieving any of the following? • Organizational capabilities • Requisite employee competencies • Challenges of the organization • Strategic plan for the organization

• Can be calculated (does data exist that can be used for this metric)?

• Is void of incorrect terms such as using the term matrix rather than metric, metric system rather than metrics, and incorrect grammar such as metrics is or metric are.

Have Questions about Assignment Two or the Term/Tool of Metrics?

Please place the questions in the Questions Forum

so all will benefit.

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