Measure Grievances to Minimize Costs

To measure and determine the real cost of employee grievances, organizations should gather and store notes and records about employee complaints in a central location so that the time spent on each case—and the cost associated with that time—can be measured and minimized.

It’s not enough to tell members of the C-suite that HR has investigated a certain number of grievances in a month, according to Cathy Missildine-Martin, SPHR, co-founder and chief performance officer for Intellectual Capital Consulting of Atlanta. “You have to be able to say what [the complaints] cost the company,” she said during a webinar held March 29, 2012.

Five Key Metrics

In“Five Employee Relations Metrics You Should Be Tracking & Why,” hosted by Dovetail Software, Missildine-Martin recommended tracking the:

• Number of grievances per month, quarter and year using a constant measure, such as the number of grievances per 100 or 1,000 employees. This data can be “sliced and diced” by manager, department, region and facility, she said.
• Cost of grievances by calculating—in a consistent manner over time—the time spent by managers, HR and legal counsel investigating and handling complaints, the cost of lost productivity and any legal expenses.
• Root cause of grievances. “Just like with safety and quality, if there’s a defect or issue we’ve got to figure out why,” she explained. In the case of employee grievances, she noted, such problems can arise as a result of supervisor errors, unclear policies and procedures, lack of management training and bad hiring decisions.
• Average close time. Similar to “time to fill,” a measure used in recruiting, the average close time is a measure of the efficiency of the grievance resolution process that is based on how many days it takes to resolve an issue from the day it is identified as a problem.
• Return on investment (ROI). “Eventually we want to look at how much money—over time—the employee relations program has saved the organization,” she noted. Measures such as revenue per employee and profit per employee can be monitored to see if there is any impact after effective grievance resolution processes are implemented.

Missildine-Martin encouraged webinar participants to look at grievances “from a continuous improvement and prevention mind-set” in order to control costs. “With our companies having to watch every nickel and dime, we have to make sure we are efficient” by taking steps to ensure that the organization avoids lawsuits that will impact the bottom line, she said.

The goal is to have a culture where everyone is treated fairly, she said, by identifying and preventing the root cause of employee complaints.

As an example, Missildine-Martin explained that organizations can measure employee turnover without having any idea what is causing employees to leave. However, when an organization “peels back the layers” by measuring turnover by manager, location or division, it can begin to hone in on trouble spots. And when other sources of data, such as exit interviews and employee complaints, are compared to turnover figures, they will be positioned better to identify areas that might need improvement.

The same is true for employee grievance data, she said.

Why Track Grievance-Related Metrics?

According to Missildine-Martin, the measurement and analysis of employee relations issues such as grievances and complaints can:

• Promote a culture of continuous improvement.
• Increase manager productivity as well as employee productivity because managers spend less time investigating, solving and working on employee relations issues.
• Help uncover potential issues before they become “explosive and expensive.”
• Provide a way to hold managers accountable for their actions, which can lead to behavioral changes that might reduce employee grievances.

“Data lead to insights; insights lead to action,” she said.

Rebecca R. Hastings, SPHR, is an online editor/manager for SHRM.

Related Resources

• Benchmarking Human Capital Metrics
• Q&A: Which HR metrics should we measure?
• Webcast: Building HR's Analysis Capability
• SHRM® Customized Benchmarking Service