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The cost of measurement

Once you have a reputation as a “measurement guy” you get a lot of speaking requests. Recently I was asked to speak on a wellness topic. In the end I declined because even though the measurement aspects of the question were clear, I did not have the knowledge of the topic to deliver well.

The request got me thinking about the costs of measurement. Often this is an area that is not considered when people get into the question of finding data. Measurement costs can be big, they are a mix of tangible and intangible and invariably they are the last thing to be considered when people start looking for answers.

For example employee engagement surveys are a major line item in many HR budgets. An organization of 2000 employees or less can easily spend over $100,000 a year to come up with their engagement score. This number includes staff time as well as the direct costs of administering the survey. This is not the cost for solving the issues identified or making changes. This is just the cost to come up with the number and communicate it to the right people in the business.

The costs of sourcing the annual engagement score have been through serious scrutiny in the last few years. From anecdotal evidence it seems that many organizations have moved their surveys in house using free online tools.  Now that executive leaders have become used to reviewing the engagement score, HR has to keep producing it on a reduced budget. The cost of measurement has impacted how things get done.

Reflecting on the measurement challenges related to the wellness topic above, it quickly became clear it was not worth measuring. Proper measurement would have involved significant work to develop, test and verify questions that are valid and reliable. Then it would be important to survey a sample at least twice a year to avoid any seasonal effects. Analysing the data would involve significant manual processing and the filtering and analysis of some amount of text-based content. All of these factors make the measurement process costly and complex. Which in turn makes it diffcult to sustain.  Much as the wellness outcomes being sought were important, the likely returns from the area being studied would not warrant the investment required to capture and process the data.

There is an alternative to undertaking your own measurement project. This is to review organizational studies and literature to find outputs which support your program. The wellness topic that was the focus for the presentation has lots of supporting literature to show that it brings benefits.

The question of cost is one of the least talked about and most important aspects of any measurement program. In many instances when it comes to questions about people, and especially where you need large amounts of qualitative data, the costs of data capture may outweigh the value of the data.  Before any specific area of the business is measured or a measurement process is developed, it is important that you know what data you need, what it will cost you to capture this data on a consistent and timely basis and whether these costs are consistent with the value that can be derived from the data.

Ian J. Cook

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Ian J Cook

Director, Product Management at Visier Analytics
Ian J. Cook MA, MBA, CHRP, continues to pursue a fascination for people and business. His quest to understand what it takes for organizations, and the people in them, to thrive has led to many fantastic career stages. Ian has been an entrepreneur, an operational manager and spent 10 years, consulting to some of the World’s leading companies. Read more
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