The HR profession has rapidly gone from the back burner to the front of the queue. Right from being a side profession to an important segment of every organization, the HR vertical has grown manifold over the decades.
Key Performance Indicators or KPIs, as they are more commonly known, have become the talk within the HR town. Earlier, sales and marketing teams used to heavily rely on their KPIs to measure the success of the employees. However, given the recent trends, even HR managers are using these KPIs to measure their organizational goals, and further measure their performance against each metric.
Here is a list of some of the vital key performance indicators within the HR field, which have gained momentum over the years:
1. Talent Retention
Employees of a company are the most integral resource, which are an active yardstick to measure the success of an organization. Talent retention is all about measuring the average quality of the employees’ retention period, which in turn is linked to factors like remuneration and other HR related factors. When an employee leaves an organization, not only does an organization have to spend money in training a new resource, but also has to spend a considerable amount of time trying to get the new resource on board.
If the staff turnover index is high, it simply means that the organization will end up incurring higher costs in hiring and training. In order to calculate the rate of retention, one has to compare the number of workers who joined the organization in a specific time period versus the number of workers who have were a part of the organization during the same period.
2. Time spent in a specific position
If employees feel they are not getting promotions after a period of time, it will lead to unrest, and eventually, attrition. Many employee losses are directly related to the time spent in the same position. In other words, if an employee is not given regular promotions in their positions, there might be a high rate of attrition, which can adversely impact the brand name of an organization. The average duration can be calculated by counting the number of months each employee spends within a specific role, and divide it by the total number of employees of an organization.
Absenteeism, as a KPI, measures the absences of the employees due to sickness, delays along with excused and unexcused leaves. This KPI helps predict the numbers you, as an organization, are expecting. Depending on the average hour values which impacted the absenteeism within the organization, the company’s costs can be rightly quantified.
4. Average recruitment time
Average recruitment time is used to measure the time taken between the announcement of a departing employee’s last day and the joining of the replacement employee. This time gap can be rightly quantified and measured by optimizing the average time of new hiring along with a few other factors.
5. Educating and training courses for employees
Employee training courses have a direct impact on the company activity. Through this KPI, organizations aim to boost the productivity levels of their employees, by creating useful strategies to increase loyalty and drive satisfaction levels which work in the favor of the organization’s retention strategies in the long run.
6. Employee engagement levels
As the name suggests, this metric is all about measuring the employee engagement levels within an organization’s employees. This KPI helps the HR resources to understand how well involved the organization’s employees are, and which strategies are working in favor of keeping the employees well motivated and tuned with the organizational goals. During the calculation phase, this metric is usually calculated as a “Yes/No/Maybe” metric and further basis the employee inputs, this metric can be quantified and used for further analysis.
7. Offer acceptance ratio
In order to stay competitive and in sync with the market, it is often necessary to perform benchmarking. This might be helpful in calculation of the recruitment numbers, the payout, compensation etc. In order to calculate the offer acceptance ratio, divide the number of offers which have been accepted over a period of time by the number of offers which were given during the same period of time. If the numbers are abnormally high or low, it would give an idea around the issues which are causing the numbers to rise or fall. Some causes might be varying compensation numbers, which might be too high or low as compared to the market standards, lack of additional benefits being provided etc.
8. Cost per hire/total hiring cost
As discussed above, every type of employee hiring has an associated cost. The cost per hire might include the total amount spent in the interviewing process, getting the person on-boarded, training him/her as per the requirements, etc. Apart from these costs, some overheads should also be taken into consideration, which includes the likes of posting job requirements on job boards, recruitment software licensing, applicant tracking systems, etc. In order to calculate this ratio, you need to add up all the expenses incurred during the hiring process, and divide it by the total hiring in a given year.
9. New hire turnover
Last but not the least; the new hire turnover ratio is of prime most importance to an organization. The concept of a “new hire” might vary from company to company. People who have joined the company within 6 months can be considered as new hires. This KPI is closely related to the recruiting and on-boarding process of your organization. In order to get the most out of a new hire turnover ratio, compare it with your overall turnover ratio. If the number is not very concrete, chances are you might be having issues retaining new talent. This might be related to a number of reasons; however, this issue can be resolved by taking considerable feedback from the new hires on the on-boarding experience and using it to improve the hiring process eventually.