HR metrics help you track key HR and recruitment activities to improve employee experience and program effectiveness. Learn more. Show
Have you ever wondered what successful businesses have in common? They use people data to analyze business performance and define goals. HR metrics are one of the ways to do this. Human resources are, after all, an integral part of a company’s success. People strategies, workforce analytics, and HR metrics all help you work toward achieving your business goals. It doesn’t matter if you have 10 or 1,000 employees. The sooner you start watching your HR metrics, the better. So let’s see why these metrics are so important and how to use them. Why do HR metrics matter?HR metrics are data points that allow you to track key human resource and recruitment activities like employee performance, retention, compensation, engagement, cost-per-hire, time-to-hire, and more. This lets companies keep a close eye on how each of their programs are functioning so that they can make adjustments if needed. In other words, HR metrics are a way of assessing a particular area within your business. They can also help you better face unforeseen events. If the past few years have taught us anything, it is that the way we work can change from one day to the next. Who would’ve expected the rapid shift to remote work? Plus, we now see people who want to work in companies that focus on inclusion, diversity, and well-being. You need to analyze workforce and people data to create an environment where people feel valued. If you don’t, you risk losing your employees’ trust and loyalty as their values shift and evolve. HR metrics can help you start on your analytics journey. They are the first step towards data-informed decisions aligned with your business goals. How do I use HR metrics?Use HR metrics to get a better view of what works and what doesn’t work in your company. To do so, start with a hypothesis or question. Here are some examples.
You can then turn to your HR tools to look for and analyze data that relate to those questions. These are only a few examples of what HR metrics can do for you. Predicting future business needs is another area where HR analytics can be helpful. How many new employees will you need? What new skills will people need and want to learn? All this can be answered using HR metrics and can help you make better business decisions long term. What are the most important HR metrics?There are several types of metrics, each with its role. Of them, we identified 10 core metrics any company must watch:
If you want to go deeper, you can also track more advanced metrics such as productivity or manager effectiveness. We’ll talk about each metric in detail in the following section. 1. HeadcountAbout 70% of an organization’s budget goes towards its people costs. Because of that, having an accurate headcount is crucial. Headcount is the total number of people working in your company at any given time. This includes permanent, temporary, and contingent employees as well as gig workers. The headcount tells you if you have enough people to accomplish your goals. It also allows you to forecast how that number may change. That means better financial management and a more effective estimation of costs. 2. TurnoverIf you thought replacing employees was easy, think again. The process can sometimes cost one-half to twice the employee’s annual salary. This should be a good motivation to want to reduce turnover rates. Metrics you need to know include:
The turnover rate comprises voluntary and involuntary departures. But it is the voluntary turnover metrics that should get your attention. You can control which contracts you terminate and which people you lay off. You don’t have the same control over their resignation. Analyzing this metric will help you understand the trends and the reasons behind the employee’s decision. 3. DiversityA recent study showed that 76% of employees and job seekers look at diversity when considering a job offer. What does diversity mean in a business context? It refers to the range of differences within the company, particularly related to race, gender, ethnicity, and age. Diversity, equity, inclusion, and belonging (DEIB) are becoming priorities in many organizations. But there’s still room for improvement. Common DEIB metrics to track include:
The more diverse an organization is, the more chances it has of attracting top talent. 4. CompensationCompensation is one of the top reasons people leave their jobs. It doesn’t just mean that the pay is too low. It might also mean that there are no advancement opportunities, or that people feel disrespected. Compensation includes salaries, bonuses, paid time off, health insurance, retirement plans, and more. By tracking this metric, you make sure the pay scale is aligned with the market demand. Metrics to track include:
5. Total cost of workforceThe total cost of the workforce (TCOW) is more than salaries. It includes:
Knowing the TCOW helps you stay competitive by building an efficient workforce plan. Metrics to watch include:
6. Spans and layersOrganizations grow over time. By using the spans and layers metrics, your organization can reduce costs. Its employees can work together more effectively. These metrics also make it easier to assess salary grades and promotion opportunities. Spans refer to the number of people who directly report to each manager. Layers refer to the number of supervisory levels. Common spans and layers metrics to know include:
7. Employee EngagementEmployees are a key component in any business. How well they relate to their employers, their colleagues, and the work they do are all part of the employee engagement metrics. In other words, this metric is about how connected and involved employees are in an organization. Engaged employees are more productive. They tend to have lower rates of burnout and voluntary turnover. Employee engagement metrics to track include:
8. Talent acquisitionA bad hire can cost you up to $240,000! Talent acquisition metrics may help prevent such a loss. They track how a person moves through the hiring process—from the job description to the offer and beyond. By using this information correctly, you can make the right hiring decisions and avoid the huge costs of a bad choice. Talent acquisition metrics to know include:
9. LearningPeople want to learn new things. So much so that 32% of those who changed jobs over the past years did so to learn a new skill. Learning metrics track individual employees’ career development. They help reduce voluntary turnover and absenteeism. They improve engagement and individual performance. Learning metrics to track include:
10. Workforce planningHow many and what kind of workforce your organization needs during a period is part of workforce planning. These metrics allow you to identify gaps between the current workforce and your future needs. Without these metrics, you risk lacking the necessary people to achieve your goals. Common metrics to know include:
2 advanced metrics to knowProductivityWithout a productive workforce, you’ll have a hard time doing anything in your organization. Productivity metrics refer to how much work a person can perform at any given time. Common metrics include:
Manager effectivenessDid you know that 82% of employees would quit due to a bad manager? Effective managers create structure, make work meaningful, and support employees in their growth. Common metrics of manager effectiveness include:
HR metrics FAQWhat are HR metrics?HR metrics are key data points that organizations track the effectiveness of their human resources and recruitment programs. What are the most common metrics used by HR?The most common metrics used by HR include headcount, turnover, diversity, compensation, the total cost of workforce spans and layers, employee engagement, talent acquisition, learning, workforce planning, productivity, and manager effectiveness. Why are HR metrics important?HR metrics are important because they give human resource and recruitment leaders objective insights into how to improve their programs. Without HR metrics, HR departments would be in the dark about how their workforce is performing, and how they can improve. On the Outsmart blog, we write about workforce-related topics like what makes a good manager, how to reduce employee turnover, and employee burnout. We also report on trending topics like the Great Resignation and preparing for a recession, and advise on HR best practices like how to present headcount data to your CEO, metrics every CHRO should track, and connecting people data to business data. But if you really want to know the bread and butter of Visier, read our post about the benefits of people analytics. Which of the following best defines HR Analytics quizlet?Which of the following best defines HR analytics? A motivational strategy that emphasizes motivating the worker through the job itself.
How is analytics used in HR?HR analytics is the process of collecting and analyzing Human Resource ( HR ) data in order to improve an organization's workforce performance. The process can also be referred to as talent analytics, people analytics, or even workforce analytics.
What is HR metrics and analytics?Last Updated: March 11, 2021. Analytics is defined as the interpretation of data patterns that aid decision-making and performance improvement. HR analytics is defined as the process of measuring the impact of HR metrics, such as time to hire and retention rate, on business performance.
What is the importance of HR metrics analysis quizlet?Why is the impact phase of human resource metrics analysis important? Impact helps leaders develop an action plan that will engage staff and help to prevent turnover. Why is human resource analytics useful? It helps in determining a pattern or behavior of each employee from data collected by the data analytics team.
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