HR metrics are indicators that enable HR to track and measure performance on different aspects and ultimately predict the future. However, not all HR metrics are created equal.
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You are welcome to suggest additional HR metrics in the comments below
HR metrics is important because it allows organizations to make the connection between the value of what HR is doing and the outcomes of the business. If HR professionals don’t measure their function’s effectiveness and providing decision-making leaders the data they need, HR will continue to be undermined and eventually sidelined when it comes to having a seat at the table. Therefore, many experts urge HR professionals to use the data they have in front of them and understanding how metrics and analysis could give HR an advantage as an overall better strategic partner. This will allow them to help business leaders solve the people problems that matter to the organization
Human Capital is very important to organization because they are the people who are actually working for the organization. They build the company’s core competencies and competitive advantages to the organization. With effective management of the Human Capital, a company can achieve the maximum outputs from its own human capital and be superior to other competitors.
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Before HR metrics, many of the HR activities and processes were difficult to quantify, making it hard to fully understand the real employee costs associated with each HR functions. For example, “a decade ago, if someone looked for turnover rate by performance category, it could be a two-week project.” With HR metrics, more specifically Retention metrics, HR leaders are able to quantify variables such as turnover rate, average tenure, the rate of veteran worker, or the financial impact of employee turnover. These results can indicate how much separating employees is costing the company and help the company to create proactive plans to prevent future loss of top talent.
More importantly, metrics enable leaders and decision makers in organizations towards more efficient and better delivery of HR services
Softwares or outsourcing HR Metrix
The HRIS systems (Workday, Successfactors, Oracle HR, etc.) provide often strong reporting tools within the systems to reflect cost of people.
While talent acquisition systems (like Taleo, etc.) Provide insight in recruitment costs.
If the HR department wants to create data around organizational insight, engagement, culture and in general the opinions of the employees, software like FieldRate (business intelligence) or Beekeeper (more focused on communications) can be used, especially if there is a need to reach the employees who do not have a corporate email addresses.
For the most part, HR professionals in many companies probably don’t need to purchase additional software to create valid metrics. The trick is knowing where to look and how to extract data
Top Examples of HR Metrix
HR metrics examples in recruitment
1. Time to hire (avg time per hire)
An important metric for recruitment is the ‘time to hire’. This shows the efficiency of the recruitment process and provides insight into the difficulty of filling a certain job position.
An important metric for recruitment is the ‘time to hire’. This shows the efficiency of the recruitment process and provides insight into the difficulty of filling a certain job position.
2. Cost per hire (total cost of hiring/the number of new hires)
Like the time to hire, the ‘cost per hire’ metric shows how much it costs the company to hire new employees. This also serves as an indicator of the efficiency of the recruitment process.
Like the time to hire, the ‘cost per hire’ metric shows how much it costs the company to hire new employees. This also serves as an indicator of the efficiency of the recruitment process.
3. Early turnover (percentage of recruits leaving in the first year)
This is arguably the most important metric to determine hiring success in a company.
This early leaver metric indicates whether there is a mismatch between the person and the company or between the person and his/her position. Early turnover is also very expensive. It usually takes 6 to 12 months before employees have fully learned the ropes and reach their ‘Optimum Productivity Level’. According to a 2014 Oxford Economics report, the lost output cost over this period averages £30,000 ($43,700) for new hires.
This is arguably the most important metric to determine hiring success in a company.
This early leaver metric indicates whether there is a mismatch between the person and the company or between the person and his/her position. Early turnover is also very expensive. It usually takes 6 to 12 months before employees have fully learned the ropes and reach their ‘Optimum Productivity Level’. According to a 2014 Oxford Economics report, the lost output cost over this period averages £30,000 ($43,700) for new hires.
4. Time till promotion (avg time in months until internal promotion)
This rather straightforward metric is useful in explaining why your high potentials leave.
This rather straightforward metric is useful in explaining why your high potentials leave.
HR metrics examples related to revenue
5. Revenue per employee (revenue/total number of employees)
This metric shows the efficiency of the organization as a whole. The ‘revenue per employee’ metric is an indicator of the quality of hired employees.
This metric shows the efficiency of the organization as a whole. The ‘revenue per employee’ metric is an indicator of the quality of hired employees.
6. Performance and potential (the 9-box grid)
The 9-box grid appears when measuring and mapping both an individual’s performance and potential in three levels. This model shows which employees are underperformers, valued specialists, emerging potentials or top talents. This metrics is great for differentiating between, for example, wanted and unwanted turnover.
The 9-box grid appears when measuring and mapping both an individual’s performance and potential in three levels. This model shows which employees are underperformers, valued specialists, emerging potentials or top talents. This metrics is great for differentiating between, for example, wanted and unwanted turnover.
7. Billable hours per employee
This is the most concrete example of a performance measure, and it is especially relevant in professional service firms (e.g. law and consultancy firms). Relating this kind of performance to employee engagement or other input metrics makes for an interesting analysis. Benchmarking this metrics between different departments and managers/partners can also provide valuable insights.
8. Engagement rating
An engaged workforce is a productive workforce. Engagement might be the most important ‘soft’ HR outcome. People who like their job and who are proud of their company are generally more engaged, even if the work environment is stressful and pressure is high. Engaged employees perform better and are more likely to perceive stress as an exciting challenge, not as a burden. Additionally, team engagement is an important metric for a team manager’s success.
An engaged workforce is a productive workforce. Engagement might be the most important ‘soft’ HR outcome. People who like their job and who are proud of their company are generally more engaged, even if the work environment is stressful and pressure is high. Engaged employees perform better and are more likely to perceive stress as an exciting challenge, not as a burden. Additionally, team engagement is an important metric for a team manager’s success.
Other HR metrics examples
9. Cost of HR per employee (e.g. $ 600)
This metric shows the cost efficiency of HR expressed in dollars.
This metric shows the cost efficiency of HR expressed in dollars.
10. Ratio of HR professionals to employees (e.g. 1:60)
Another measure that shows HR’s cost efficiency. An organization with fully developed analytical capabilities should be able to have a smaller number of HR professionals do more.
Another measure that shows HR’s cost efficiency. An organization with fully developed analytical capabilities should be able to have a smaller number of HR professionals do more.
11. Ratio of HR business partners per employee (e.g. 1:80)
A similar metric to the previous one. Again, a set of highly developed analytics capabilities will enable HR to measure and predict the impact of HR policies. This will enable HR to be more efficient and reduce the number of business partners.
A similar metric to the previous one. Again, a set of highly developed analytics capabilities will enable HR to measure and predict the impact of HR policies. This will enable HR to be more efficient and reduce the number of business partners.
12. Turnover (number of leavers/total population in the organization)
This metric shows how many workers leave the company in a given year. When combined with, for instance, a performance metric, the ‘turnover’ metric can track the difference in attrition in high and low performers. Preferably you would like to see low performers leave and high performers stay. This metric also provides HR business partners with a great amount of information about the departments and functions in which employees feel at home, and where in the organization they do not want to work. Additionally, attrition could be a key metric in measuring a manager’s success.
This metric shows how many workers leave the company in a given year. When combined with, for instance, a performance metric, the ‘turnover’ metric can track the difference in attrition in high and low performers. Preferably you would like to see low performers leave and high performers stay. This metric also provides HR business partners with a great amount of information about the departments and functions in which employees feel at home, and where in the organization they do not want to work. Additionally, attrition could be a key metric in measuring a manager’s success.
13. Effectiveness of HR software
This is a more complex metric. Effectiveness of, for instance, learning and development software are measured in the number of active users, average time on the platform, session length, total time on platform per user per month, screen flow, and software retention. These metrics enable HR to determine what works for the employees and what does not.
This is a more complex metric. Effectiveness of, for instance, learning and development software are measured in the number of active users, average time on the platform, session length, total time on platform per user per month, screen flow, and software retention. These metrics enable HR to determine what works for the employees and what does not.
14. Absenteeism (absence percentage)
Like turnover, absenteeism is also a strong indicator of dissatisfaction and a predictor of turnover. This metric can give information to prevent this kind of leave, as long-term absence can be very costly. Again, differences between individual managers and departments are very interesting indicators of (potential) problems and bottlenecks.
Like turnover, absenteeism is also a strong indicator of dissatisfaction and a predictor of turnover. This metric can give information to prevent this kind of leave, as long-term absence can be very costly. Again, differences between individual managers and departments are very interesting indicators of (potential) problems and bottlenecks.
As you can see there are a lot of different examples of HR metricshttps://www.youtube.com/watch?v=bx1kunfxAuA. While some metrics are easier to implement than others, all of them provide insights into the workforce and HR. Combining these insights will prove vital for making substantiated decisions with proven impact.
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