Five Key Areas for HR Analytics
Why Measure?
HR metrics are used to keep people’s activities aligned with business goals.
HR used to feel their work couldn’t be measured – but using data can have great benefit:
· If your business is growing, think about time-to-recruit measures. The shorter the time-to-recruit, the faster the new employee will be contributing to his or her new function, which translates to increased productivity and departmental performance.
· Perhaps your business is established, but you’re facing other challenges. Metrics on employee engagement and development can help pinpoint problem areas around productivity and retention.
Do people like coming to work? Even a few years ago, employee satisfaction wasn’t considered a priority. Lately companies have realised the enormous impact of morale and its effect on productivity. Consider employee engagement surveys to measure people’s happiness.
What to Measure
When it comes to HR metrics, one size does not fit all. Think strategically (and creatively) about the data you need, and then choose metrics that support your organisational goals. But don’t overdo it. Start off small, with just a few key measurements to get you going.
These are the five key areas for HR Measurement:
1. Recruitment and retention
Metrics to consider:
· Time to hire
· Most productive recruitment channels,
· % vacant posts
· Number of year’s service by department,
· Attrition rates,
· Reason for attrition,
· Absenteeism,
· Reason for on-going absenteeism,
· Succession planning.
A fully resourced team is more effective than one where there are skill gaps or resource shortages. Consider how much attrition rates are costing your company.
The career path of your people - from recruitment and on boarding to engagement and succession planning - is key to minimising costs and maximising engagement. Happily engaged employees stay longer, and higher retention brings increased productivity, time saved in recruiting, and lower on boarding costs. Understanding the trends will help you to:
· Identify your best recruiting channels
· Cultivate future leaders via succession planning
· Manage attendance to identify and improve problem areas
· Track and monitor absence, leave and holiday
· Enforce rules consistently to control costs and improve productivity
2. Productivity and managing objectives
Metrics to consider:
· % achievement of targets
· Profit per full-time-equivalent (FTE)
· Human capital return on investment
· Employee productivity index
· Performance differential rate
· Unscheduled absence rate
A motivated workforce is a happy workforce, and a happy workforce is productive and effective. How can you be sure your teams are motivated to achieve unless you measure the outcome?
In many organisations performance is measured in a single yearly review. But high performing companies today engage in continual feedback, including goal setting sessions, regular reviews, pulse surveys, and ad hoc feedback via social media. These things help you motivate employees, track performance, and develop your talent. And such personal and anecdotal evidence coupled with objective, data-driven metrics gives you an incredibly accurate picture of employee productivity and achievement.
· Use a systematic approach to performance management
· Create 360° feedback between leaders and their team
· Empower employees to be more innovative
· Keep employees aligned with the company’s vision and goals
3. Employee engagement
Metrics to consider:
· Attrition rates
· Reason for attrition
· Compensation level
· % achievement of development goals
· Time and attendance management
· Learning and development opportunities
HR departments have had a tough time measuring engagement in the past. It’s not like you can send an “Are you engaged?” email with tick boxes for yes or no...
There are numerous of factors that contribute to employee engagement—like corporate culture, team personalities, management styles, and priorities outside of work—and the pertinent factors are different for each employee.
Historically, we’ve measured engagement via surveys, where employees are asked in various ways to rate their own level of engagement. Assuming these survey responses are honest, this approach offers solid input into employee attitudes—but they don’t necessarily produce objective data on employee engagement. (After all, you have to wonder whether they’re telling you what they think you want to hear vs. what they really think). Consider these measures:
· Amount of work outside of normal working hours
· % participation in ad-hoc meetings and initiatives
· Hours per week spent in meetings
· Time spent in one-to-ones with their manager per week
· Time spent in presence of senior management
· The percentage of a manager’s time spent with team
· The ratio of highly motivated employees vs. low engaged on a current team
4. Remuneration
Metrics to consider:
· Cost per full-time-equivalent (FTE)
· Average remuneration
· % of employees satisfied with their compensation
· % of employees paid above the average salary for their position
· % of high performers who resign for compensation-related reasons
Employee remuneration is often the largest expense in an organisation, but the least analysed. Remuneration often goes unevaluated beyond the most basic numbers. The secretive nature of salary and bonus information also leads to problems: failing to differentiate pay for performance, over and/ or underpaying relative to the market, and salary levels that grow faster than sales revenue.
Written or unwritten, an organization’s compensation strategy must fit with its overall business strategy. The employee must feel valued, supported, and rewarded, and in return the company must feel that it gets a fair deal. Analysing your company’s compensation metrics can help you prevent problems before they occur.
· Track impact of compensation on performance and retention
· Detect and prevent compensation problems
· Make compensation decisions and actions more transparent
· Improve the quality of compensation decisions
· Configure and administer benefits enrolment
5. Benefits
Metrics to consider:
· Benefits cost per employee,
· Healthcare cost per employee,
· % utilisation per benefit,
· Benefits satisfaction rating,
· Benefits as a % of salary,
· Benefit revenue ratio.
Benefits metrics must align with your overall company objectives. Consider a policy on Health & Wellbeing. Very often benefits are a major driver of employee motivation and morale. So use those metrics to help determine which benefits are popular and which are underutilised.
Once you identify which services aren’t being used, you can investigate whether a particular service is worth keeping (with more promotion), or if it’s just not adding value as part of the package. An unused benefits programme is a waste of money. Ask people which benefits they would appreciate.
See an example of HR Analytics ....
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