What can HR metrics do for you?

If it can be measured, it can be managed. Having reliable data makes it easier for business leaders to make effective decisions and eliminate guesswork, using evidence rather than “gut feeling”. This is where HR Metrics shine.

Most organisations use Key Performance Indicators (KPIs) and performance metrics in some way, usually in relation to financial or operational performance. With people costs representing a significant proportion of the cost base in many organisations, determining whether HR activity is performing should not be left to chance.

HR activity directly contributes to achieving business goals and, therefore, should not be treated any differently. Taking a data-driven approach is a competitive advantage that organisations can no longer afford to overlook.

How do organisations use HR metrics to drive performance?

Organisations that use HR metrics understand their current level of performance and, therefore, can create plans and specific solutions to pain points in recruiting, managing and retaining employees. This happens by considering an individually tailored combination of:

Basic information

Core data about the workforce and how this changes over time. Measures may include headcount, age profile, the ratio between full-time to part-time employees and gender diversity figures.

HR Activities

For example, recruitment and retention. Measures within recruitment and retention may include employee turnover, time to hire and replacement costs.

Outputs

This relates to leadership capability. Measures with leadership capability may include appraisal results, engagement scores and training outcomes.

Outcomes

The quality of outputs and the resulting impact, for example, organisational performance. Measures for organisational performance may include market share increase, profit and service quality improvements.

Armed with this information, the priorities for the HR strategy can be determined and the impact of the strategy measured.

Which HR metrics should be used?

Select the most meaningful metrics, those that measure what is valued, can be influenced and tell the story of what’s happening in the workplace. Make the information simple to understand and preferably visual, but useful and practical. Complement the data with comparisons where possible such as an external or internal benchmark.

There are many HR metrics, but collecting these metrics is only half of the story. Being able to use them effectively to influence your organisation is key. Our expert HR consultants can support you in developing an HR strategy with an accompanying selection of metrics that will Make A Difference to your organisation’s performance.