I believe People Operations teams should run like Product Teams. This requires a restructuring of your mindset beyond conventional "HR data" to cultivate a truly commercial People Operations function leveraging data. Let's dive in.
In today's fiercely competitive business environment, organizations have recognized the significance of data for strategic decisions. Revenue-generating functions, such as marketing and sales, have always depended on data for success evaluation. In recent years, the importance of data has permeated the realm of human resources (HR). It's a prevailing topic that continues to emphasize its relevance in the current macroeconomic environment, focusing on delivery and return on investment (ROI).
I believe People Operations teams should run like Product Teams. People Operations as a Product is a new way of thinking about how to build your People Team to be commercial and highly impactful, and it involves a restructure in your mindset and day to day beyond the Ulrich model. If you want to hear more about that framework, then my book Built for People and the blog that inspired it will give a great overview of the way of working and methodology.
To cultivate a truly commercial People Operations function leveraging data, it's essential to explore beyond conventional "HR data". My emerging hypothesis is the use of product and marketing metrics to measure the effectiveness of people strategies, which fosters cross-functional learning and enhances the success of your team.
If you are any business leader, from People to Marketing to Product Management, one of the biggest challenges you are likely to face is how to demonstrate that your team is making a significant contribution to your company's top-line, bottom-line, and strategic targets. In most businesses I have worked for in the past, there is a direct line of sight between a leader's performance and their ability to tell compelling stories about their team’s effectiveness and performance. This is not just expected via qualitative data and anecdote, but also getting under the skin of KPIs and performance data of a more quantitative nature.
The two things holding you back from doing incredible work:
Like the Peter Principle, where someone is promoted to their highest possible point of competency (or failure) within an organization, I often see HR leaders fail through what I am calling a gut principle. This is where they are promoted, or succeed, to the highest possible outcomes of their own intuition or gut reads on a situation.
We’ve all seen it, someone who has incredible intuition, they are capable of seeing a situation and making a capable and educated guess on what to do. However, as your promote that person based on their success, and they continue to not invest in analytical analysis, they will eventually reach a stage of business scale and complexity where they become incompetent.
The second biggest failure I see is relying on input metrics. HR teams are notorious for focussing on input metrics to measure their success. Put simply, an input metric is where you do something. An example is “Launch a new careers page” or “Update our benefits offering.”
However, the mark of a great leader is being able to set, measure, and influence output metrics. These are the metrics based on some kind of outcome or result. Examples here are to “Increase traffic on our careers page from X to Y” or “Improve sentiment around our benefits by 20%.” These are the kinds of goals you can see being moved through a range of different inputs, and those which enable you to see tangible progress towards your higher level company goals, rather than just internally focussed projects.
Marketing and Product teams are generally great at output metrics. So let’s see what we can learn from them in People Operations.
Operational Metrics are indicators that measure and track core team performance. These metrics provide an ongoing report or birds-eye-view of how a company, team, or function is performing along their key deliverables. They primarily track efficiency, quality, spend, and are used for identifying trends or areas of focus, rather than tracking success against a specific goal. Operational metrics may take the form of a dashboard or reporting to the board or management team, and are often standardized and longer-term.
When thinking like a product manager, and breaking the hiring, onboarding, and engagement process down into a funnel akin to a product journey, there is an easy and effective way to draw inspiration from the commercial and product teams in your company.
Generally I like to look at hiring success through the lens of CAC to LTV as they are defined in Marketing. This means “Customer Acquisition Cost” and “Customer Lifetime Value”. An ideal hiring process has a high LTV and a low CAC, this is through successfully implementing great recruiting, branding, and performance feedback.
Some other metrics to look at include:
In product, the ideal metric for onboarding is called the ‘ah-ha moment’ - each company may have a different activation metric for their product. For example, Spotify may use ‘liked three songs’ or ‘created a playlist’ as their ah-ha moment. In People Operations, it’s worth thinking what your company’s “ah hah” moment, where you and your new employee have a mutual understanding of the benefits and relationship they are a part of. You may use something like ‘recorded a professional goal in Lattice’, ‘was an onboarding buddy’, or ‘completed a 360 review’
Throughout the rest of the journey, take some time to think about what Product & Marketing are measuring, and then see how you could adopt a similar metric in your People Team as if your employee experience is a subscription product.
A success metric is a quantifiable measurement that your team uses to track if a project or strategy is successful or effective, and by how much. These may also be framed within Key Performance Indicators (KPIs), Objectives and Key Results (OKRs), or SMART Goals. Success metrics may be tracked long or short term, and may be bespoke to a project or period of time, often formulated at the beginning of a project or strategic milestone.
Whenever you’re setting a project or goal in HR, try to avoid setting an input metric like “Launch the project” and instead focus on something drawn from product or marketing with an output.
This requires you to think of a problem, or an area you’d like to see improve, and then setting a metric that may demonstrate that change has happened through whatever inputs or programmes you employ.
For example, if you know your onboarding process takes too much time from our HR team. An input metric would be, “Launch a new onboarding process”, a great output metric may be: A reduction in HR administration time by X%.
If you find that really hard to measure, try an input metric with something more quantifiable or valuable. For example, “X% of our onboarding process is fully automated or partially automated.”
Every part of your HR team can take this advice, from Payroll to L&D.
Problem: Training expenses per employee are not effectively tied to performance
Output: An increase in the relationship between high performance and training within the prior quarter, from X to X.
Due to the highly qualitative nature of many People Operations professionals (a description with no criticism, I count myself in the same camp!) many of us can be apprehensive towards building and managing metrics, particularly those around areas of the business which feel more human and less numeric, such as culture and engagement.
I understand these fears, and my most compelling argument against this natural response is to remind you that data is a compass point, not a map. Remember, these are tools to give you insights, tell human stories, and lead your team towards more compelling and human-first solutions.
Want to learn more? Check out Jessica's lastest book, Built for People, here.