Whether you are making a shift to evidence-based HR, or just want to make sure you have your finger on the pulse of your business, there are some key metrics that ever HR manager needs. Here’s our list of the top ten:
It’s surprising how many companies tell us they don’t actually know how many people they employ. Or, they find there is a disconnect between the definition used by HR and by finance. Should your figures include temporary staff, those on sabbatical, seconded to other organisations, covering for maternity leave, or another long-term absence?
If you don’t have a shared definition and the right baseline figures, it makes it difficult to trust any of your other metrics—especially when marrying up with those coming out of finance and payroll.
For example, if you need to manage contractors in a different way to permanent staff, it makes sense to add them to your HR system. That way, you can run headcount reports with, and without, these staff. It will give you a better understanding of the ‘real’ resourcing requirements and employment costs, and you can more easily keep track of key information: when contractual periods end, the training you’ve had to provide, previous experience, or simply how to get in touch if you need to.
2. Employee turnover
It’s inevitable that staff leave. Some change, especially near the top of your organisation, can be helpful in allowing you to pull new staff through, or introduce fresh thinking. When you track historical turnover, it can help you plan for internal development and recruitment. Tracking leavers and joiners on a regular basis will flag up potential issues before they become a problem, too.
A 5% or 10% churn may feel good for your industry, but if there is a sudden spike of leavers from a particular part of the business—a sales team, middle managers, new graduates, etc.—it may indicate there is a problem that needs to be addressed. With the figures in black and white, you’ll find it easier to make the case to act.
3. Flight risk
Discovering the flight risk of your employees can be a tricky metric to come up with, but it’s vital if your business has key roles it needs to keep filled or staff you want to retain. The most common approach is to identify the most important roles—or people—and arrange periodic reviews with senior managers to talk about current incumbents and those who might be ready to step into their shoes should they leave.
Look out for clues that staff are unhappy or disengaged. Have absences levels gone up? Have they stopped going the extra mile? If so, do you know why? Perhaps it’s a one-off issue that isn’t related to work, but it could be they are looking for other roles.
Have you delivered against development or promises made during a performance review? Have they expressed an ambition to move up the career ladder, or take on new responsibilities that you’ve not been able to respond to? When did they last get a pay rise and how does their compensation package stack up against other businesses in your area? This kind of information is usually easy to gather during regular performance reviews, especially if managers are equipped with the right questions to ask—and a system for recording them.
Obviously, knowing who is at risk is only the first step. Armed with this information you can work with their managers to find ways of mitigating these risks. Perhaps by offering alternative career routes or stretch opportunities to staff who you think may be getting itchy feet – or by putting in place appropriate succession plans to fill the gap should they leave anyway.
4. Employee costs
Knowing how much you invest in your staff, including salaries, benefits, bonuses, compensation and training, is another figure you’ll find invaluable. This baseline allows you to estimate the cost of unplanned absences, staff development and new recruits, as well as model the impact of potential pay rises. And, for UK organisations, with more than 250 employees, there is also the new gender pay gap reporting, which comes into effect from April 2017.
When line managers are responsible for recruiting for their own teams, it can be difficult for HR to get a handle on current and upcoming vacancies. However, there are good reasons why it’s a figure that HR needs to know. Staff need to be inducted, trained and supported. If HR aren’t in the loop early on, it’s easy for time and money to be wasted.
Having a clear view of upcoming recruitment requirements can also ensure that recruitment is managed in the most effective way. HR can help to negotiate better rates with agencies, make use of HR software that posts vacancies online and to free job boards, or save time by streamlining the candidate selection and communication process.
6. Time to hire/cost to hire
The ability to quickly and cost-effectively fill vacancies has a direct impact on business performance—as does the success of any new candidate. Make sure you know the cost of filling each vacancy, the route you used, and how long it took. If you can, it’s good to estimate ‘hidden’ costs too, (the time spent on screening CVs, interviewing and communicating with candidates, etc.) so that comparisons with agency costs are more accurate.
As new employees come on board, keep an eye on how quickly they get up to speed and settle in with the team. With staff that come through agencies, having a system that prompts for regular performance checks can be handy. If it’s clear early on that the new hire isn’t working out, you may be due a refund from the agency.
Unplanned absences can be a huge cost to the business. Of course, absences are often genuine, and it’s much better that staff stay home rather than struggling in to work and either make themselves worse, or pass their bug on to others.
However, as some companies have found, it can be easy for a culture to develop where it’s considered “OK” to throw a sickie to nurse a hangover or avoid another tedious commute in the rain. If you can track absences accurately with an absence management software, and map them against different areas of the business, you’ll have the metrics you need to identify whether you have a problem, and if so, what you might be able to do about it.
It’s also handy to know how many days of holiday entitlement employees have ‘in hand’ at any time. Partly because of the impact it has on resourcing, and partly to help with financial reporting.
Having information about the make-up of your workforce provides an important perspective on key HR decisions related to staff development and retention, such as the kind of training you invest in, the approach to flexible working, what benefits to offer, and even the way your office is decorated. Also, with the impact of Brexit on EU workers far from clear, it’s important to be aware of the nationality of your workforce.
Setting specific development and performance goals is a very effective way of helping everyone focus on growing people and the business in the right direction. However, if employees and their managers don’t track their agreed goals or progress against them, performance management initiatives will fast lose impetus. Having a helicopter view of goals and progress against them, means that you’ll be better positioned to provide a helping hand and, if development planning is part of the performance review, then it’s essential that HR know what’s been suggested or agreed, and can easily report on delivery and outcomes too.
Last, but not least, is compliance. A wide range of employment issues land at HR’s door. Depending on the industry you are in, there will be critical facts and figures that you need to know.
A key example is health and safety. Do you know how many of your staff have mandatory training requirements, or critical training that’s up for renewal? Can you easily track health and safety incidents and look for patterns? Who is responsible for risk assessment, and when was it last carried out?
The good news is that pulling most of these metrics together doesn’t need to be hard work. Today’s HR systems should do the bulk of the work for you, making it simpler to gather together the information, and presenting it in a way that you’ll find easy to understand and make use of. Some even alert you if key performance indicators, such as absence levels, are exceeded, or critical dates missed.