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Alexandre Diard When it comes to HR management, many are under the wrongful assumption that this field is entirely human-centered. While many of the decisions that human resources teams have to make will depend on individuals within the organization, not all decisions are feeling-focused. Truth is that human resource management is an extremely data-driven field.
A lot of the choices that an HR professional has to make will be based on HR statistics on organizational behavior. From pulse checks to annual happiness surveys, HR teams must collect data from top HR metrics in order to make real changes. This is why people analytics is one of the most important successfactors for human resources management and making proactive organizational decisions that are aligned with your business objectives.
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What Are HR Metrics?
You might be asking yourself, what exactly are HR metrics? HR metrics is a broad term for people analytics. There are multiple business metrics that the HR department can collect and calculate throughout the year. Some examples include attrition rate, employee happiness, retention rate, hiring statistics, and manager effectiveness. However, these categories only scratch the surface of exactly the impact HR metrics can have on HR processes and creating change within the organization. Without HR analytics, teams will be less likely to trust leadership to come to realistic conclusions. Therefore, it is important that HR metrics are at the core of every HR strategy.
Why Is Collecting HR Metrics Important?
There are many reasons why collecting and calculating HR metrics is important for any organization. HR professionals should be checking-in with employees to get a pulse and see how things are going as a general part of talent management. Instead of only making decisions based on feeling a certain way, data should be the foundation of strategic HR that can drive impactful change that improves employee effectiveness and happiness overall. When changes are made within an organization, this can impact both employee productivity and happiness.
When making organizational change, you will want to show your team that their responses are the main drivers of these decisions. This can help employees feel as though their opinions matter and that leadership is not making decisions based on factors that only impact executive success.
As a result, your employees will have more trust in the HR executive team. If employees do not trust the HR strategies, it is not uncommon for the human resource department to be classified as toxic in organizations.
In order to avoid this from happening at your company, the HR manager needs to explain to your employees the reasoning behind why decisions are being made and how they are aligned with your business needs. If employees understand that their feedback is taken into consideration when pivots in the company happen, they will be able to see the impact they have on strategic management.
In order to see if your company is on a positive or negative trajectory, it is necessary to compare data points over time. If you do not collect HR metrics throughout the year, you will not be able to see if a data point is trending upwards or downwards. In order to make a strategic change and set up strategic goals, you will need to see what is working well and what is not working well. Focus on improving the pain points first, and continuing to provide perks within the organization that your employees appreciate and enjoy.
Top HR Metrics Your Business Should Be Collecting
If your human resource department is new to collecting HR metrics, you’ve come to the right place. Let’s explore the top HR metrics that matter and that your company can start collecting today, in order to influence positive and data-driven change within your organization.
Quality of Hire
“Quality of hire” refers to the value a new employee brings to an organization, emphasizing not just skills but also cultural fit and contribution to long-term goals. This metric evaluates factors like job performance, engagement, and overall impact on the company’s success. High-quality hires are productive, align with company values, and stay longer, reducing turnover and fostering a positive work environment. Measuring quality of hire involves performance reviews, retention rates, productivity, cultural fit, and manager satisfaction, all of which ensure the organization builds a capable and committed workforce.
Cost Per Employee – HR Software
When is the last time your team examined the current tech stack at your company? If you have not taken a look at what HCM software you are subscribed to in the past six months, you are due for analyzing your HR technology. In order to decrease operating costs, your organization may want to consider evaluating the current software that you use.
Of course, there is some HR management software that simply cannot be replaced because of employment laws. For example, your payroll and benefits providers will oftentimes require you to use certain HRIS systems in order to stay within compliance and HR policies and to make sure that your employees receive their compensation and benefits on time.
Even if you find an HR management system that can be replaced, think twice before you decide to end the subscription. HR management systems are oftentimes a lot less expensive than hiring a human to perform tasks manually, and you can rely on an HR system to get the job done correctly.
If you have unnecessary tools in your tech stack, this could be contributing to overspending within your organization. Many times, HR solutions will charge a flat fee and an additional cost per employee. Your HR team can conduct an evaluation to see which software each team is using, and how you can cut back. There is also cloud-based human resource management software available on the market to help you consolidate the systems you use to operate. These tools will allow you to view your entire tech stack from a bird’s eye view using a central dashboard.
Performance and Growth
Growth and employee performance are critical parts of managing people and completing the employee lifecycle. If your organization does not yet have a performance review plan, now is the time to make one! There are many tools that can help you create the perfect review program, without getting too complicated. Your employees are likely craving feedback from their peers and supervisors as a part of their employee development.
Not only is this a great way for them to reflect on how their performance is being viewed at the organization, but these are great HR metrics for your team to analyze, which will be valuable for the organizational development of your business. The metrics will help you see which teams are the happiest, most successful, and most productive, so you can focus on retaining these employees.
By viewing these top HR metrics as a part of your performance management, your HR personnel will be able to implement change in order to improve employee happiness in the departments that need it most. This data will also help you support your personnel management.
Your business leaders can use the HR metrics to have growth conversations with their most valuable employees. If an employee has been rated highly by their manager and peers, this can be a sign that the employee has the competencies for the next growth opportunity. Without this data, HR managers will not be able to make these actionable organizational decisions that can help improve organizational performance and allow you to retain top talent.
Satisfaction of Human Resource Software
Using the right top HR metrics, you can analyze employee satisfaction with HR services and how often employees are really using the software your organization provides them with. Recourse management is often overlooked by many organizations but in reality, should be a big part of HR planning. You can start by surveying employees to see if they enjoy using the software or not. If employees are not satisfied with the current software, your organization can search for better and cheaper alternatives to replace them with. Not only will this cut costs, but your employees will be happier because of this change!
Engagement Surveying
Ever since the pandemic, companies have embraced a remote-first environment, and leadership teams have been concerned about employee engagement. If employees work in the office, one HR metrics that can be used for employee engagement is absenteeism. With a remote workforce, absenteeism is trickier to measure. Instead, you can measure employee engagement by interviewing your employees or investigating it in a questionnaire.
Next time you conduct a pulse check, try to include an engagement survey. Employee engagement is extremely critical to the overall morale of a company. If your employees are not engaged with the business strategy, business goals, and values of your organization, they will be more likely to leave. Employees that are not engaged in the business are also more likely to act negatively while on the job, which can create a toxic work environment for peers.
If you are offboarding an employee with low employee engagement rates, take the opportunity to have an exit interview to gather useful data that can support future organizational advancement.
Check in with your employees to motivate them and see how impactful they believe their projects are, how valued they are, and how much they like working at the company in general.
Turnover
Employee turnover rate is another top HR metric that your organization should be tracking when focusing on human capital management. The great thing about this metric is that you can look into your records and backlog these HR analytics and use it as a part of your workforce planning. As a part of your workforce management, analyze how many people have left your organization over the past year, and then break it down by certain demographics.
Take a look at the individual attrition rate of certain teams, genders, races, and sectors in the organization. If your turnover rate is extremely high, this is generally not a good sign. With this data, you can dig into the managerial question of why employees are leaving your company to seek employment elsewhere and build a people strategy to increase employee retention.
If your turnover rate is low, you can promote this metric in your hiring process. When your hiring manager is recruiting potential new hires, attracting them to the company is crucial. Displaying that your company has a low turnover rate can be attractive to a new employee who wants to start a long-term relationship with an organization.
By having a low turnover rate, recruitment candidates know that staffing is well taken care of, satisfied, and also plan on staying with the company long-term, which will give the recruiter a competitive advantage in the talent acquisition process.
Conclusion
We hope this article helped you better understand why tracking the top HR metrics are important for your human resource development and gives you some ideas of how you can start collecting these HR data points. HR metrics streamline your people management and job analysis while supporting you to make actionable, data-driven decisions that are aligned with your organizational goals. You can simplify your collection of metrics with human resource systems such as PeopleSpheres.
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