Welcome to our Metric Monday series. Each Monday, we’ll provide a cutting-edge or cool emerging metric that can help to improve your workforce analytics capability. These metrics have been vetted through real-world workforce planning and analytics projects, so the value has been shown in real business settings already.
Today, we’re going to look at three different ways of calculating tenure. Each tenure calculation represents a different look at the workforce, and they impact largely different outputs. We’ll look at each of these, their strengths, and where they should be applied for effective workforce planning and analytics.
For workforce analytics, tenure is not a one-size fits all.
The three types of tenure that we’ve seen used effectively, albeit in very different capacities, are:
- Service Tenure
- Company Tenure
- Role Tenure
It’s critically important to draw the distinction between the three, and use the right tenure metric for the right purpose.
Service Tenure
Definition: Service tenure is a calculated number that is generally used for retirement eligibility. For an employee who has never left the company, it’s usually the same as company tenure. For an employee who termed and rehired, they’re usually credited with a portion of the service from their prior stint(s) with the company.
What to use it for in workforce analytics: This calculated number was created for one reason: retirement, so why re-invent the wheel? This is the number that should be used for your retirement metrics. It’s going to be your most accurate way to uncover future retirement eligibility and projections.
Use it for:
- Predictive retirement flight risk.
- Current and future retirement eligibility.
Don’t Use it for:
- Anything else. This is a number created by your HR and/or finance department and has no real relevance outside of retirement.
A great way to show retirement risk and eligibility is in a heat map. You can show retirement eligibility by job family, by division/business unit, and create quick and powerful insights into aging demographics.
Company Tenure
Definition: Company tenure is a simple representation of the total time an employee has spent at your organization. For term/rehire employees, this includes previous time at the company.
What to use it for in workforce analytics: Overall company tenure is a good representation of employee loyalty to the organization, as well as general employee engagement. Do people stay with your organization over time? Are there mobility opportunities?
Use it for:
- Turnover by company tenure. In particular, show this as a trend over time. Losing tenured employees is a sign of a downturn in engagement and employee loyalty.
Don’t Use it for:
- Predicting flight risk. A change in job, manager, or department can instantly change an employee’s flight risk, so overall company tenure is not your best predictor of turnover.
Role Tenure
Definition: Role tenure can be flexible, but is generally defined as the time a person has spent in their current role, in their current department/location. Sometimes companies will expand this metric to show how long an employee has been in a particular job family, so that a promotion doesn’t reset their tenure.
What to use it for in workforce analytics: Role tenure is arguably the most powerful tenure metric. It’s going to be your most accurate tenure-based predictor of turnover or movement. It’s also a great measure of experience and knowledge.
Use it for:
- Predicting flight risk or internal movement probability
- Showing overall job experience and house knowledge
- Projecting for loss of knowledge, skills, and experience. These are valuable, and creating retention in these areas will generate tremendous ROI
- Historical turnover trends by role
Don’t Use it for:
- Retirement, aging demographics
You don’t show up to build a house with a single hammer. You need hammers, drills, and wrenches. Just like building a house, analytics requires the right tool for the job. Choose wisely and prosper.