Feb 21, 2018 10:45:00 AM

On the Future of HR and Employee Engagement Metrics

A while ago, I read a great post about the future of HR by McKinsey & Company. They say that HR in the future should be more strategic, drive business value, measure results, be analytical and accountable for the right metrics. That sounds very familiar and I wanted to share a few experiences and thoughts of my own on this topic.

I'm an engineer by training and love numbers but also I've been an entrepreneur for 12 years and have learned the value of people. HR and metrics nicely combine these two passions of mine.

From the metrics point-of-view the most important thing is to choose the right metrics and avoid easy and/or vanity metrics. As we all know you get what you measure. It's tempting to choose easy metrics so you have something to measure and be accountable for but it doesn't help the business or employees. Sometimes it can be better to have no metrics at all than to use vanity metrics as they can lead us the wrong way.

Some time ago we were in Las Vegas exhibiting at the HR Tech Conference and had a few very interesting discussions about this topic. These people we talked with felt that many of the modern engagement platforms, as well as the traditional annual surveys, measure vanity metrics more than anything else. Vanity metric is something which is easy to measure and might look good but improving the results don't necessarily improve the end goal which in this case is the company's bottom line and employee experience.

This was really great to hear as we've been wondering the same thing ourselves - in fact, VibeCatch exists because we want to provide the metrics that matter. We also believe that simple engagement indexes are not particularly helpful in understanding how to develop the business to be better next week. Everyone knows more engagement is good, but how exactly does it drive productivity in each company? Neither does benchmarking against industry standards help as they mostly seem to offer a reason to do nothing unless performance is well below average. We all know that great culture is good but there really isn't one great culture you can copy, all companies need to develop the culture that is good for them. We've all read about the culture of Amazon which surely wouldn't fit many other companies but serves them extremely well.

It's quite understandable that this is the situation. It's not an easy feat to measure how productivity is linked with employee satisfaction, engagement or culture. It is definitely harder than measuring an employee engagement NPS index or calculating an average of a few different questions. Previously in HR events, we've talked with huge companies that have over 100 000 employees and have dedicated HR analyst teams trying to figure out the link between engagement and productivity. They all said they have failed to find a reliable connection. To me, this means that the problem is very difficult for any corporation or startup to solve in a quantifiable way. McKinsey estimates, in the article mentioned in the beginning, that there is potential to improve margins by 2,75% by improving HR practices. This figure may be underestimated, especially if the real productivity drivers can be identified and there’s support from the management to improve them.

We at VibeCatch are dedicated to solving this problem. We don't claim to have a 100% accurate solution but having over ten years of academic research behind the product does give us a headstart. If you're interested in learning a bit more about how engagement and productivity are linked, you can read our short white paper. You can also read how one company improved profits by 25%.

I'm happy to hear any thoughts, opinions and discussion on this from management and HR people alike!

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Posted by Juha Huttunen

CEO of VibeCatch. A serial entrepreneur, technology enthusiast and geek with 15+ years of experience in startups, sales, leadership and growing business.

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