Human resource metrics have lately become extremely popular with managers of both large and small companies. However, there is one question that worries lots of business owners today: if HR metrics are so effective, then why cannot some organizations cope well with their implementation? Experts who have explored this issue, have come to the following conclusion: the problem is that a lot of companies make a number of errors when setting up these metrics. The most common mistakes here are that HR departments of most organizations develop and introduce metrics in a certain vacuum and apply an excessive number of them at a time. This prevents the managers from analyzing the obtained data adequately and drawing up proper conclusions. So, it certainly makes sense to have a closer look at these two errors.
Creating metrics in a vacuum… What does it mean? It just implies that HR managers try to cope with this painstaking process on their own and do not consider it important and necessary to use a collaborative approach. The latter method, however, will make it possible to analyze a complete list of the existing human resource metrics in details and point out those of them that will be understood by the company’s top managers and will allow the evaluation of its current business impact and performance.
The next error that prevents the HR department from getting the most out of these indicators is that they tend to choose and utilize too many of them. This approach is actually unnecessary and often too expensive. The most reasonable number of metrics to be utilized in most companies should range between eight and twelve. The thing is that the very process of collecting, analyzing and calculating human resource metrics may prove to be too time-taking and costly.
What KPIs are considered the most essential then? Well, the list of these metrics may seem quite extensive at first sight, but there is no need to use all of them simultaneously. Just look through them more carefully and decide what exactly needs improvement in your organization at the moment. So, the list of the most crucial human resource metrics includes: overall workforce productivity, employee engagement, retention and recruitment rates, manager satisfaction, general HR expenses, employee relations, turnover costs, employee satisfaction, cost per hire etc. This list in incomplete, however, so take your time to explore more metrics and decide whether they are essential for your current business or not.