Influential American statistician and management consultant Dr. William Edwards Deming once said, “Without data, you’re just another person with an opinion.”
This quote rings true for HR since you cannot jump to conclusions about an employee’s performance without measuring their key performance indicators (KPI). If you cannot set what “good performance” looks like and how it can be measured within your organization, how will you know if they are progressing or falling behind?
This article will break down the KPIs that HR managers should track to make better decisions in managing their departments and the organization as a whole.
12 Useful HR KPIs to Track
KPIs are measurable values used to evaluate the performance of a person or an organization. Here are some of the KPIs that HR managers need to track.
Cost per hire
This tracks the average cost you spend on a new hire. To get the result, calculate the cost incurred in the hiring process (e.g., marketing spend, recruiter fees, or relocation costs) and divide it by the number of new hires.
A high cost per hire may indicate inefficiencies in your hiring process and a need to invest in technologies to streamline it.
Average time to fill
This KPI measures the time it takes to hire a new employee. This includes the time between posting the job offer and hiring the new employee. A low number is always ideal, so if this figure is high, you should intensify your efforts in recruiting and headhunting.
Quality of hire
Know if you were successful in hiring the right person for the position by calculating this KPI. Measuring the quality of hire is tricky because it will depend on your company’s goals and how you define “good quality.”
To do this, check how long it takes for them to be fully productive, how they fit in with co-workers and the company’s culture, and the immediate manager’s satisfaction with the new hires.
Employee productivity rate
This measures workforce efficiency over a period. You can find the employee productivity rate by taking the total company revenue and dividing it by the total number of employees.
A low rate may indicate several things—inefficiencies in processes or equipment, employee burnout, or understaffed departments. It is best to investigate other KPIs to diagnose this problem better.
Salary competitiveness ratio
This KPI measures the competitiveness of your compensation package against the job market. Compute by dividing the average salary in your company by the average salary of your competitors or in the industry.
A compensation package not at par with your competitors or the standard could be why your employees leave so soon. Do a compensation analysis every two or three years to ensure your pay scale is within the industry average. This will help you attract highly qualified candidates.
Benefits satisfaction ratio
Are your employees satisfied with the benefits they receive? You can collect this data through employee engagement surveys that ask about their satisfaction rating with the incentives offered.
Conducting a benefits satisfaction survey gives you a sense of what your employees need and what benefits you can offer your incoming hires. You can also do a separate survey about what they want to see in their benefits package.
This is one of the most important KPIs to track as it tells the rate at which your employees leave the organization. Calculate by comparing the number of workers that joined during a specific period and the number who remained in the same period.
A high turnover rate could signify that your salary offers are under the market rate or that your organization has a toxic work environment. Apart from the hemorrhaging of talents, one of the side effects of a high turnover rate is incurring high expenses for your recruitment efforts.
This measures the absence rate of your employees due to sick leaves, delays, and excused and unexcused absences and shows the impact of absenteeism on the company’s expenses.
One of the difficulties in a work-from-home setup is the absenteeism of remote workers. If your organization’s absenteeism rate is higher than the historical rate, investigate. Does it apply to one department only, or is it a company-wide issue? Once the cause becomes evident, it will be easier to set counteracting measures.
Employee engagement rate
Learn more about your employees’ mental and emotional connection to their work by getting the employee engagement rate. Surveys can also help you collect this information. Although this KPI may be subjective, it can still give you insights into employee experience in the company.
Learning and Development KPIs
Training cost per employee
This measures the cost of onboarding new hires and upskilling tenured employees. You can calculate this by dividing the training budget by the number of employees you train.
Note that this will entirely depend on the size of your company. Small businesses usually invest more than large corporations in training new hires. However, with other KPIs like Return on Investment, Quality of Hire, and Learner’s Satisfaction, you can get a good read on the effectiveness of your training and development program.
Training participation rate
This is the percentage of employees taking part in development opportunities. You calculate this by dividing the number of workers who participated in a training and development program by the number of eligible workers, then multiplying by 100.
Your training participation rate will determine if you offer enticing career path development and upskilling or reskilling programs.
Internal hiring rate
The internal hire rate is the proportion of employees who have switched to a new position within the company over a specific time. This is calculated by the number of internal hires divided by the average employee headcount in that period.
Usually, companies with high internal hire rates provide more internal career growth opportunities.
You Can’t Improve What You Don’t Measure
As an employer, you should fully understand your organization’s strategy and goals so you can select the best KPIs to meet them. HR KPIs are how you can significantly contribute to the company’s overall strategy.
If you are having trouble meeting your recruitment KPIs like Cost Per Hire, Average Time to Fill, and Quality of Hire, you should contact a recruitment agency in the Philippines that can help find top talents and manage remote and offshore workers for your business.
Contact Manila Recruitment today to know more.