Every HR professional will be well aware of the importance of tracking metrics for different HR processes to monitor their success. But with so many metrics and KPIs overlapping across different elements of an organisation, it can be difficult for HR professionals – and HR reports – to keep up. What are the most important HR metrics? And how can Human Resources report on these efficiently?
HR metric #1: Employee engagement
Employee engagement is never far from the minds of Human Resources, so it may seem very obvious to HR departments and C-suite execs that tracking employee engagement is pivotal for every organisation. However, it can be tricky to measure employee engagement in a tangible and productive way.
There are many HR metrics which may contribute to evaluating employee engagement, such as absence rate and productivity, but there are also other indicators, like engagement with company initiatives and incentives. Every HR professional knows that engaged employees are more likely to be the high-performing members of the workforce and tend to be more motivated day-to-day.
A quick way to get clean, quantitative data on the engagement rate of your employees is to send out an anonymous survey. But a survey isn't going to give you the whole picture. If an employee reports that they're less engaged, it could be due to a multitude of issues: a clash with management personalities, a lack of personal development or an unachievable workload, for instance. Figuring out the context is key.
Have they recently put in a HR request? How much annual leave have they taken this year? How's their learning and development going?
It's not enough for HR departments to monitor and report engagement rates in the workforce once a quarter. Blending quantitative data, like surveys with qualitative data built from ongoing dialogues between HR and employees will enable your HR leaders to holistically analyse the engagement rates in your organisation and compose strategies to improve engagement.
You may also be interested in: Six people analytics metrics you should be tracking
HR metric #2: Employee retention
Especially in the age of the 'Great Resignation', promoting employee retention in your organisation should be a priority. With the cost, time and training considerations of new hires, it's in everyone's interests to keep talent within your business. Retention provides HR departments with insights into employee satisfaction, company culture, and ultimately, your organisation's offering in comparison to your competitors.
Employee retention is usually measured inversely against your organisation's turnover rate. But employee turnover doesn't provide Human Resources with the reasons why an employee would want to stay in your company. Average employee tenure is often a more valuable metric for HR to track than turnover rate.
Turnover rate only details the total number of employees that left your company within a given time frame (usually a year). Again, without context, this metric is relatively unhelpful. Average employee tenure, when contrasted with first year employee turnover can provide HR with insightful analytics that could shed some light on when and why your employees are leaving. For example, employees could be leaving after 2 years if they are struggling to progress. If you have a high first year employee turnover, but a longer term retention, it could be a sign that high-performing employees decide to stay.
HR software like XCD makes it simple to generate insightful HR analytics on all of these metrics, including average tenure and turnover rate. Using the reporting and analytics functionality of your software, HR leaders can instantly generate automated reports using the people data on the platform to assess at what point employees decide to leave, for example.
You may also be interested in: What is the ideal employee turnover rate?
HR metric #3: Job offer acceptance rate
Job offer acceptance rate is a crucial metric for HR to track. As employers and HR are well aware, cost-per-hire sits between 20-30% of an employee's salary to fill, meaning that if you find the perfect candidate and they slip through your fingers, this cost and time-to-fill sky-rockets.
Just like retention, job offer acceptance rate is a good indicator for HR teams and internal hiring managers to see how your offering measures up to your competitors. As potential new hires aren't as engaged with your organisation, job offer acceptance rate provides a good opportunity to analyse your offering. Do you offer a competitive salary? Flexible working? Growth potential? Work-life balance? Good company culture? When a new employee joins your business over others in the market, you know your employment package is competitive.
Like we mentioned, job offer acceptance rate will impact other key HR metrics in the recruitment process, like cost-per-hire and time-to-fill. Keeping a close eye on this metric in recruitment strategies, HR strategies and even wider business strategies, will ensure that you continue to be competitive with others on the market. For example, if you noticed that your entry level acceptance rates were higher than your senior level vacancies, it could be an indicator that salaries or learning opportunities need to improve. This could even improve your retention rate if changes are made to improve it.
You may also be interested in: HR metrics you should be tracking in 2021
HR metric #4: Headcount
Headcount is one of the simplest metrics to track in an organisation and its importance often gets overlooked. It's not enough for HR leaders to be aware of the total number of employees in your organisation, but the ratio of managers to junior staff members, and the ratio of HR to the rest of the workforce.
Tracking employee headcount is more tricky than it sounds, especially if you're doing the process manually. There are many factors to consider: who counts as an employee? What about part time employees and maternity covers? Seasonal workers? Contractors? The list goes on and on. That's not to mention how often you do a headcount!
Employee headcount is a key HR metric as it can be used in analytics to highlight if there are any talent shortages in a department or if junior employees are able to receive enough support from their managers. For example, if one team in an organisation has an unmanageable workload for the number of employees, it's time to hire. If a small department's performance is suffering, perhaps it's time to invest in learning and development. It seems simple in practice, but headcount is a fundamental HR metric, especially when compared with other factors in analytics.
HR software with self-service capabilities is a key tool for Human Resources teams looking to automate the process of tracking employee headcount. XCD's cloud-based HR and payroll software holds its data in one central source of truth, updating in real time to ensure every metric is accurate. Goodbye annual headcount headaches, hello accurate workforce data.
You may also be interested in: Keeping Track of Employee Headcount
HR metric #5: Employee performance
Like we mentioned earlier, employee performance strongly correlates with employee engagement. Monitoring the performance of the workforce seems like such an instinctive HR metric that it barely warrants a mention, but it is a key metric to track. Introducing a performance rating metric for employees to make it possible to track birds-eye progress of your teams.
Employee performance monitoring is a great tool to introduce new hires to during onboarding. HR can set personalised goals in the onboarding process in collaboration with new hires and monitor progress during check ins and from within a HR system. Setting goals together ensures that new employees engage with their performance and have a stake in their individual progress.
Performance management software makes the whole process of employee performance monitoring simple. Using the pre-determined, individual goals, HR can check on the progress of employees throughout the employee lifecycle. With automated alerts and self-service capabilities, Human Resources will no longer have to chase incomplete performance review forms or feedback from managers as they can add comments discretely and directly into the system. Performance management has never been easier.
Automate metrics tracking so you can focus on HR analytics and strategies
XCD's all-in-one HR and payroll software makes it simple to track and report on your crucial HR metrics. The cloud-based HR system enables HR teams to automate day-to-day, admin-heavy tasks to streamline their workloads and spend more time focusing on strategic work and hands-on check-ins with employees.
Want to see how HR and payroll software can revolutionise your HR metrics tracking? Click the button below to learn more: