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If you are a responsible and conscientious owner of a small or large company, then you should realize how essential it is to pay attention to all the elements and aspects of your business. You will surely agree that tough competition that often prevails at the market, does not leave place for hesitations, because lack of control my eventually result in serious problems and financial loss.

Just like any business issue, HR performance should be evaluated, measured and analyzed. Companies and organizations that overlook this aspect frequently regret it later, because well-trained and skilled personnel are the most valuable asset of any organization. In case the work of the human resource department proves to be ineffective, this may result in unexpected complications. Likewise, paying unprofessional employees who do not wish to improve their skills is nothing more than just a waste of money. So, there is no sense to spend more if you can invest your money in experienced and talented personnel.

With the Balanced Scorecard system the measurement process becomes easy and available to most human resource departments. This system utilizes a set of universally recognized and useful assessment tools, which can be implemented in all business spheres without any exception. The only thing that changes from one company to another is a set of key performance indicators that have to be analyzed. Their choice typically depends upon several factors such as current performance of your company and its HR department, available problems and weak points, personnel performance and professionalism etc.

Although key performance indicators may differ in diverse companies, there are still those that are internationally recognized. Cost per hire, for instance, is referred to as one of the most meaningful and valuable indicators. It helps identify the average amount of money spent with the purpose of hiring one employee. In case these expenses prove to be too high, your organization may face financial losses. So, it is important to make them low for the benefit of your business.

Length of employment is one more metric that is worth measuring in any company. It shows the amount of time a worker spends in the organization. If employees spend less than one year in your office and leave without any serious reason, then this may be the sign of problems observed either in the HR or compensation policy.

Introducing the system of Balanced Scorecard is a long, time-taking and complicated procedure. This is where you will need special software that will make the measurement process more reliable and informative.

Effective and responsible work of the HR department is a foundation for better functioning and success of the whole company, because the goals of this segment should meet the overall business strategy. That is why the performance of this sector should be regularly assessed and analyzed, which will allow introducing urgent changes to the HR policy of any organization and reaching its short-term and long-term goals.

It is not a secret that correct and properly thought-over personnel selection is one of the most meaningful preconditions of the advanced business performance of your company. Introduction of the Balanced Scorecard system makes it easier to assess the efficacy of the HR department and its functioning. It also helps set reasonable goals when it comes to the strategic planning and identification of the major problems that prevent your organization from business improvement and profitability.

At present, the procedure of the HR measurement is mainly done from the point of view of 2 perspectives, namely learning and growth and internal processes. The thing is that the HR department is bound to make sure the company does not spend too much money to engage the best professionals in this or that area. At the same time, it does not make sense to save on personnel training and education, since this contributes to the quicker integration of new employees into the team. The more effective the process of education and training is – the less subjected to the negative influence of competitors your company will be.

The Balanced Scorecard system is highly valuable and helpful in proper assessment and monitoring of the HR performance. Furthermore, a set of key performance indicators it uses in the process of measurement helps integrate and develop a certain strategy into the functioning of this department and company in general. As a result, it becomes possible to foresee the potential problems that may not allow implementing specific strategic objectives that mean a lot for your company. That is why investing in human resource metrics is of great importance if you are serious about the business advancement of your organization. You should not forget that most HR metrics deal with the development of the human resource segment, its ratios, internal connections, personnel productivity, processes of recruitment and retirement, retaining and reward, workforce training, compensation and job environment in general. These categories require the application of lots of KPIs, which have to be assessed and analyzed carefully and on time. By means of investing in HR metrics, you make these processes more effective and consistent, which will be reflected in the enhanced performance of your organization.

Performance measurement tools and metrics are probably the most widely discussed issues in the human resource industry these days. There is no lack of information associated with this topic, since it is extensively covered on the web. At the same time, there is a need to make some important points clear if you are concerned with the improvement of your business performance.

It does not matter a lot what business you run, you will face the necessity to measure the effectiveness of the HR department sooner or later. This is because the process of recruitment is one of the most responsible procedures for any organization, since the productivity, knowledgeability and training of employees is closely connected with the overall performance and success of a company.

As far as the human resource department deals with personnel and its management, HR specialists have to look for the best and the most experienced employees in each area. The process does not stop here, because even the most professional worker needs some training and time to adapt to the new position. The Balanced Scorecard system, which uses metrics or key performance indicators, can help evaluate workers’ skills and their potential contribution to the performance of a company. This valuable system combines strategic aims of a company with specific actions and measures that have to be undertaken for their effective implementation.

Key performance indicators should always agree with the strategic planning of your organization. This is where you should consider such aspects as the main accountability areas of your business, performance goals and standards, strategic aims that have to be met etc. This helps choose the best and the most suitable KPIs. For example, if you plan to measure the rate of customer satisfaction and care, you will have to set the corresponding objective, select a target and choose the most reasonable key performance indicators to measure this issue. Thus, the objective here will imply the improvement of customer satisfaction and the target will be to achieve not less than the 80% rate with the clients during the upcoming quarter, for instance. As a result, the best KPI, which will help you meet the pre-set goal, will be the review of the annual rate of customer satisfaction and its comparison to the current state of affairs in this area. The human resource department is bound to ensure that exact information is gathered, analyzed and measured properly. Well, this example may seem quite simple, but it can give you an idea of how the measurement process should be done.

Does the human resource department of your company measure its performance regularly? If not, then it seems vital to underline the importance of this procedure, because some measurement tools may be really powerful when it comes to defining areas that need improvement. This will eventually help your company realize special needs of your employees and do everything you can to come up to their expectations.

The choice of human resource metrics you can implement these days is endless. Some of them are effective when measuring the rates of retention and recruitment, for example, while others should be analyzed to span payroll, revenue, compensation and engagement rates etc. Nonetheless, all of them help provide a helpful and meaningful insight into the performance of the human resource department.  At the same time, it is worth underlying that some indicators are more significant and, hence, widely used as compared to others, which generally depends upon the goals of your organization, its strategies, effectiveness etc. With regard to this, HR experts are recommended to consider the following issues when designing and implementing metrics: information that has to be tracked, the ways of analyzing the data, the use of this information for further strategic planning, problem-solving, performance improvement etc.

Nowadays, most HR departments make use of the following common metrics: absence rate, cost per hire, engagement rating, return on investment, yield ratio, revenue per one employee, tenure and annual turnover, time to fill etc. Absence rate, for example, is calculated by means of dividing the number of days an employee is absent during one month by the overall number of workers multiplied by the number of working days. This metric is essential when there is a need to find out the percentage of employees who are absent for this or that reason and improve the result if necessary. To calculate the cost per hire, you need to summarize all recruitment expenses in general, the sum of benefits and the cost of compensation.

Satisfaction rating is another metric to be calculated if you intend to determine the percentage of employees who are satisfied with their job and work place in general. The higher this indicator is, the more productive the personnel performance becomes and the higher the rate of customer satisfaction is.

These are only several HR metrics that may be potentially beneficial for your organization. You can implement much more of them depending on the current needs and efficacy of your company.

Metrics are highly valuable measurement tools that help managers of the human resource department monitor and develop business strategies through the detailed analysis and presentation of human capital data. Any company, which is going to implement these metrics, aims at tracking and identifying key variables with regard to its current business needs and functional area. When analyzing human resource metrics, there is a chance to find out more about the impact of human resource programs your company uses, current HR trends and their alignment with short- and long-term corporate aims. What you should know is that it is possible to carry out metrics at different levels. Thus, you can start with common indicators such as cost per hire, days to fill, turnover rate and then proceed to analyzing more complex aspects that may comprise a combination of formulas and factors, including quality of hire, employee and customer satisfaction etc. Listed below are the most valuable and widely used HR metrics that can help you analyze your business performance accurately.

Employee engagement is probably the most popular HR metric that is used by lots of organizations these days. It is closely connected with business performance, since low rates of employee engagement signify that there is an increased need to improve productivity and increase costs per each hire. This metric also affects the rate of employee retention and personnel performance in general.

Competency development spend is the second metric, the aim of which is to help HR managers identify major talents and skills of employees that are required to meet the company’s business goals. Personnel skill levels should be reviewed consistently, which will allow HR experts work out the annual competency improvement plan in accordance with the available funds, expected outcomes and timelines.

Quality of hiring is another HR metric applied to define how exactly the abilities and skills of new employees vary from the initial expectations and requirements. This indicator is usually calculated around 6 months after a worker has been hired. This metric is typically combined with the speed and cost of hire in order to measure the efficacy of the recruitment process in general.

Resource utilization is a metric that has a serious impact upon the revenue of any organization. This indicator shows the ratio of the employees’ paid work to the general work amount. This indicator can be affected by diverse factors, including inconsistent calculations of current projects, ongoing trainings, special job demands etc.

Another simple HR metric we will consider here is revenue per employee. It helps measure the efficiency of all the initiatives and plans. Apart from this, it helps make the comparison of the performance of your company with that of similar companies and set internal goals for better HR management.

Is there any difference between human resource metrics and human capital metrics? Both types of metrics sound nearly the same, so it is rather easy to confuse them. No wonder, lots of people use these terms interchangeably. Meanwhile, they are used to identify quite different things, so it makes sense to learn more about them.

HR metrics have always been implemented to describe the way the human resource department performs its functions. Human capital metrics, in their turn, come into play when there is the need to get information about employees who work for the company. This info may include not only workforce performance, but also their special rewards, characteristics, organizational capabilities and negative features that may prevent them from getting the most out of their talents and knowledge. Unlike HR metrics, human capital indicators have not been analyzed and tracked systematically. The situation has changed recently, due to the fact that company managers have started thinking not only about their profits, but, what is much more important, about their human assets.

Let us find out more about both types of metrics so that you could understand the difference between them. It is not a secret that human resource metrics are valuable quantitative tools that enable the managers of a company to assess the work of the HR department and functions it is accountable for. They help track the efficacy of the human resource segment as well as that of measures it undertakes. HR metrics can be helpful or not, dynamic or static, sub-function or full function, soft or hard. How is it better to evaluate them then? The truth is that only several of them can be benchmarked easily. Others, on the contrary, are not that simple to assess. So, it takes time to choose the required measurement strategy. The best examples of HR metrics are: recruiting and retention, turnover expenses, ratio of non-HR workers to HR personnel, training costs as well as time to fill a vacant position.

Human capital (HC) metrics are not associated with functions performed by the human resource department. They are all about the workforce and their impact upon the business success in general. Examples of these indicators comprise: employee engagement, overall rate of turnover, control spans etc.

Whereas HR metrics are important for the effective management of the functions and performance of the human resource department, HC metrics matter a lot when it comes to managing your business in general. They focus not on expenses, but on value.

What is the key to efficient introduction and use of human resource metrics? Unfortunately, this question is not considered by lots of organizations that think about measuring the performance of the HR department. Meanwhile, it matters greatly, since it affects not only the choice of the best metrics, but also the costs and other problems associated with this process. Experts underline that the key to proper and accurate use of metrics is timely and correct identification of those factors that have to be measured in the first place.

A human resource metric is nothing more than just a tool of tracking and measuring performance indicators. Metrics utilized by the human resource department help track the productivity and performance of the largest and the most meaningful investment of any company – its human capital. To be precise, human resource metrics are applied to analyze and measure the efficacy of a company’s financial investment in hiring, recruiting, retaining and training of its personnel.

So, what do human resource metrics actually measure? As far as they are generally linked to a company’s most significant business issues, they may help improve the rate of customer satisfaction, realize the impact of cutting the expense and define the effect of newly introduced technologies. If designed and introduced correctly, they can reveal the causal relationships that affect the overall business performance.

There is something any HR specialist can do to improve the trustworthiness and value of human resource metrics you plan to implement. Thus, you can use special formulas and ratios that are typically applied in the analysis of other segments of your business. For instance, return on investment (ROI) is one of the commonly valued and applied metrics. As far as investing in human assets is often considered the most meaningful aim of any company, HR experts should try their best effort to define where exactly the allocation of human resources will provide the maximization of investment associated with hiring and retaining of the personnel in order to meet both short- and long-term business objectives.

Efficient HR metrics help managers of a company adopt right decisions based on certain facts. Thus, the rate of turnover indicates the number of employees that leave the organization during a particular time interval. The actual purpose of this metric, however, is to reveal the costs related to hiring, recruiting and training of new personnel. That is why this metric helps understand other reasons that are hidden behind the rate of turnover. As a result, this makes it easier to undertake measures meant to increase the workforce retention. The same benefits are associated with other metrics as well, so choose them responsibly.

The work of any human resource department can be notably facilitated through the introduction of special measurement tools that make it possible to analyze the performance of the whole company and efficacy of the HR department in particular. These tools are known as human resource metrics and are specially worked out to provide important information and detailed analysis of staff-related issues. The main purpose of implementing these indicators is to provide a reliable framework for analyzing and monitoring specific data associated with the company’s personnel. Key performance indicators also help set standards for proper measurement of HR performance and timely identification of strategies that help the company’s managers plan and reach the targeted business objectives.

Human resource metrics are designed on the basis of special data associated with the company’s workforce and their productivity. This information helps get the idea of all staff-related changes that have happened during the analyzed period of time as well as corresponding consequences. The most significant key performance indicators that should be considered by any human resource department are the rate of turnover, sickness levels, retention and recruitment, personnel engagement and training etc.

Turnover rate is important for any organization, since it shows how effective and correct the process of personnel recruitment was. High rates of personnel turnover generally lead to the increased financial expenditures. This is because there is a need to replace the employees and introduce other related changes. This indicator is calculated by means of dividing the overall amount of leaves during the analyzed time interval by the real staff amount. It is quite understandable that the lower the rate of turnover is, the more efficient the performance of the HR department proves to be. Consequently, this should be one of the main goals of each company.

Let us proceed to sickness levels now. It is of paramount importance for any organization to monitor and manage this indicator accurately, because the results are closely connected with the company’s expenses. Apart from this, sickness absence rates affect both the client’s care continuity and the overall morale of employees. This is especially true when sickness levels are quite high.

As you see, the processes of monitoring and tracing all the changes that are going on in your company are not too painstaking and time-consuming if you use choose and implement human resource metrics accurately and with regard to your current needs. If you manage to use this measurement strategy correctly, the results will come in due time.

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Any business owner can be asked these questions:

• Are your employees performing ok?
• How many employees may require improvement of skills?
• Which employees are the best and what individuals lag behind?

Answers to these questions can be obtained only through personnel appraisal. At the same time, it might be problematic to choose the most effective method. Moreover, certain personnel appraisal systems are not easy to implement. The bad comes to worst when evaluation results are distorted. This will certainly create an atmosphere of distrust and envy in any company (it is not a secret that the majority of bonus compensation plans are based on results of personnel evaluation).

Evaluation may become a nightmare, once employees sense unfair practices and approaches. For example, when rating employees from worst to best it often becomes impossible to fairly rank employees in the middle of the ranking. Another example includes evaluation of personnel based on completion of seemingly identical tasks which however differ in complexity, in fact. A combination of several methods may create even more problems, so HR managers must be really cautious.

This article focuses on top 10 personnel evaluation methods currently used in various industries. Each method has its peculiar features, advantages and disadvantages, problems with implementation etc. Short summaries include most important details and teasers that may offer food for thought for HR managers and team leaders.