Human Resource Metrics: What Needs to Be Thoroughly Measured?

How important is it to reveal the impact of the HR department upon the company’s performance? This question is a major concern of lots of business owners nowadays. Meanwhile, recent research has proven that it is possible to increase the company’s productivity up to thirty percent by means of putting HR metrics in place. That is why it proves to be vital to link the human resource strategy to the company’s objectives and business goals. Some experts even underline that human resource department should be ideally run as an individual business to present better performance results.

Consequences of low new hire retention rate
Consequences of low new hire retention rate

Generally, all human resource metrics are subdivided into three major categories for the upcoming comparison, analysis and forecasting. These categories involve past expectations, current condition and future prospects. In case it is impossible to get past information, the company should make use of data that belong to a similar organization.

Measurement of hr ratios
Measurement of hr ratios

All categories of metrics mentioned above should be linked directly to the company’s business objective, which is individual for each organization. Nonetheless, the most typical human resource metrics that may help measure the ability of the HR department to maintain proper personnel functions, which correspond to the general business strategy, involve employee productivity, attendance and engagement, turnover rates and costs, recruiting effectiveness, communications, personnel retention and the system of rewards that exists in the company.

So, what needs to be thoroughly measured in each organization? When it comes to employee productivity, it is important to measure personnel attitudes, skillfulness and the amount of reached objectives. Thus, it is easy to measure productivity if you manage to compare current results and financial outcomes with those observed during a specified time interval in the past. If your company is new, though, you should measure its productivity against conventional guidelines typical for your industry.

Personnel attendance involves absenteeism and tardiness, while its engagement defines whether the company’s employees are satisfied with their co-workers, supervisors, schedules, attitudes and tasks or not. Thus, there is an efficient HR metric, which is frequently used to identify personnel productivity. It involves the percentage enhancement in employee productivity observed during prior years as well as its currency value.

Other human resource metrics should always be compared to the results obtained from those personnel KPIs mentioned above. For instance, communications generally refers to how correctly and precisely information is passed on to employees, while recruiting efficacy reveals the number of new positions that were created with regard to total turnover rate. This interrelation makes it possible to detect all current problems associated with the performance of the HR department and solve them on time.