In today’s highly competitive world of business, the most perceptible evidence that strategic HR is taking hold could perhaps be that many organizations are now using HR metrics as a vital component of their overall business strategy.
As a matter of fact, one recent survey shows that a mind-blowing 82% of companies today say that HR metrics are somewhat useful, useful, or extremely useful for them.
This further demonstrates that executives value HR metrics and want to see more of them—therefore, your HR team too needs to optimize its data analysis game.
Not sure where to start? We’ve got your back!
Here’s a guide to help you contemplate the basics of HR metrics and which ones your HR team should be measuring to take your organization to greater heights.
HR metrics are nothing but operational estimates, addressing how effective, efficient and result-oriented an organization’s HR practices are.
There are multiple challenges recruiters face today. These metrics leverage the power of data to aid you deduce conclusions that drive a better outcome for your employees and the company as a whole.
HR metrics can involve any number of processes fabricated to provide quantifiable issues.
Why do HR Metrics Matter for your Organization?
Few reasons HR metrics truly matter are because they:
Aid your organization in making better, more informed decisions
According to Deloitte’s Talent Analytics research, companies that go through the process of “datafying” their HR organization are witnessing 2-3 times better results in quality of hire, leadership pipelines, and employee turnover.
As more and more businesses use analytics to derive effective strategies, HR teams are constantly under pressure to improve factors like employee retention and time to hire.
A few questions HR managers can answer by closely studying HR metrics include:
- How can the organization retain and engage top talent?
- How can the organization change its compensation process?
- How can the organization create more collaboration?
- How can the organization increase overall employee diversity?
Measure employee satisfaction
Predictive analytics in HR metrics can help plan employee retention campaigns and improve employee engagement.
Advanced algorithms that make use of historical data to govern the likelihood that some employee will leave in the near future is how this works.
Using HR metrics, companies can more easily acknowledge and reward employees hard work and dedication. By having everything organized and centralized, employees can also receive updates when they hit their targets or complete assigned tasks, and then be recognized through means of a peer recognition system.
Optimize the recruitment process
The amount of data collected through HR metrics that HR professionals can now use makes their job less complicated, but there are several ways HR professionals can use this data to get better precisely at hiring. These include:
- Companies can dive deep in social media to find the right people
- Companies can do text-analysis on the hundreds of resumes they have in their databases
- Companies can use advanced games and tests to to measure candidates skills
Key HR Metrics you should be Measuring
There is no shortage of things to measure in the management of human resources. But what data will present your organization with the added edge it needs over its counterparts to grow and succeed?
We’ve compiled a list of some of the most important HR metrics to monitor in your company:
- Time to Start (Average time required to fill a position)
This metric is calculated by taking the total number of days positions are open in the organization and dividing them by the total number of positions filled.
This metric can provide insights on the effectiveness of your organization’s marketing efforts, employment brand, and application process. If numbers are on the higher side, it can also throw some light on your interviewing process – yours may be too lengthy of an application process, or you may have scheduled too many interviews while hiring.
- Time to Productivity (Average numbers of days to satisfactory productivity)
Time to productivity is calculated by considering the total number of days between the new joinee’s start date and the point at which he/she reaches satisfaction productivity; and dividing this value by the total number of positions filled.
This metric is an important measure of how well your organization’s onboarding program is performing. Additionally, outcomes can also be an indication of the potential of the applicants you’re attracting and the quality of your recruitment process.
- Turnover Rate (Rate at which employees are leaving the organization)
Turnover rate is calculated by considering the total number of departures during a particular period (a month, quarter, or year), dividing the value by the average number of employees during the same period, and thereafter multiplying the resulting value by 100.
When focusing on a target group (e.g., Millennials, high performers, low performers, or critical positions), this metric can provide details regarding the efficacy of your performance management, culture initiatives or development.
- Cost Per Hire (Average cost incurred with a new hire)
Cost per hire is calculated by considering the total cost ( recruiter fees, marketing spend, or relocation expenses) and dividing this value by the number of new hires in your organization.
Too high of an external cost could be an indicator that you need to invest in internal recruiting resources such as technology or training, hire an extra recruiter, or reevaluate the mediums you’ve selected to market your positions.
Learning and Development
- Readiness (How ready the organization is from a human capital perspective)
This metric is calculated by taking the total number of vacant positions divided by the total number of approved positions and then multiplying the resultant by the number of employees with desired competency ratings divided by the total number of employees who have received a competency assessment. Thereafter, this value needs to be multiplied by 100.
Simplified: (Vacant Positions/Total Positions) x (Employees With Desired Competency Rating/Total Assessed) x 100.
It’s an important metric for ascertaining whether your workforce is aligned with your business trajectory.
- Training Participation Rate (% of employees engaging in development opportunities)
Training participation rate is calculated by dividing the total number of employees who took part in a training opportunity by the number of employees who were eligible for the same, and then multiplying the value by 100.
The outcome will help you govern if you’re using the best delivery medium, if you’re offering the “right” training, or if you’ve effectively communicated the opportunity.
- Average Performance Rating (The average performance rating for a selected group)
This metric is calculated by dividing the sum total of all performance ratings by the total number of employees who received a rating, and then multiplying the resulting value by 100.
Tracking this metric will let you know if your performance management programs are working in full force and if any of your teams is falling behind the curve.
- Employee Engagement (Degree to which employees are committed to and engaged the objectives of and the strategy followed by their organization)
Calculating engagement can be a tricky task.
Most organizations invest in a third-party resource that typically includes an extensive survey — it’s worth it. A high level of engagement is one of the most critical traits found in high-performing organizations.
The work you do in human resources is crucial to your organization’s advancement. However, without monitoring and measuring HR metrics, it can get arduous to identify how your work as an HR manager makes a difference or how you can amplify your efforts.
If you aren’t measuring any of these metrics at the moment, you need to sit down and HR identify which data you need to start tracking right away. Keep it simple; there’s absolutely no need to start running a hundred reports.
If you are already computing certain HR metrics at the moment, double-check that all of your data is helping your organization reach its objectives. You also need to think about metrics you don’t need to be tracking or the ones you need to add. Don’t miss out on the valuable insights that are waiting for you in the numbers.