Companies missing the mark on using metrics to boost their employees’ productivity, performance

TORONTO A new study shows only 10 per cent of senior financial executives say their productivity measurement tools fully meet their organization’s needs, and more than one quarter are not using productivity data to improve performance at all, according to new research by the Canadian Financial Executives Research Foundation (CFERF), sponsored by ADP Canada.

CFERF, the research arm of Financial Executives International Canada (FEI Canada), conducted the survey of 126 senior financial executives across Canada, which revealed the most common HR reporting and analytics tools used are vacation tracking (86 per cent), payroll management (74 per cent) and attendance (71 per cent).

There are numerous employee productivity metrics used, with the most common being workforce turnover metrics and financial metrics such as sales or revenue per fulltime equivalent. However, the vast majority (90 per cent) of survey respondents say these metrics are not fully meeting their organizations’ needs. This struggle to measure output is, in part, leading to a productivity deficit in the workforce seen in other recent research, where nearly half (49 per cent) of Canadian workers are not feeling as productive as they could be.

The results show that one of the most glaring missed opportunities today is a lack of alignment between HR and Finance departments about what key performance indicators (KPIs) to measure, and how to glean actionable insights from this data to improve productivity and performance.

“Many people don’t realize how involved finance departments are in a business’ HR functions, both in a day-to-day capacity as well as strategically,” said Russ Wong, Chief Financial Officer at ADP Canada. “The two departments can and should lean on one another to determine the key performance indicators that have value to improving productivity and engagement, and use their company’s available data to strengthen their business.”

The study shows that payroll is handled by finance in 71 per cent of cases, while onethird (35 per cent) of respondents report that finance is also responsible for culture, staffing and strategic planning. However, even with more metric-savvy financial team involvement in HR, more than one-quarter (28 per cent) of organizations are still not using the productivity data they have to improve their companies' performance.

“This is a huge missed opportunity, particularly with finance playing a growing part in the HR function in many organizations,” said Laura Pacheco, Vice President, Research, FEI Canada. “But the reality is that in most cases, companies aren’t tracking or leveraging the key performance indicators that best support their business objectives, and using that information to inform decisions that impact the workforce. By better aligning HR priorities with business priorities, Canadian companies stand to prosper through a more engaged and productive workforce.”

Of particular note, the report also showed that:

*The majority of businesses define workforce productivity through the lens of the bottom line. Sales generated per fulltime employee (46 per cent), percentage of revenue allocated to compensation (23 percent), operating expenses per full-time employee and industry specific metrics (like units produced per employee in manufacturing) (22 per cent) were most frequently cited.

* Two-thirds (64 per cent) say they are using productivity data to inform employee budgeting decisions

* Nearly three-in-five (59 per cent) respondents say they either have in place or are developing KPIs to measure productivity, with larger organizations more likely to develop these KPIs

* Upgrading employee training and skills (38 per cent), increasing employee engagement (21 per cent) and improving workflow design and expanding/recalibrating the workforce (16 per cent) are the areas that respondents see as most likely to foster increased productivity over the next three years

*According to other recent research from ADP Canada, of the 49 per cent of Canadians who feel they are not as productive as they could be, distractions such as multitasking and social media (43 per cent), process red tape and bottlenecks (35 per cent) and a lack of training or resources (27 per cent) are the most common reasons cited.

“HR is often understood to be the softer side of managing a business,” added Wong, “but these professionals can certainly benefit from a strong relationship with the finance department, who better understand how to extract value from data. Strong metrics lead to better analysis, which in turn leads to both a more productive and engaged workforce and a better bottom line.”