Though seemingly routine to outsiders, everyday HR tasks are critical to keeping a business running. While its importance is never questioned, how do you set goals and measure the success of your HR processes? Like all departments, there are several critical HR metrics that help determine the effectiveness of HR tasks and initiatives throughout your organization.
If you’re working in Human Resources, you’ll need to be able to judge and explain the advantages of different HR programs and policies. HR metrics help quantify the role of HR and its contribution to the success of the overall business.
The following data points make a difference for HR, whether you’re comparing policies within the department or reporting to upper management. Here are the ten most critical HR metrics and how to use them effectively.
For most businesses, employee compensation is one of the biggest variable expenses and most important HR metrics to track. A small increase to standard pay might slightly reduce turnover, but additional compensation will surely make a big difference when expenses are projected over the whole year.
- Total Compensation includes benefits, salaries, and bonuses.
- Salary Averages allow you to look beyond the extremes of entry-level wages and upper management salaries.
- Pay Equity judges the relative compensation of employees in similar roles, particularly where implicit biases may lead to one employee being relatively underpaid.
2) Total Labor Cost
Total labor cost is the aggregate cost of the hours worked by all employees, plus all related payroll taxes and benefits costs. Total labor cost is an HR metric needed for budgeting of a business.
- Total Cost Of Workforce (TCOW) includes employee compensation (pay and benefits), plus related expenses like facilities and overhead.
- Headcount is the total number of workers in different categories. Check your classification of contractors and exempt employees for an accurate headcount. Part time employees and contractors are counted separately from full time workers.
3) Time & Attendance
Employee hours have a big impact on payroll and productivity. Timekeeping software provides up-to-the-minute recordkeeping automatically. Track all workers and different types of work with a single, streamlined solution with Time and Attendance software that works directly with payroll.
- Effectively manage Tardiness and Absenteeism with Time & Attendance software. Late arrivals and unscheduled absences can be disruptive.
- Overtime Hours, usually anything beyond 40 hours a week, can help during crunch times and deadlines, but time-and-a-half OT pay adds up quickly. Excessive overtime leads to employee burnout and suggests a need for additional staff.
- Leave Management is a system for scheduling employees and keeping the company running efficiently throughout various absences and scheduling issues.
4) Turnover & Retention
Beyond the hassle of recruiting and interviewing new workers, it’s important to track the HR metrics association with losing and replacing employees. When HR wants to invest in company culture and morale, it helps to remind the C-suite about the potential savings in turnover cost.
- Turnover Cost includes the lost revenue because of vacancies, cost per hire, and training pay.
- Internal Promotion Rate shows how often you’re making use of existing talent and rewarding loyal workers. If current employees are underqualified, then a Learning Management System can prepare your staff for future openings.
New jobs open when the company expands, and some level of turnover is inevitable. Even your happiest workers retire eventually. The recruiting, selection, and onboarding process should be efficient and cost-effective—and can be with the right recruiting software and HR metrics.
- Track your Cost Per Hire to see whether you’re overspending on job boards and advertising.
- How long does it take your company to fill a new job opening? If you aren’t advertising enough, an extended Time To Hire can lead to understaffing and unnecessary lost revenue. If you’re slow to respond to job applicants, then the most qualified workers may tend to accept jobs elsewhere.
- What percentage complete the onboarding process and how many reach their first employment anniversary? Your Hire Success Rate tracks how many new hires become successful employees.
LEARN: Recruiting Best Practices: Improve Your Hiring Process and Land Top Candidates
6) Diversity, Equity, and Inclusion (DEI)
A wider range of perspectives can help your business avoid blind spots. Promote diversity with a Learning Management System that closes skill gaps and offers training to everyone.
- Track Diversity Ratios to make sure you’re recruiting and promoting workers from different races, genders, ages, and other demographics. Work with your legal team to make sure you aren’t collecting or using demographic information in ways that could expose the company to liability.
- Equity is about granting equal access and fairness to everyone, overcoming systemic and unconscious biases.
- Inclusion goes beyond the mere presence of a diverse workforce, making sure that your company culture is welcoming to everyone. Minority workers shouldn’t be excluded from group projects, social gatherings, or professional opportunities.
7) Employee Engagement & Satisfaction
When identifying problems in your company culture, you don’t want to wait for complaints to appear in rants on public review sites like Glassdoor. Get proactive with anonymous surveys and quantifiable HR metrics for employee engagement.
- What is your Employee Participation for social events and voluntary training programs?
- Do you have a Workplace Giving Program that reflects the values and priorities of your employees?
- Track the number of Complaints and Incident Reports from month to month, identifying trends and setting goals for improvement.
- Employee Self-Evaluations are used to rate their own experience and satisfaction as part of a routine review process, as well as can track changes over time.
8) Employee Benefits
Benefits Administration Software makes it easy to improve efficiency and provide better value for workers. Employees need options for the benefits they prefer, and your company needs to ensure accuracy, efficiency, and compliance across the board.
- What is the Total Benefits Cost for your current benefits program and vendors?
- Track your Cost Per Employee for benefits to see when it’s time to shop around for alternatives.
- Usage Rates will confirm what percentage of employees take advantage of different benefits. Consider adding new and emerging perks like student loan reimbursement to improve recruiting and retention. Are new perks more popular than your older benefits?
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9) Employee Performance
Performance may require subtle changes to the workplace culture. It’s not enough to simply keep moving the goalposts for workers. Invest in performance as a long term goal for optimization through HR technology.
- Use HR software to track Employee Productivity in terms of both quality and quantity. Increasing the output and number of employee hours may lead to unintended consequences like preventable mistakes and complaints from customers.
- Discover Training or Process Deficiencies and other areas of improvement by department or company-wide.
10) Learning & Development
Many of your best workers are already working at your company, but how do you keep them engaged and prepare them for additional responsibilities?
- Standardize L&D Process and Scoring to easier address performance issues and measure improvements over time.
- Provide ongoing Professional Development, closing skill gaps and opening new career paths. Make it a part of performance reviews and use multiple choice tests to evaluate trainees before and after programs.
- Cross Train Employees with a Learning Management System to improve teamwork, employee skill sets, agility, and resilience.
Learn more about how Netchex makes HR metrics work for you:
Learn more about our HR Reporting & Analytics software. Netchex makes collecting, analyzing, and reporting on HR metrics easy, straightforward, and worry-free.
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