The 11 HR metrics every professional should know

The 11 HR metrics every professional should know in summary:

• In this article, we look at the importance of key HR metrics such as headcount, employee turnover, and flight risk for strategic decision-making.
• We also highlight metrics like salary changes, absences, and employee Net Promoter Score (eNPS) to understand employee satisfaction and retention.
• Metrics like time to hire, compliance, and diversity are also crucial for optimising HR processes and ensuring legal and ethical standards.

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The growth and success of a business can hinge on its HR department.

Dedicated to the growth, wellbeing and management of an organisation’s employees, HR also plays a vital role in more strategic objectives: including employee engagement, strengthening cultures, and ensuring organisations have the right people and skill sets in place … to name but a few.

 

With such an important remit, HR teams need to develop their strategies using evidence-based HR. But, with so many initiatives to manage, what are the key metrics every HR professional should know?

Here’s our list of the eleven most important:

1. Headcount

Having an accurate understanding of the size of your workforce is the first and probably most important metric you need to know. It’s a surprisingly difficult figure to get right, especially as HR, payroll, finance and even divisional heads may have a different understanding of what constitutes headcount.

For example, how do you count staff on sabbatical, seconded to other organisations, or on long-term sick leave? How about temporary staff, or those on a fixed contract covering for staff on maternity leave or away for other reasons?

Without a shared definition and the right baseline figures, you won’t be able to trust any of your other HR metrics, especially when matching them up to data from finance and payroll.

If you employ contractors, it makes sense to add them to your HR software. 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 will leave your business. While turnover can be viewed as a negative, some change – especially near the top of your organisation – can be helpful in allowing you to pull new staff through, or even 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 your employee data shows a sudden spike in leavers from a particular part of the business – a sales team, middle managers, new graduates, etc. – it may indicate problems within the culture of the business that need to be addressed.

With the staff turnover figures in black and white, you’ll find it easier to make the case to act.

3. Flight risk

Measuring flight risk isn’t easy, but it’s vital if your business has key roles it needs to keep filled or specific staff you want to retain. The most common approach is to arrange periodic reviews with senior managers to talk about key people and how likely they are to leave.

Look out for clues that staff are unhappy or disengaged. Have their absence 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. When did they last get a pay rise and how does their compensation package stack up against similar roles in other businesses?

Have employees expressed an ambition to move up the career ladder or take on new responsibilities? Are their goals aligned with those of the business and do they feel valued? That 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 the data.

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.

4. Employee salary change

With the cost of living reaching frightening new highs, employees will only stick with a business for the long term if they feel their employer is going to help both their careers and salaries flourish. In short, organisations that don’t look to improve their employees’ salaries over time will more likely experience higher rates of attrition and find it difficult to beat the so-called ‘Great Resignation.’

Measuring salary changes within a team, department or specific group can help you to spot if a lack of salary increases could be contributing to poor rates of staff retention – especially if you can benchmark this data against external sources. It may also help your organisation make informed salary cost forecasts – something your finance teams will certainly thank you for.

5. Vacancies

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. For example, HR can help to negotiate better rates with agencies, facilitate hiring events or put in place processes or technologies – such as pre-selection surveys or HR software – that will streamline 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.

7. Absences

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 heat or 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 investigate if needed.

It’s also useful to know how many days of holiday entitlement employees have ‘in hand’ at any time. This helps with resourcing and financial reporting.

8. eNPS (employee Net Promoter Score)

eNPS is a metric that assesses how satisfied an employee is with their job and if they’re willing to recommend their company to others.

For example, if your employees are telling their friends or family your organisation is a great place to work, it’s fair to say they’re satisfied with life at your company. However, if they’re telling people to avoid it, it’s important to investigate any issues that could be negatively affecting the employee experience at your business.

Regular pulse surveys can help HR teams gain timely answers to the subjects that matter most to both them and their organisation’s people. They can make employees feel more valued as well as allow HR teams to identify trends and make better-informed decisions.

9. Employee performance

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 an overarching view of goals and progress against them means that you’ll be better positioned to provide a helping hand. If development planning is part of your organisation’s performance reviews, then it’s essential that HR know what’s been suggested or agreed, and can easily report on delivery and outcomes, too.

10. 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’ll 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?

11. Diversity, equality and inclusion

Lastly, the CIPD are not alone in believing that more robust diversity, equality and inclusion strategies will be one of the priorities for HR well beyond 2022. With that in mind, having accurate metrics about the make-up of your workforce will provide an important perspective on key HR decisions related to staff development, attraction and retention.

By tracking and reviewing HR metrics such as gender pay gaps, diversity ratios and salary averages, HR can make sure that people from all teams and backgrounds are well represented among their departments and receive both fair pay and career opportunities.

Effective DE&I strategies must be more than just tracking and reviewing, though. Organisations must demonstrate with actions their commitment to fostering inclusive cultures that celebrate diversity and give people from underrepresented backgrounds a chance to succeed. The information you gather must be acted on, be it to locate areas of improvement or to help guide your stated initiatives in the future.

The good news is that pulling most of these metrics together doesn’t need to be hard work.

Today’s HR systems with in-depth analytical capabilities 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 or staff churn, are exceeded, or critical dates missed.

HR software for smarter decision making

Cezanne’s HR software makes the business of analysing and reporting on employee data both simpler and less time intensive. In fact, every one of Cezanne’s HR software modules comes with its own best-practice dashboards, queries and reports together with the option to easily create, save, share and schedule reports that match your needs.

In addition, our Insights module builds on that foundation, providing you with additional data analysis options. Insights turns your data into graphical reports that makes information easier to understand and act on – why not take a look and see for yourself? Just follow this link to learn more…