Measuring performance is a great way to gauge employee’s accomplishment and efficiency in meeting the organization’s strategic objectives. One popular way to track one’s progress towards goals is by using Key Performance Indicators (KPIs). More than just quantifiable numbers, KPIs enable leaders to analyze business pain points and monitor business health through performance analysis. With today’s ever changing business environment, it is best to keep yourself updated with the latest HR KPIs.
Understanding HR KPIs
A Key Performance Indicator, or KPI, is a quantitative metric which can be used to assess how successfully your company is accomplishing its strategic goals. This does not imply that everything measurable is a KPI. KPIs are just indicators that are relevant to your objectives and strategy. Due to its nature, KPIs strived by one department may be different from others. In HR departments, for example, HR managers may utilize absenteeism statistics to evaluate employee satisfaction. They may also assess employee productivity, which has an impact on the company.
Here are 7 crucial HR KPIs metrics you should measure in 2021:
1 . Employee Turnover
An HR manager is responsible for maintaining a low turnover rate. Along with an employee resignation, employers do not only have to spend a significant amount of time and energy to find a proper replacement, but also money to train the new hires. It is obvious that a high turnover rate affects negatively on your company’s productivity and bottomline. After all, higher turnover equals higher expenses.
Employee turnover as one of HR KPIs reveals how many of your workers depart, either intentionally or involuntarily. It reflects your company’s performance in terms of retention and engagement. You may measure the turnover rates by comparing the number of employees who joined the company in a year to those who stayed over the same time period. If you have a high turnover rate, you must analyze the core reason and identify the issues that must be addressed. Financial compensation, time-off policy, work culture, and other points may be areas that need improvement.
2 . Absenteeism and Employee Satisfaction
The rate of absenteeism can be calculated by examining how many hours employees work on average. The findings will reflect employees’ degree of motivation and dedication to their jobs. If you see that the absenteeism rate has been greater than normal in the last few months, try to figure out why, take suitable measures, and find the best solution. Absenteeism may have a detrimental influence on your company’s productivity, profitability, and overall well-being.
Employee satisfaction may become either a factor or a result of absenteeism. You should perform employee satisfaction surveys on a regular basis to ensure that employees’ needs are fulfilled. If they have any difficulties or concerns, you should address them as best as you can. Ensuring satisfaction requires more than monetary benefits. For example, if employees maintain a work-life balance, get an option for remote working flexibility, a friendly workplace culture, and other non-monetary perks, they may be happier and more satisfied at work.
3 . Tenure of Employment
Tenure of employment is one of the HR KPIs worth evaluating in light of the job-changing trend. According to one research, 40% of millennials anticipate to be promoted within the next one to two years. When employees believe that the company is just not acknowledging their efforts and that they may not be promoted anytime soon, they begin seeking for other possibilities. If you want employees to stay with the company, provide them opportunities to advance and promote them on time. For example, if they have served a role for a couple of years, it is time to consider conducting appraisal and see if they are worth the promotion. Other than it is good to extend their tenure of employment in your company, promotion will reduce your need to hire upper level employees from the outside.
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4 . Training and Upskilling
Training provides workers with the knowledge and skills they need to carry out their responsibilities. For new hires, training provides them with a clear knowhow of their tasks and functions. Moreover, if you are looking for a succession within your company, upskilling and training may be mandatory to prepare the candidates.
Calculate how much you have invested in onboarding new as well as existing employees to assess this HR KPI. This is done to track their skills and growth. You may also give a brief knowledge assessment and evaluate the results to see whether the training you delivered was successful. This HR KPI also helps increase employee productivity as they gain the right skills to perform their tasks better.
5 . Employee Productivity
Employee productivity HR KPI assesses the effectiveness of employees. This is often measured by dividing total sales by employee count. Consider all of the factors that might affect your employees’ productivity levels while measuring this metric. This covers the amount of time employees spend at your company, their performance, the amount of sales delivered, the quality, and other aspects. The outcomes reflect how long it takes for employees to accomplish their tasks and how successfully they do these activities. The findings can assist you in making a fix on the company policies and adjusting work methods to boost efficiency.
6 . Hiring Cost
Hiring costs, often known as ‘Cost Per Hire,’ cover the costs of advertising the job, screening and selecting candidates, performing evaluations, and everything else. SHRM’s cost per hire formula is – the sum of all recruiting expenses divided by the number of hires in a certain timespan. In a brief, (total internal recruitment expenses + external recruiting expenses) / (total number of employees in a specific period). This HR KPI primarily measures the amount of resources put in each employee by the firm. These costs may quickly add up on a company’s budget, which is why this KPI should not be overlooked.
7 . Overtime
Last but not least, one HR KPI to measure in 2021 is overtime work. This is important now that more people are aware of how being overworked can have detrimental effects on their work-life balance. Overtime hours are a fairly easy KPI to measure and monitor: simply look at the number of overtime hours worked by employees. In addition, these four points can provide you with some general ideas for measuring KPIs on overtime:
The general reason for this number to be lower is because more overtime usually means more resources to pay out. Furthermore, if your employees are working a lot of overtime, there is concern about their productivity in terms of completing tasks during normal working hours.
Measuring KPIs may be complicated, as it needs a thorough understanding of the company’s plans and objectives. Developing HR KPIs that are consistent and offer value to the business is a challenging task. However, when done properly, they allow HR to offer great value to the business in a proven and data-driven manner. Needless to say, setting objectives based on HR KPIs provides a framework for making better decisions and driving business strategic objectives.