HR metrics: The numbers you should be looking at
How can HR show upper management that it contributes just as much — or more — as any other department in your organization?
Two words: HR metrics.
Yes, HR keeps records and documentation like any other department. But those records alone belie very little of HR’s true worth to an organization.
Put simply, HR metrics involve compiling and analyzing specific data and information culled from various sources to gain a better understanding of how HR is contributing to the business side of a company – and to the bottom line.
If compiled and analyzed properly, using metrics should help organizations:
- improve competitiveness
- increase worker satisfaction
- boost productivity, and
- aid in getting a good return on investment.
Metrics for consideration
The first question HR pros need to answer: What information should we be looking at? There are boatloads of metrics available for organizations to use.
The key to remember is that each company has specific organizational concerns or questions that will need to be addressed.
Here’s a list of HR metrics available, grouped by category:
Absences
Absence rate: Number of days absent in a month / (average number of employees during a month multiplied by number of workdays).
Benefits
Benefits as a percent of salary: Annual cost of benefits / annual salary.
Cost of benefits: Total cost of employee benefit per program / total number of staff members.
Compensation
Compensation as a percent of total compensation: Annual salary / total compensation (which is salary + benefits + additional compensation).
Compensation satisfaction: Percentage of employees who are satisfied with their compensation. (Culled from employee survey.)
Percentage of top-performing staffers who left a company for compensation reasons: Number of top employees who left due to money reasons / total number of top employees who left. (Culled from exit interviews.)
Employee satisfaction/engagement
Employee engagement: The percentage of employees who look forward to coming to work everyday. (Culled from surveys).
Employee satisfaction: Percent of employees engaged or satisfied overall or with a specific part of the workplace.
Workplace life
Length of employment: Average number of years employees stay with a company.
Hiring/recruiting
Average performance review rating of new hires: Taken from appraisals and compared to previous years’ ratings
Cost per hire: Cost of recruiting / (compensation cost + benefits cost).
Diversity: Number of supervisor and upper management positions filled by minorities / total number of supervisors and members of senior management.
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