HR metrics represent the key data points which modern organisations are now tracking to assess the effectiveness of HR strategies and interventions as well as the impact of environmental pressures in this increasingly volatile and unpredictable world. Such metrics might include: employee turnover, staff satisfaction, time-to-hire etc.
Well-chosen HR metrics can also help design more effective HR processes and constantly optimise processes. At its most basic level, trying to run an HR department without metrics is like trying to drive a car without a speedometer, mileometer, fuel gauge, MPG, temperature gauge etc…, relying on educated guesswork. These days HR teams should really be using data to inform decision-making at every level of the business.
However, trying to track and measure key data points across a complicated business may seem like an arduous task but this has been made relatively straightforward with the emergence of HR systems powered by high levels of automation and AI integration.
But, what key data points should business’s track?
Key HR Metrics of HR Data Points will vary according to your organisation
The exact composition of your HR metric portfolio will vary according to the type of organisation you are, your competition and the nature and volatility of the business environment you live in.
Organisations that operate in industries with high turnover for example, (hospitality or call centres) would clearly want to track employee turnover but would want to correlate this with meta-data points that might influence turnover, such as salary level, employee engagement, or even something obscure like commuting distance. In fact, it has actually been shown by research that a bad commute can increase employee turnover significantly by increasing stress and reducing job attachment and embeddedness. You may be surprised by the informative correlations that you may find when you start co-relating overarching HR metrics with more intricate data points.
HR Metrics: Key Data Points Every Business Should Track
So, the starting point of any good HR metric programme should be to build a set of overarching data points which should ideally be linked to business strategy. Since most of you are in the business of increasing profitability the core HR metrics that underpin this are fairly standard and relate to data points that underpin and drive business performance. These include:
- Employee Turnover Rate – This measures the percentage of employees leaving within a given timeframe. High turnover can indicate workplace dissatisfaction and can lead to increased hiring and training costs. Research from the Work Institute’s Retention Report also gives a clue as to which key data points you could co-relate to to understand the cause and potential remedy for turnover in your organisation. For example, the top three reasons for turnover in their study were Career Development, (22%), Work-life balance (12.0%), and Management Behaviour (11%)
- Internal Mobility Rate – This measures the number of employees promoted or moved internally versus those leaving. A high internal mobility rate signals strong career progression opportunities, which as indicated in the survey above can improve retention.
- Employee Engagement Score – Typically derived from surveys and feedback mechanisms, this metric indicates how invested and motivated employees are in their work. A Gallup study found that highly engaged teams show 21% greater profitability, and experience a 41% reduction in absenteeism and a 59% reduction in employee turnover.
- Absenteeism Rate – This tracks the percentage of workdays missed due to unplanned absences. High absenteeism can be a sign of low engagement or poor workplace culture. The Chartered Institute of Personnel and Development (CIPD) found that unplanned absences recently hit a 10 year high at 7.8 days a year and with the well-reported tripledemic threat absenteeism is a key data data point that every business should be tracking. The No 1 reason for short term unplanned absences was ‘minor illnesses’ at 94% and for long term absences it was ‘mental illness 65%’ and musculoskeletal issues. CIPD’s drill-down data insights gives clear clues as to how data-driven interventions could mitigate absenteeism.
- Time to Fill & Cost per Hire – This measures the efficiency of the recruitment process. The longer it takes to fill a position, the more productivity is impacted. According to the Society for Human Resource Management (SHRM), the average cost per hire is around £3,000, which can be reduced with an optimised hiring strategy. Direct costs and lost opportunity costs arising from slow recruitment can impact productivity and competitiveness and it’s crucial that every business is tracking this key data point.
- Performance Productivity Metrics (Revenue per Employee). This is a strong indicator of workforce efficiency. Higher revenue per employee often signals that teams are productive and well-structured. Again, this can be correlated with other metrics such as engagement, work location, commute time etc for greater insights.
- Training & Development Investment per Employee – This measures how much is being invested in employee skill development. Research from LinkedIn’s Workforce Learning Report shows that providing learning opportunities is the current no 1 retention strategy from the surveyed organisations. As if we didn’t know it already, L & D investment per employee is a crucial metric.
- Diversity & Inclusion Metrics – This Tracks workforce demographics and inclusion initiatives. A McKinseyt study found that companies in the top quartile for gender diversity were 25% more likely to outperform their peers in profitability.
Still, DEI has become a controversial topic in recent times in the US which according to Time Magazine has led some big name employers to scale back DEI in response to the political agenda of the government of the day. Since many of the US companies mentioned are also major UK employers (Pepsi, Google, Mcdonalds, Amazon), this issue will spill onto our shores. However, UK employers are required by law to track certain DEI metrics like gender and gender pay gap and will need to align themselves with UK law, custom and practices
