Are Companies Measuring HR Metrics?
Interestingly, research by Oracle published in the Harvard Business Review finds that most organizations, globally, have a pretty strong HR analytics stance.
In the last ten years, our ability to measure and utilize HR metrics has evolved in leaps and bounds. Today, it isn’t just the Googles and the Facebooks of the world keeping an eagle eye on their people numbers. The following results from a survey of 1,510 respondents in 23 countries illustrate this:
- 51% of HR respondents said they could perform predictive or prescriptive analytics (compared to just 37% in finance). This indicates a degree of data processing maturity ahead of other departments.
- 89% of respondents agreed that they could use HR metrics to plan the future of their workforce; only 1% disagreed.
- 94% said they had real-time insights into their employees’ career development goals.
- AI is commonly used alongside HR metrics to detect attrition risk, shape talent pipelines, and predict candidate performance.
Companies are doing well when it comes to realizing the potential of HR data – and 2020 could be the year when this trend gathers fresh momentum.
To apply sophisticated HR analytics models such as AI, machine learning, or even advanced visualization, you first need a bedrock of reliable HR data. Get started in 2020 by looking at these 20 metrics.
HR Metrics You Can Gather From Your Recruitment Platform
Recruitment is a significant part of any HR function, especially in today’s tight labor market. By measuring recruitment metrics, you can understand how effective your hiring strategy truly is and how you can improve it. Here are the metrics that should be on your radar in 2020.
1. Which sourcing channel is the most influential?
Recruiters today look at multiple channels when getting inbound leads, from social media to email campaigns, and a wide variety of job boards. It is vital to know precisely which channels are working and which ones aren’t. This HR metric isn’t about identifying the source with the highest number of candidates – instead, it tries to zero in on the channel that makes the most significant contribution to your hiring plan.
Measure the number of candidates per channel, the quality of performance of each of them, and the post-hire attrition rate. The channel that performs best across these three parameters is the one that deserves more investment in 2020.
2. How long does it take for new hires to reach full productivity?
Time to productivity is a vital HR metric determining the quality of hire. Until a recruit reaches their full productivity level, you will be unable to unlock returns from your hiring investment.
Calculating this HR metric is simple. Define and measure the average productivity of a team (the smaller this group is, the more accurate your calculation will be). Next, monitor the recruit’s performance to figure out how many days it takes to reach that set benchmark.
3. How many candidates interacting with your employer brand actually convert?
Conversion rate as a result of employer branding is an HR metric that takes inspiration from the marketer’s playbook, treating every candidate like a potential customer. Similarly, candidates will interact with a variety of messaging types – employer branding blogs, recruitment marketing emails, and so on. But how many of those who interact with these messages decide to apply for a job? The answer to this question will give you a candidate conversion rate.
Remember, you’re not counting the number of people who join. Conversion rates reflect the efficacy of your recruitment marketing capability and the power of your overall employer brand.
4. What is the diversity make-up of your pool of recruits?
Measuring diversity at the time of recruitment is the first step to building an equitable and inclusive work environment. Start by studying the gender, ethnic, age, disability, and other minority composition of your region. The talent you hire should reflect the same ratio, at the very least.
If there’s a discrepancy, you need to double down on your diversity & inclusion initiatives to maintain a positive work environment.
5. How much money are you spending per hire?
Cost per hire is a critical HR metric for any company, especially during a high-growth period. Companies that onboard new talent quickly without considering the cost per hire will find themselves outpacing their HR budgets in no time.
To calculate the amount of money spent per hire, look at the cost of job ads, the effort put in by different stakeholders in hiring the candidate, the time taken to close a requisition, and the value the recruit adds to your business. A disproportionate cost of hire is a clear sign that you need to optimize your recruitment strategy.
HR Metrics From Everyday Workforce Management
The data we discussed in the previous section is available in any cutting-edge recruitment platform. But in the case of workforce management, you need to factor in a variety of tools, including performance management, workforce scheduling, and organizational charts. These tools will reveal the following HR metrics:
6. What is the retention rate for a specific manager?
In 2019, LinkedIn analyzed 32 million employee profiles to find out that companies with a good management team routinely experience higher than average retention.
In 2020, make sure that you monitor employee retention rates for individual managers, including team leaders, regional heads, business unit level stakeholders, and the like. This HR metric will inform your leadership training track and make employees feel like they are genuinely valued.
7. What is the impact of training after 30 days of course completion?
Ensuring that your workforce has all the skills needed to be productive is integral to workforce management. But conducting one-off training sessions isn’t enough.
Your employees will inevitably go through a forgetting curve that needs to be factored in. Benchmark skill levels on day one after a course. Measure this metric once again after 30 days have passed in terms of the application of new knowledge and improved job performance. This will give you a clear picture of knowledge absorption and if there are any bottlenecks in this process.
8. What is the revenue earned per employee?
This simple HR metric can reveal several telling insights about your company and how it utilizes its people assets.
For example, there could be a lot of high-performing employees in the office, yet the revenue per employee is only not high – this means that there is an inequitable distribution of work. Measuring revenue per employee is easy: take your net profits (not gross) for the year and divide by the employee headcount.
9. How does productivity change after implementing a new tool?
Several organizations are now undergoing digital transformation. The automation of workflows, access to data dashboards, new productivity apps, a new intranet – employees are being given it all. But how do these changes impact workforce productivity?
It is advisable to maintain a tracker for employee performance and plot digital transformation initiatives on their performance curve. This will reveal correlations (both positive and negative), helping you make smarter decisions on digital transformation in the workplace.
10. How accurate are your job planning capabilities?
The efficiency of job planning is a frequently overlooked metric, but one that makes a big difference to the overall effectiveness of HR. With accurate job planning, employees are allocated as per demand, your schedules do not need alteration, and there is plenty of room to accommodate employee requests or exceptional business needs.
Assess job planning accuracy by monitoring the time that goes into configuring employee schedules once they have been deployed. Undue overtime, idle-sitting resources, lost business opportunities, and stress in the workplace are all warning signals to watch out for when measuring this HR metric.
HR Metrics That Define the Quality of Employee Experience
This is another area that requires attention. Employee experience is a culmination of the many variables your workforce encounters every day. By improving the quality of employee experience, you can ensure that your top talent stays on in the company and even becomes a vocal advocate for your employer brand. Here are the metrics you need in the area:
11. How likely are employees to recommend your company as a good place to work?
This HR metric is encapsulated in the concept of an employee net promoter score or eNPS. eNPS is a good indicator of how your workforce perceives the company, whether they are happy with its many elements, and if there is a risk of attrition. You can follow-up on an eNPS survey with detailed questions on why the respondent gave you that particular rating.
12. What is the average amount of non-productive effort employees are putting in?
This is a critical HR metric for modern workplaces. As your company grows, a large number of processes and formalities will likely creep into the daily workflow, and not all of them will generate value. An employee effort rating tells you the number of hours put in every week to complete basic tasks that don’t add to productivity.
For example, there might be a lack of integration between attendance and payroll, compelling employees to manually register their login hours and leaves. By measuring this HR metric, you can shape a more engaging and productive workplace.
13. How easy is it to access the necessary benefits?
Employee benefits are directly linked to the quality of experience. It determines if employees enjoy a positive quality of work life, their requisite medical aid (mental and physical), and a good number of paid leaves.
But too often, employees are unaware of the benefits in place, leading to a low adoption rate. We highlighted this problem in our article on employee stock options and if employees use them. Ask workers at frequent intervals how easy it is to avail themselves of the benefits they are looking for.
Act on the data gathered by reimagining your benefits communication policy.
14. When was the last time the employee was recognized?
The frequency of recognition is a reliable metric for employee engagement and satisfaction. HR can measure the frequency of both formal and informal recognition – you can use pulse surveys for this purpose.
Ask a direct question like “when was the last time your manager appreciated your effort?” If large groups reply saying that it was months ago or “don’t remember,” the quality of experience is clearly taking a hit.
15. What is the status of organizational health?
This HR metric comes in different names like organizational health index, total health index, workplace well-being index, or employee health index. But the core idea remains the same: measure employees’ ability and willingness for stellar performance in the workplace.
To measure organizational health, involve the entire workforce and look into two parameters. First, check how many employees would be open to working for two extra hours that week. Second, check for instances of burnout or consistent stress. This will reveal your organization’s capacity to chase new goals and drive performance.
HR Metrics to Ensure Robust Employee Development
Upskilling and employee development will be a top priority in 2020. In fact, Gartner named it as among the top 5 HR targets for next year. Apart from boosting productivity, employee development can also play a role in retention. In many ways, employee career development is on par with – if not better than – employee benefits. That’s why you need to measure the following HR metrics in 2020:
16. What does the participation level for your L&D program look like?
Offering learning & development (L&D) opportunities is of little use if employees aren’t benefiting from them. HR should keep an eye on participation levels, especially after a new offering is announced.
Let’s say you subscribed to a new mobile learning app in 2019. What does the participation level look like in Q1 of 2020? Leverage the built-in analytics of your L&D platform for insights into usage, course completion rates, social sharing, etc.
17. How effective is your internal hiring mechanism?
Internal mobility is pivotal for ensuring employee development. It offers your best talent the chance to follow their dreams and move up the ladder without having to switch to a new company. Internal hiring depends on a variety of factors, such as cross-skilling and succession planning.
Measure the total number of people who took up new roles in the last year. Then, separate the number of internal hires and calculate this HR metric as a percentage of the total number of employees joining new roles. Anything above 50% suggests that you are on the right track.
18. Are HIPOs opting for voluntary turnover?
High-potential employees or HIPOs are a valuable asset for any company. They bring in a significant chunk of revenues, aid in innovation, and often take leadership roles.
In 2020, identify the HIPOs in each team/department and monitor their retention rates. If a large number of HIPOs are leaving voluntarily, you need to rethink your culture as “an antidote for the quitting epidemic.”
19. What is the ROI of your L&D programs?
The return on your L&D investments is critical to building a sustainable employee development track. Measure this HR metric by first benchmarking your targeted outcomes. Are employees supposed to acquire a specific hard skill? Are they expected to be equipped for a specific project/task? Are you looking to outpace automation?
Define your targets and place your L&D investments against the results you achieve. This HR metric can help you get buy-in for future initiatives, accelerating employee development even more.
20. What is the employability like for exiting workers?
Outplacement is a part of every business and should, therefore, figure in your list of HR metrics to monitor. Make sure that exiting workers (unless they were terminated due to misconduct) are well-equipped to continue their careers outside your organization.
This is particularly true for large-scale layoffs. By measuring and improving an ex-employee’s value in the labor market, you strengthen your employer brand. This also forges a relationship with exiting workers, creating a potential talent pool for when the need arises.
This article by Chiradeep BasuMallick Contributor, HR Technologist
