How HR Metrics Could Drive Better Government Performance

Every jurisdiction should be comparing itself with its peers to identify problematic practices, increase productivity and reduce costs.

Two yellow rulers
The conclusions of a study of Philadelphia's city-government hiring and employment practices issued by the Pew Charitable Trusts last year could hardly have come as a surprise to the city's top officials. After all, they had commissioned the study; they knew they had problems.

The researchers compared Philadelphia's practices with those of 29 other large cities. Philadelphia's problems, they found, flow from an outmoded civil service system. "Hiring through the civil service in Philadelphia," the researchers wrote, "has changed little since the system was put in place in 1952." That was the year when a reform mayor replaced patronage with a merit system.

One current metric jumped out from the Pew report: The median time from when an applicant applies to getting accepted for a position is 360 days. Some have to wait as long as two years. That contrasts with a recent recommendation from one of the nation's foremost experts on private-sector employment, John Sullivan. For well-qualified applicants, he recommends making an offer the day they are interviewed.

The Pew report highlights a number of other points that should concern Philadelphia's leaders. Its human resources practices are excessively bureaucratic, costly and hurting city government. There is no reason, other than politics, to allow that to continue in any jurisdiction, and there are cities that discarded such antiquated practices years ago.

There is one aspect of the Philadelphia report, however, that should be encouraging to those who follow HR practices in government: the study's use of a range of metrics that are widely employed in other sectors to compare Philly's practices with those of other cities. In government, that kind of comparison is the exception. The contrast between the extended wait for a job in Philly and Sullivan's recommendation prompted me to search for information on the use of comparative HR metrics in government. I found virtually nothing. Contacts with several recognized HR thought leaders confirmed that.

Last year the International Public Management Association for Human Resources conducted its second survey of the use of HR metrics. Little has changed since the first study, in 2010. Equally troubling, the response rate to the new survey was low and a number of questionnaires were sent back partially completed. Its clear that many of IPMA-HR's members had little to report.

The reason for my interest is simple: State and local governments have a combined workforce of 20 million and a payroll that exceeds $80 billion. HR metrics are well suited to simple comparative assessments as well as more sophisticated analyses. Metrics would provide management with the information needed to identify problematic practices, increase productivity and reduce costs.

While not all standard HR metrics are relevant to government (an obvious example is "profit per employee") there are at least 15 that are well suited to comparisons across similar public-sector organizations. Examples include not only the "time to fill vacancies" metric used in Pew's Philadelphia analysis but also "training expenses per employee" and "absences per manager."

Another metric that is often cited is "HR to employees ratio." In the past, a common goal was to reduce that ratio, but with the growing recognition that HR can play a lead role in raising performance levels, that metric has lost is relevance. And any metrics related to HR staff size have to take into account variations in the function's organization, such as outsourcing benefits administration.

There are several metrics, however, that are directly relevant to evaluating HR's effectiveness, regardless of how the function is organized. "Time to fill vacancies" is an obvious one. "Costs per hire" is another. When an employer finds that those values are comparatively high - Philly's leaders should pay attention -- it's a red flag indicating that changes are needed.

Beyond HR-specific metrics, there are several indicators of how effectively employees are managed. Those include rates of turnover, absenteeism, grievances and first-year resignations. Comparisons across jurisdictions would be a great way to assess the need for reform. Raising employee engagement levels is a proven way to increase productivity and reduce costs. It starts with HR metrics.

For employers like Philadelphia, or any public employer, assembling the data requires an investment, but it is solidly consistent with evidence-based management. The ongoing monitoring of comparative results -- year to year as well as across jurisdictions -- will provide an incentive to change. There is no better basis for developing support for civil service reform.

The value is greatest when a group of similar organizations agree to develop comparative databases. Once up and running, such a "competition" would provide participating organizations a reason to drive for improved performance.

A consultant focusing on public-sector pay and performance