Candidates who receive high-performance ratings are indicative of hiring success while the opposite holds true for candidates with low-performance ratings. 18 Key Performance Indicator Examples & Definitions Financial Metrics. If an employee’s recent performance metrics are 10% higher than they were previously, it’s a good indication that their training was effective. Examples of such data include turnover, cost-per-hire, benefits participation rate, and others (we’ll get into more of them later). This little known plugin reveals the answer. Cost of HR per Employee: The total amount your organization spends on HR functions divided by the total number of employees. With more accessible, more streamlined reporting, American Cedar & Millwork has seen a 25-30 percent reduction in overtime hours as clock-in/clock-out tracking has become more accurate. But without measuring and tracking the HR metrics that matter, it can be difficult to pinpoint how your work makes a difference or how you can improve your efforts. Only then are relationships of one key metric to another revealed. A key performance indicator is a number that shows whether you’re getting closer to your goal or if there’s a lag in progress. This is a good sign for HR professionals because, in Peter Drucker’s words, “What gets measured gets improved.”. You also want to determine how many customers actually purchase items from your website and how many of those customers return to buy more stuff. Hiring Quality metrics is a group of recruitment metrics that measure the quality of the candidates you hire. California residents: To submit a right to know, delete, or opt-out (aka “Do Not Sell My Information”) request regarding your personal information. what HR metrics are most important for your company, performance management software includes goal tracking, make real improvements in real organizations. From a list of various options, almost a quarter of respondents selected employee satisfaction as a report they would like to have, and 20 percent selected employee engagement. Producing lots of data can bring a false sense of productivity—don’t get caught in the trap of measuring things just to measure things. All Rights Reserved. The Houston Chronicle outlined regular appraisals, productivity tests, 360-degree feedback, and management by objectives as a few common forms of measuring individual performance metrics. Just enter your email below to get regular deliveries of awesome HR insights. She explains, “If managers wanted overtime reports before, I had to manually go into our system and access [the report] for them. Read on: The complete guide on KPI dashboards . Get the scoop on what executives want from HR reports in our free infographic. Low first-year performance ratings are indicative of bad hires. Turnover is inevitable. Employee Satisfaction: The number of employees who would recommend your company as a good place to work versus the number of employees who wouldn’t, indicating overall employees satisfaction (an employee Net Promoter System℠*. No spam, ever—we pinky swear. Quality of hire, often measured by someone’s performance rating, gives an indicator of first-year performance of a candidate. If everyone is going in the same direction, we are so much more productive. Innovation can come in many forms. If you find yourself reporting on data that does not contribute to larger decisions, then it may be time to adjust your reporting strategy. Debt Asset Ratio In fact, many executives want to hear from their HR teams more frequently and with more detailed HR reports. Types of performance metrics include those used to analyze business productivity, marketing and sales, financial performance, customer-relations management, and environmental metrics. It isn’t frequency alone that matters when it comes to HR metrics—it’s also about what you measure. You can calculate this by adding up the time for each individual hire and dividing it by the number of new hires in a given period. We’ve compiled a list of some of the most important HR metrics and formulas to monitor in your company. Check out BambooHR today. First, analyze your data and draw conclusions from it. HR metrics like labor costs and profit per employee can help the business gauge employee performance and understand how staff contributes to the bottom line. If you are measuring some HR metrics already, double-check that all of your data is helping your organization reach its goals. By presenting key HR metrics, as well as the context and narrative of that data, Emily helped her organization win an important grant and continue funding their company mission. Through research, analysis, and writing, she creates content to help HR professionals think and plan more strategically. Training Expenses per Employee: The total cost of your organization’s training courses and programs divided by the total number of employees. Common Types of Human Resources Metrics: Time to hire. ️ Importance Tracking these recruitment metrics will help you find out if you are hiring the best people for your job openings and your company culture. Another example would be manufacturing output measured against performance incentives. Stakeholders, such as consumer advocacy groups, or stockholders of the company, may look at corporate responsibility as it is revealed through an analysis of actual social performance. Metrics that measure productivity analyze factors such as output per hour, days lost to injury, and frequency of supply-chain interruptions. Jessica Neal, HR general manager at American Cedar & Millwork, uses time tracking reports to keep employees and managers on the same page with scheduling and overtime—which is especially important for an organization that spans multiple states. The best-known metric is subjective appraisal by the direct manager.1. Measuring this kind of information—what’s working well, what needs improvement, and what trends to expect in the future—helps organizations figure out their people strategy. There is no universal magic number for what your turnover rate should be or what your training per employee should cost. And to take that quote a bit further, what gets measured matters: a full 87 percent of respondents said that HR reports influence their organization’s strategy to varying degrees. Revenue per Employee: The total amount of revenue divided by the total number of employees. Engaging in performance management helps ensure that your staff meets your expectations. Not every figure is going to be equally useful for every team. You can generate this number by adding up both internal and external hiring costs then dividing that total by the number of employees you hired in a given period. An example would be using performance metrics to determine which shifts are more productive or less, or how many man hours were lost due to injuries in the workplace. Responses to advertising campaigns and data derived from public opinion polls are also examples of the types of metrics that are used to quantify a company's marketing efforts. Please note, your specific reporting strategy will largely depend on your organization’s size, priorities, HR team, and more. They are: Process benchmarking. In fact, one of our recent surveys shows that almost one-third of executives want to see reports from their HR teams more often. Acceptance Rate: The number of offer letters your organization extends divided by the number of candidates who accept an offer. All of these performance metrics examples will really help you measure the effectiveness of your website. The following are common examples. I wanted to say that website performance metrics are also important because you need to understand how effective your website is with respect to your business. The following are common types of employee performance. Cost per Hire: The average cost of hiring a new employee. In this list of key performance indicators examples, we’re going to look into four different categories of business metrics : If you aren’t measuring any human resources metrics right now, sit down with your executive and HR teams and identify which data you need to start tracking today. As a small-business owner, you want to make sure your employees perform their duties efficiently and effectively. The Three Types of Methods Used to Measure Performance. Employee Performance: You can track employee performance through self-assessments, peer reviews, manager assessments, or a combination of all three. The metrics you choose should be closely aligned with your industry, business and strategy. Performance metrics define in quantitative terms the performance of various activities in a business. What’s the Difference Between Employee Satisfaction and Employee Engagement? Quality . This is both empowering for employees, which promotes higher levels of motivation and conviction in doing a great job, and also gives them very practical tools for improving their performance with confidence. I think that sales performance metrics should be visibly displayed and the results should be posted so that all of the sales staff can see how are they are doing. By continuing to use this website, you agree to our use of cookies in accordance with our privacy policy. Learn more here! In our survey, over two-thirds of respondents said that it is very important or extremely important to measure the impact that HR initiatives have on their organization. The work you do in human resources is vital to your organization’s success. We asked respondents for the types of HR reports they currently use to measure the impact of HR, as well as the types of HR reports they wish they had. After all, the report states, “Any metric that does not lead to action is not worth the time and effort to calculate and report it.”, Third, you should identify the right audience for each HR metric. KPIs and metrics provide a way to measure how well companies, business units, projects or individuals are performing in relation to their strategic goals and objectives. It’s also useful to have a track record established when you decide to promote or demote an employee. With the right HR metrics and analytics, Emily is able to make a compelling case for her company to gain the funding they need. Promotion rate HR metrics can help answer these questions. If an organization can capture and report on quantitative benchmarks for average and high-performing norms, employees … An article in CFO Magazine in 2007 reported that Best Buy® discovered, through tracking performance metrics, that a 0.1% boost in customer engagement correlated with a $100,000 US Dollar (USD) increase in a store's annual operating income. Gross Profit Margin 2. Learn about a little known plugin that tells you if you're getting the best price on Amazon. Learning about how consumers are finding your website and how long they stay on your website can tell you if you have the right information on your website or if is set up in a user friendly fashion. Work quality metrics say something about the quality of the employee’s performance. (This is. 4.1. What this means is that HR metrics are no longer nice-to-haves—they are a must for any HR team that wants to help build a solid, data-driven management strategy for their organization. Let’s say your goal is to decrease disengagement by 7% through more continuous feedback: (300 employees x 10.2% disengagement) = 30.6 disengaged employees Marketing metrics may be used to measure the performance of product lines, sales team performance, competitor analysis, or to gauge consumer demand and engagement. Metric #1: Goal-based metrics A powerful approach to measuring employee performance is to translate company goals into specific goals for individual employees. ROI of HR Software: There are several factors that contribute to. This really motivates a lot of members of the team to continue what they are doing or to pick up the pace a little. (300 employees x 17.2% disengagement)/100 = 51.6% disengaged employees ($60,000 x 34%) = $20,400 cost of disengagement per employee ($20,400 x 51.6) = $1,052,640 Total cost of disengagement. The … If employees know the specific metrics that will be measured and analyzed, they can better self-manage and monitor their own performance. Performance metrics are indicators of the value produced by a business, program, team or individual. As SHRM’s report explains, “It is the insight that produces value, not the metric itself.”, Second, SHRM reminds us that the main purpose of HR metrics is to help your organization make better, more informed decisions. To make HR metrics as valuable as possible, SHRM reminds us “[d]on’t waste anyone’s time with metrics or analytics that are not relevant to their responsibilities and decisions.”. It all depends on your organization’s specific circumstances. As director of people and culture at ISTS, Jennifer Fisher uses performance management reporting from BambooHR to save time, identify opportunities for improvement, and boost engagement. HR Software Employee Participation Rate: The number of employees who actively use your HR software divided by the total number of employees, multiplied by 100 to get a percentage. Retention Rate: The opposite of your turnover rate in that you divide the number of employees who remained in your organization over a given period by the number of total employees. The specific metrics used to monitor employee performance will ultimately depend on the type of work your business does. Quantitative productivity data may be used to justify retooling costs, for example, or to reconfigure the manufacturing operation in its entirety. For example, “our grant writer was asking me for a turnover rate, and I was able to give her not just the turnover rate, but also the narrative of how our turnover rate has gone down by a factor of four over the past three years.”. Tracking the right employee retention metrics – with help from the new data points available to human resource professionals – can help keep your employees satisfied and reduce the likelihood that they jump ship. Keep it simple; no need to start running hundreds of reports right away. Are HR initiatives helping to boost employee satisfaction and engagement? There is no shortage of things to measure in HR, from headcount to benefits participation. So, your organization should have a goal for each metric that clearly relates to your organization’s overall success. This is all about better understanding your processes, comparing performance against internal and... Strategic benchmarking. Planning & Execution ... A list of common performance metrics for businesses, programs and employees. The following 70 HR metrics are illustrative. Are there reports you need to add? Fourth, your organization must determine its own goals and targets. Absence Rate per Manager: The absence rate broken down by individual teams and managers. Get performance management software that actually helps improve performance. Management by Objectives; Subjective Appraisal by Manager; Product Defects; Number of Errors; Net Promote Score (NPS) 360 Degree Feedback; 180 Degree Feedback; Forced Ranking or Vitality Curve; 2) Work Quantity Metrics Employee Performance metrics. quantifiable value expressing the business performance in a shorter time-frame level Her focus is on taking complex ideas and in-depth research and turning them into clear, digestible pieces of content. The reports give her organization “better visibility into where everyone is. If your organization hopes to make informed, strategic choices for the future, it’s clear that HR metrics need to be a piece of that puzzle. For measuring Employee Performance, four metrics come in play and they are-Four Metrics to Measure Employee Performance 1) Work Quality Metrics. Production metrics may also reveal bottlenecks, slack in the system, or excessive waste. Regular reporting of HR metrics is a good tool for managing any Human Resources department. Return on Capital Employed The ratio of profits to the total amount of capital invested to achieve those profits. Key Performance Indicators for the Finance Department, such as headcount metrics, work quality metrics, work volume metrics, cycle times and process-related metrics that measure group productivity as a whole, all contribute to the bottom line, just like revenue and sales-related figures do. In addition to managing typical human resources tasks, Emily White, the director of HR and operations at New Moms, also helps secure grants and funding for the nonprofit organization. T here are a number of different methods to choose from for actually tracking performance metrics. We’ve created this guide to help you understand the basics of HR metrics and which ones you should be measuring to make a real impact on your organization. Voluntary Turnover Rate: The turnover rate including only those employees who leave your organization voluntarily. Talent Turnover Rate: The rate of turnover among your organization’s high-performing and high-potential employees. With this data, they have helped employees improve and gotten the right people on track for leadership positions. While closely related, employee satisfaction and employee engagement are different concepts, and one doesn’t necessarily guarantee the other. Overtime Hours: The number of overtime hours worked by employees in a given time period. Strategy Developing plans that achieve goals. The best performance management and measurement systems include a blend of quantitative metrics (the “what”) and qualitative metrics (the “how”). Some companies have significantly reduced manufacturing waste by tracking and analyzing discarded material, then using those metrics to adjust future orders for goods and materials up or down. Collecting raw data alone is insufficient. Environmental metrics may also quantify the impact of weather patterns on productivity, or how the local labor market may be impacting job recruitment and retention. The average length of time that it takes for you to hire a new employee, from the time of the job posting to their acceptance of an employment offer. Wikibuy Review: A Free Tool That Saves You Time and Money, 15 Creative Ways to Save Money That Actually Work. Performance metrics define in quantitative terms the performance of various activities in a business. Amazon Doesn't Want You to Know About This Plugin. Employee engagement is tied to innovation, productivity, creativity, and longevity in your workforce. Net Profit Margin 4. Absence Rate: The average number of days employees are absent in a given time period, not including approved PTO (also called. Learn the rules and regulations you need to know to organize and maintain employee records and keep your organization in compliance. In a recent study, we found that both executives and HR professionals agree that measuring HR and its impact on an organization is critical. Ratio of HR Professionals to Employees: The number of employees in your organization per HR professional on your team. Still,you need to measure employee engagement, just as you would any other business objective, regardless of whether employee engagement becomes part of your balanced scorecard. Perhaps the most visible evidence that strategic HR is taking hold in business is that many organizations are starting to use HR metrics as a key part of their overall business strategy. Management by objectives is a management model aimed at improving the performance of an organization by translating organizational goals into specific individu… Among the non-HR executives we surveyed, nearly one-third said their HR team doesn’t report often enough, and 16 percent said they have no idea how often their HR team reports. Management by objectivesA way to structure the subjective appraisal of a manager is to use management by objectives. Time to Completion: The average amount of time it takes for an employee to complete a given training program. I know that some retail companies also measure the number of warranties sold for high ticket items as another metric because this area is pure profit for a company. Companies are refining the metrics they track and the amount and types of employee feedback they include in their processes. Customer Metrics. Or are they hindering these things? I couldn’t give them access to some things without giving them access to everything. When I worked in sales, my company also measured our monthly revenue as well as our percentage of conversions which involved the amount of leads that we were able to convert to regular customers. Don’t know where to start? Total Turnover Rate: The number of employees who leave your organization within a given period of time divided by the average number of total employees (then multiplied by 100 to come up with a percentage). We recommend focusing on these four key things as a jumping off point: 1. Don’t miss out on the valuable insights that are waiting for you in the numbers. By tracking HR metrics such as goal progress, employee performance, and employee engagement, Jennifer and her team were able to identify points of employee disengagement and misalignment, as well as potential development opportunities. Since HR is meant to serve the people of an organization, the employee experience should be an important part of the HR measuring process. By accurately documenting real performance and process metrics with BrightGauge, you can show employees where they need to improve in greater detail. Tracking the feedback from performance metrics produces hard evidence, which a company uses to chart a strategy. Understanding the reporting needs of your executive team, and then meeting those needs, can open the way for you to become a more strategic force in your organization. If everyone is meeting their goals, that means our company is most likely meeting its goals.”. Performance metrics were based on concrete production ... healthcare organizations should develop incentives and performance metrics for employees who align with the digitally fit culture they seek to develop. Most performance measurement metrics in this area involve closing percentages and the average size of the sales order in dollar amounts. Is Amazon actually giving you the best price? This can help with your performance improvement plan (PIP) creation so you can improve productivity without having to onboard a new employee from scratch. Some metrics, like new-hire turnover or time-to-hire, will be especially helpful for your recruiting team, but they might not be as relevant to your middle managers. Types of performance metrics include those used to analyze business productivity, marketing and sales, financial performance, customer-relations management, and environmental metrics. But what data will give your organization the insights it needs to grow and succeed? However, there are some universal metrics to consider. Financial metrics analyze a company's fiscal strength and performance in terms of cash flow, profit margin, overhead costs, cash reserves, and other similar quantitative data. New-Hire Turnover: The number of new hires who leave within a set period of time, such as within their first year of employment. Types of employee performance metrics Quality of work Although it is hard to measure quality objectively, companies can observe the number of defects or rejection of a product, and use that to gauge employee performance metrics. Now I can give them access to reports for their own employees.”. Are there metrics you don’t need to be tracking? We’ll show you why that’s a mistake and how to correct it. While 51 percent of the respondents did agree that their HR teams report frequently enough, the numbers suggest that many organizations still have room for improvement. Therein lies a great opportunity for HR. Tori Fica is a senior copywriter for BambooHR. HR metrics, or human resources metrics, are key figures that help organizations track their human capital and measure how effective their human resources initiatives are. Below are a few examples of HR metrics being used to make real improvements in real organizations just like yours. Cost per hire. © 2020 Bamboo HR LLC. Company Performance: A high-level comparison of how well employees are performing versus how engaged and valued they feel. This is one of the most difficult metrics to measure, as it appears to be entirely subjective. Hiring talent that’s matched to the job, conducting effective training and managing employee workloads all contribute to … HR metrics, or human resources metrics, are key figures that help organizations track their human capital and measure how effective their human resources initiatives are. Key performance indicators (KPIs) and metrics. Headcount: The total number of employees in your organization or within a specific department you may be tracking. What’s more, a whopping 82 percent say that such HR metrics are somewhat useful, useful, or extremely useful for their organization.