The success of any organisation is ultimately determined by its employees, which is why HR teams need a dependable way to measure their impacts.
The struggle for talent has become a serious challenge that shows little sign of abating. With the Great Resignation in full swing, HR leaders are finding themselves under growing pressure to maximise their impact on a variety of critical business functions. After all, the success of an organisation hinges on its ability to attract and retain the best talent. With talent gaps widening in many industries, the promise of competitive financial compensation alone not enough.
What are HR metrics, and why do they matter?
To overcome these challenges, HR professionals need to understand why people are leaving and how they can encourage them to stay. They also need to know how to best appeal to new talent and build up a strong employment brand.
The answer to these questions lies in data. HR metrics are key performance indicators (KPIs) that help HR professionals track the effectiveness of their processes, such as recruitment and onboarding. While employees are more than mere numbers, data plays a vital role in driving informed decision-making based on facts rather than emotions.
The most effective HR leaders approach employees in a similar way to how marketing teams approach customers. That’s why employees are increasingly referred to as internal customers. This makes sense too, simply because a motivated and engaged employee does a better job, much like an engaged customer brings more financial and reputational value to a business.
HR metrics are important for eliminating much of the guesswork involved with recruiting and retaining employees and ensuring they reach peak productivity as soon as possible. To that end, they have a profound impact on broader business strategy. Business executives, being increasingly aware of the importance of talent acquisition and retention, expect more detailed and timely reports. Having the right data is fundamental to providing those reports.
With that in mind, let’s take a closer look at the most important HR metrics:
Recruitment and retention
The most important function of any HR team is recruiting and retaining the best talent. Paying attention to recruitment metrics helps HR professionals create compelling job descriptions and target their job ads to right most suitable potential candidates, just as marketing teams do with potential customers. Here are some of the most important:
- The source of hire shows where your employees are coming from, such as job boards, internal references, agencies, or company career pages. This helps HR professionals determine where to best allocate their advertising budgets.
- The time to hire is the number of days it takes between when a placement is opened up to the day a new hire is accepted. Of course, the shorter this period, the better, and it can help greatly to automate processes like job posting and candidate screening.
- The cost per hire is the total sum of all recruiting costs. Internal costs include salaries, referral bonuses, and interview time. External costs include job ads and agency fees, among others. Tracking these metrics can help optimise recruiting processes.
Retaining employees is the next part of the battle, and it’s vital that HR professionals measure retention before they dig deeper into the metrics behind it, like those pertaining to employee engagement and satisfaction.
- The retention rate is the percentage of employees who have stayed in the organisation for a giving period of time. While some turnover can actually be helpful for businesses, a good overall retention rate typically stands at around 90%.
- The turnover rate is the percentage of employees who leave a company within a given timeframe. It’s important to measure voluntary and involuntary turnover separately, as they are often caused by very different things.
- The absenteeism rate is the percentage of unplanned employee absences caused by things like sickness or personal emergencies. While these are out of your control, it’s still important to know for garnering a better understanding of your recruiting needs.
Training and engagement
In most organisations, processes like onboarding, training, and career development fall under the umbrella of HR management. Tracking training and development metrics helps HR leaders determine the effectiveness of these programs and identify the reasons behind problems like high turnover rates.
- The time to productivity is the time it takes for a new hire to become productive. While this depends partially on things like job complexity and individual characteristics, it can provide insights into the effectiveness of your training and onboarding processes.
- The participation rate is the percentage of employees who participate in HR initiatives, such as initial onboarding phase, training programs, and team-building activities. HR leaders should also measure how many employees complete these activities.
- Assessment pass rates and scores measure how well employees perform in training and development activities. These are especially important to measure for positions that require on the job training and preparation for industry certification exams.
Achieving peak productivity requires a robust onboarding software, but by far the biggest test when it comes to talent management and retention is employee satisfaction and engagement. Employees who are dissatisfied with their working conditions are more likely to be disengaged and, as a consequence, less likely to be productive and more likely to leave.
- The workload balance is the amount of work that is assigned to an employee. Naturally, being overloaded with work is a major cause of burnout, which is why it’s important to track workloads among team members.
- Setting performance benchmarks and goals helps HR leaders determine how well their employees are performing in their daily tasks and, in doing so, give them the insights they need to create targeted employee engagement programs.
- Employee recognition refers to the time it takes for managers to recognise employees’ achievements (and failures) and the feedback they provide. Employees who feel their efforts are being ignored are much more likely to be disengaged.
Employee engagement is harder than other areas to measure with numbers alone. The most effective way to measure engagement and satisfaction is to run surveys, as well as regularly review how your employment brand is performing on employer review platforms. Surveys are particularly valuable, since most employees appreciate the opportunity to provide feedback.
C-PEOPLE is an HR management platform that helps organisations manage their internal and external human resources with seamless onboarding experiences and real-time insights into the things that matter most. It is one of the ContinuSys integrated business management apps. Request your demo today to see how it works.