Five HR Metrics You Should Be Tracking Jun 11, 2018Views: 588
Human Resources (HR) has been around for decades, but for many businesses the process of acquiring, retaining and dismissing talent hasn't changed a great deal over the years. Whereas other departments, such as accountancy and marketing, has evolved considerably with the advent of digital tools and the Internet, the implementation of technology, data and analytics within HR is a relatively recent development.
Yet, HR is awash with data and potential insights, but most businesses aren't aware of how to take advantage of it. As companies of all sizes begin to try and track and analyse their HR data in order to improve their talent acquisition and management processes, many are wondering which metrics they should be tracking, and what exactly the data is telling them.
If this describes you, here are five of the most important HR metrics you should be tracking:
1. Turnover Rate
Of all the available metrics HR can track, turnover rate is one of the most important - measuring the number of staff members who leave the company within a given period. Turnover can be a revealing statistic, with high turnover rates indicative of problems within the business culture, issues with morale or working conditions. It can also point to a failing in the talent acquisition process, potentially indicate that job descriptions or remuneration need to be improved, or that the business isn't choosing the best candidates.
Not only this, but high turnover rates can be expensive, with the cost of replacing an entry-level employee being around 50% of their annual salary. For a high-level employee, this cost can be as high as 400%.
2. Average Time to Fill
This metric shows you how long it takes (on average) to fill a position, and can reveal a lot about the efficiency of your acquisition processes. You don't want your time to fill to be too high, as this can suggest you're acquisition team isn't doing the best job when it comes to listing and promoting positions, selecting candidates and conducting interviews. Before you judge your data, however, bear in mind that average time to fill will vary by industry. For example, ATTF for the financial services industry is around 46 days, whereas it's closer to 13 days for construction.
3. HR to Employee Ratio
This won't be a particularly significant stat for smaller companies, but it can tell you whether you're becoming over-specialised or under-utilising technology (high ratio), or indicate understaffing within your HR department (low ratio).
4. Revenue Per Employee
My personal favourite, this metric shows you how much company revenue each individual employee accounts for. It's an excellent metric for tracking overall efficiency and output, and it's a figure that should be increasing over time for a healthy business. In the US, the average is $0.47 million per employee, just to give you a benchmark.
5. Career Path Ratio
Traditionally, career path has always been a rather linear, upward trajectory (hence the term 'career ladder'), but this notion doesn't apply to modern companies in the same way. Many internal moves are now lateral or multi-directional, particularly within larger companies. This metric allows you to track how many employee moves are traditional upward promotions, versus lateral moves across organisational departments and specialties.
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