• Using an HR metric or key performance indicator is an effective way to monitor the progress of an organization’s human resources management strategy. Recruiting, employee engagement, staff turnover, training expenditures, and other HR metrics are all subject to KPI optimization.
• In this post, we’ll take a look at the most significant KPIs for HR experts in order to establish current and successful management practises.
All HR managers and employees should be familiar with the following top 20 key performance indicators (KPIs) and metrics:-
• First, we assess employee absenteeism as a percentage of total working days. It's a key employee engagement KPI since it shows employee motivation and involvement in his work and the organisation. Low-motivated workers are more likely to call in ill or miss work, according to studies. It's crucial to watch this parameter over time and lower it because it will surely damage your organisation: the corporate atmosphere or overall productivity, and ultimately your finances and business well-being.
• If your absenteeism rate is higher than usual, evaluate whether it's a departmental or company-wide issue. Why? Then, fix the problem.
• Here's a Human Resources KPI used to measure new hire onboarding and education improvements. It helps track employees' development expenditures and make smarter judgments about expanding their skills after hiring. Training costs shouldn't be limited to new employees; more workers want improved job growth and continuous learning. HR management rarely considers investing in an employee's existing or new talents. Training often returns more than the initial expenditure.
• A knowledge test can help you determine if the training was beneficial.
• Young professionals value a decent work-life balance, flexible working time models, occasional work from home, and a sustainable and social company culture. Meet these prerequisites to retain highly sought-after specialists. To quantify your efforts, do employee satisfaction surveys. This indicator measures recruiting and employee retention. It makes logical to evaluate employees or specialists by tenure and department/team.
• The Recruiter Conversion Rate is more of an HR performance statistic because it focuses on HR executives. This KPI monitors the proportion of applicants who are ultimately hired. Effective recruitment depends on your organisation, region, and sector. This is a measure you may use to look at all related processes and compare different recruitment strategies to determine the most efficient one
• Most firms nowadays take frequent, constructive employee and internal feedback meetings for granted. HR must measure employee quality to evaluate recruitment efforts. Unsatisfactory employee assessments could be caused by faulty recruitment criteria or missing, irrelevant examinations. Develop an individual employee evaluation system to identify such issues and monitor staff quality.The stronger your employee rating system, the more HR managers may profit from this KPI.
• Next is group turnover rate. This simple indicator tracks the percentage of voluntary leavers by group and can tell you if a group is unhappy. Female employee turnover is 20%, even higher than the whole company, which suggests something is making female employees dissatisfied. To enhance group rates, track why people are leaving and offer methods to prevent others from doing so.
• In many companies, this HR metric is prohibited. Female-to-male ratios, especially in senior management, can reveal much about a corporation. Some industries are sexist (IT and engineering are overcrowded with men, while caring and nursing tend to be in majority female). This has a historical and sociological reason, but as our societies evolve, it's crucial to encourage gender, ethnicity, and curriculum diversity. More vistas means a larger outlook, more techniques, and more creative opportunities.
• Our next KPI is role level by gender. It measures male vs. female/diverse leadership roles. Many industries are still male-dominated. This is a crucial diversity measure to track because you want a diverse organisation at all levels. Setting realistic goals helps. As seen above, female and diverse workers in managerial roles must reach 20% by 2025. This might help you determine if your efforts are advancing your aim
• Overtime is a terrific indication on many levels, but context matters. A sudden increase in overtime hours could mean a short increase in orders or economic development. They can highlight your employees' dedication, weaknesses in work processes, or an understaffed team under pressure. This will affect another HR metric: absenteeism. Even if people don't mind working overtime occasionally, a chronic high workload will decrease motivation and employee satisfaction, which may increase absenteeism.
• Permanently high overtime should be investigated internally because lost orders or projects can limit a business's growth.
• Overall Labour Effectiveness is a comprehensive HR KPI that measures various dimensions. It's determined by dividing sales by employees. For a deeper study, evaluate the components that affect productive output: staff availability, performance, and quality, or the quantity of perfect / saleable products created during that time. Productivity measurements let workers realise how much and how well they've done and alter their work methods as needed. Higher ratios benefit the company. Measuring productivity effectively can boost profit and staff motivation.
• This HR KPI evaluates how much you spend on each new hire. It covers recruiting (advertising/marketing, referral incentives, recruiter time examining CVs and performing interviews) and training (manager/instructor time, materials, and new employee time). These costs add up rapidly and severely on a company's budget, so recruiting shouldn't be made lightly. However, without employees, work and business cannot be done. Compare the cost per hire by recruitment source. This shouldn't be the only factor to judge if a source is good or not; employee turnover is also significant.
• This is another HR performance measure whose name explains it. This metric quantifies the time between posting a job and hiring a new employee. Like the Recruiting Conversion Rate, it measures how efficiently a vacancy is filled. It also advises realistic business planning, as layoffs and resignations must be anticipated. Investing time to discover the greatest fit is vital, and a good employee may cost initially but pay off later.
• Employee turnover counts how many employees depart freely or involuntarily. It shows the performance of your company's retention initiatives and helps plan staff replacement. People that don't fit the firm should depart, which benefits both parties. When your best employees go, turnover is an issue because they never return. People abandon managers, not jobs. If you have a high turnover, track the root causes to uncover issue areas. Low turnover rates ensure long-term performance and cheaper recruitment costs.
• Employee and employer terminations affect turnover rate. Other considerations include contract expiration, retirement, disability resignations, etc. Use the dismissal rate, one of the HR KPIs that focuses on lost talent. Keep this statistic low, especially for junior workers, as they will be your most valuable resource in the future.
• We'll now examine ethnicity and gender by department. Some firms may pride themselves on having a diverse workforce, but they may be biassed in a certain function or area (such as hiring men in higher-paid positions). This KPI provides department-by-department ethnicity and gender breakdowns.
• Part-time workers work less hours than full-time workers, who normally work 40 hours per week. Part-time workers offer several benefits, especially when starting a firm and needing a position that doesn't demand 40 hours a week. Part-time work meet many people's schedules and demands. CEOs should remember that hiring several part-time workers to avoid the benefits and costs of a full-time position is a poor strategic choice. Part-time workers may take longer to learn the job and the company culture, and they can be difficult to retain if they want a full-time job. Track part-time contracts over time and compare them to company performance, employee satisfaction, and engagement.
This HR indicator keeps tabs on how long, on average, an employee stays with a business. Hiring and training a new employee is expensive, so keeping them on board for as long as possible makes sense. Then you will be able to get a better return on your money. With the addition of other KPIs such as the Employee Turnover, this statistic becomes even more effective:
Investing in new employees and training them for as long as possible will maximise your company’s return on investment.
The internal promotion rate is calculated by dividing the total number of senior jobs filled by the number of senior posts filled through internal promotion. For example, internal hires are frequently more productive, less likely to be a terrible hire, and more likely to stick around for a lengthy period of time.
The quality of a hire is measured by the number of new employees whose managers give them a high rating on their performance evaluations. The effectiveness of HR’s recruitment and selection processes is reflected in the quality of new hires. The organization’s strategic goals can be achieved by consistently maintaining a high quality of hiring rating.
This KPI measures how the salaries you offer compare to average benchmarks or competitors. It can be used at a company level, averaging out the number, or at individual job levels. To calculate this ratio you use the formula:
• Salary Competitive Ratio = Salary Offered ÷ Benchmark Salary
• The Benchmark Salary may come from industry sources or specific competitors. For example, if you pay Rs 1,00,000 and your competitors pay Rs 1,20,000 your Salary Competitive Ratio would be 83%.
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