In a data-driven world, it only makes sense that your human resources-related decisions are backed by numbers. By leveraging HR data that matters, you can experience organization-wide improvements.
Today, as businesses are realizing the importance of tracking critical HR KPIs, the demand for analytics software for human resources has gone up. However, without analyzing the right HR metrics, even the most successful software solution won’t be of any use. By monitoring the right areas, you can improve your operational efficiency and make giant leaps towards achieving your broader business goals.
For that reason, we’re going to list some of the metrics that can help you collect useful HR data to drive important business decisions.
Let’s dive right in!
What Exactly are HR KPIs? (A Brief Look at HR Data Analytics)
Human resources key performance indicators (KPIs) are metrics that are linked to a broader organizational strategy. This means that they’re directly tied to a company’s business goals. By using them, HR departments can track the progress (as well as their contribution) towards achieving organizational objectives.
If you’ve never used metrics before, here are some ways you can benefit by using analytics in HR:
- Improved Hiring Process: According to the U.S. Labor Department, a bad hire could cost you 30% of that employee’s annual paycheck. With analytics, you can measure the quality of new hires and identify your best hiring sources.
- Increased Productivity: With HR data analytics, you can identify room for improvements and make your employees more efficient.
- Better Training Programs: Track the effectiveness of your training programs and monitor participation rates if you really want to make it count.
And that’s just scratching the surface.
You can read our 2020 Workforce Analytics report to learn more about different KPIs and benchmarks to see where you stand.
17 Metrics You Need to Measure: Collect the HR Data That Matters
While handling HR data analytics, it’s important to divert your focus towards areas that actually matter. And for that, you need to use the right metrics.
Therefore, we’ve listed 17 crucial HR metrics you should begin leveraging today. We’ve also broken down the list into different categories.
To measure the overall performance of your teams, consider tracking the following metrics:
1. Employee Productivity Rate
Depending on the depth of your operations, it can be difficult to measure this metric. In any case, the employee productivity rate is a good reflection of your company’s performance.
2. Time to Process Payroll
Time to Process Payroll lets you measure the average cycle time for payroll processing. You can use it to drive process improvements, if necessary.
3. Absence Rate
Are your full-time employees and hourly-wage workers showing up on time? You can measure the absence rate of an employee by dividing their total absent-days with the total number of days they showed up.
Are your recruitment efforts paying off? You can use these metrics to find out:
4. Turnover Rate
There can be many culprits behind a high employee turnover rate, with bad hiring being the most common cause.
To calculate the turnover rate for a specific period, divide the total number of employees who parted ways with the total headcount.
5. Recruiting Conversion Rate
Recruiting conversion rate is the percentage of job candidates that move from one step of the hiring process to the other.
Tracking this metric can help you remove unnecessary hurdles for candidates and improve your recruitment process.
6. Time to Fill Positions
Is your HR team taking too long to find candidates to fill vacant positions?
Keeping an eye on the “time to fill positions” can help answer that question. To calculate, simply count the total number of days from when a position becomes available to the day a candidate accepts the job offer to fill said position.
7. Job Offer Acceptance Rate
The job offer acceptance rate is a good reflection of how successful your recruitment strategies are.
You can calculate it by dividing the total number of offers made with the total number of candidates who accept those offers (within a certain time period).
8. Quality of Hire
This includes the percentage of newly-hired employees that receive positive ratings from their managers/supervisors.
To get an objective view of how well you’re compensating your workers, use the following metrics to collect relevant HR data:
9. Wage Competitiveness Ratio
With this metric, you can see how you stack up against your competitors in terms of offering salaries.
To calculate this ratio, simply divide the average pay in your company with that of your competitors. The higher the SCR—the better.
10. Overtime Expenses
In addition to employee satisfaction and competitiveness, you should also track how much you’re compensating.
A good place to start are the overtime expenses – one of our top 7 KPIs for employers with an hourly workforce.
Use the following to make sure that both you and your employees are avoiding compliance landmines:
11. Edits to Punch Times
Frequent edits to punch times may indicate violations of company policies or even time theft.
12. Open Time Clock Punches
Are your employees using the time and attendance system properly?
Frequent open time clock punches indicate that they’re not—revealing a weakness in your basic training program.
13. Number of Compliance-Related Law Suits
Measuring your total trips to the courtroom over compliance-related law suits in a specific period of time can tell you a lot about the effectiveness of your current processes.
14. Training Hours Per Employee
Are your employees receiving enough hours of training?
You can measure the Training Hours Per Employee and compare it with your industry’s benchmark.
Other Crucial Metrics to Track & Measure
Here are a few more crucial metrics that you should be measuring:
15. Employee Engagement Index
With an engaged workforce, you can experience higher productivity, reduced turnover, and much more.
Calculate the employee engagement index with the help of surveys to see where you stand.
16. Employee Net Promoter Score (eNPS)
The eNPS measures how likely it is for your employees to recommend your organization to potential candidates seeking employment.
To calculate, simply subtract your percentage of promoters with your percentage of detractors (dissatisfied workers).
17. Employee Satisfaction Index (ESI)
Similar to the eNPS, the ESI tells you how satisfied your employees are with their jobs.
Compare your ESI with the industry benchmark (if available) and see where you stand.
Ready to Scale Your Company with Data-Driven HR?
You could have the best human capital management system in place for analytics, but if you’re not looking at the right places, it wouldn’t make any difference.
To learn more, you can watch our webinar on how to implement and leverage workforce analytics. That being said, having an effective system in place can make the entire process much easier.
If you’re ready to reap the benefits of HR data, we invite you to learn more about EPAY HCM Analytics. With our customizable solution, you can monitor your company’s performance via at-a-glance graphics, reveal opportunities and much more.