5 Important HR Metrics That Can Change Your Business
Key points about making data-driven decisions:
- Why are HR metrics important? HR metrics can help you persuade executive leaders to make changes that improve your organization.
- What are the most important HR metrics? The key metrics you track will vary, but many businesses measure time to fill, employee engagement, absenteeism, diversity and inclusion, and turnover rate.
Numbers talk. At least, they do if you know how to listen.
Your HR data is a mine of information that can give you the insight you need to improve your HR processes. Whether your goal is to boost retention, attract quality candidates, or something else, the right metrics can help you make data-driven decisions and convince your leaders to take action.
HR Metrics: A Quick Overview
HR metrics assess the value, efficiency, and overall success of various HR processes. Typical areas of measurement include turnover, labor costs, engagement, performance, and more.
Every HR metric has the power to influence important business strategy, but executive leaders aren’t interested in every single piece of data. Present only the most important metrics when persuading your leaders to make changes.
The metrics you track will vary depending on your organization’s goals, strategy, and industry, but the following are considered to be some of the most powerful:
Time to Fill
Reflects: Recruiting and hiring
Time to fill measures the time it takes to complete the entire hiring process. This process begins when you post a job listing and ends only when a candidate accepts a job offer. In general, a shorter time to fill indicates a streamlined hiring process. This reduces the cost per hire. It also helps you attract quality candidates, as 57% of jobseekers lose interest if time to fill is too long.
Time to fill can be deceiving, though, as a speedy hiring process doesn’t always guarantee success. Always take the time to properly evaluate each candidate before making a decision.
If your time to fill is too lengthy, an HRIS can help. From posting to job boards to scoring candidates, you can complete each step in one streamlined place.
Reflects: Productivity and retention
Employee engagement measures how connected your employees feel to your organization. The more connected they are, the more they care about their work and want to contribute to your organization’s success. High engagement levels predict lower turnover, along with greater productivity and profitability.
The Employee Net Promoter Score is an easy way to gauge employee engagement. It asks your employees one simple question: Would you recommend your organization to friends or colleagues? The result will give you a general idea of engagement levels at your organization.
Surveys can then explain why your engagement levels are high or low. Ask your employees about the frequency of feedback and recognition. You can also ask them if they know how their work contributes to your organization’s larger goals. Once you can target an area to work on, you can slowly help employees feel more connected.
Reflects: Attendance and engagement
Absenteeism gives you another way to measure engagement, along with attendance. Because highly engaged workforces are more present, both physically and mentally, they see a 41% reduction in absenteeism. Fewer absences also mean greater productivity, reduced shift replacement costs, increased morale, and more.
If absenteeism is high in your workplace, look at your employees’ reasons for taking time off. Maybe they’re sick or have childcare needs that their schedules are unable to support. Maybe they just don’t like coming in to work. Various initiatives, like paid leave and attendance bonuses, can help you support these employees while improving engagement.
Diversity & Inclusion
Reflects: Belonging and profitability
Diversity and inclusion metrics measure how diverse and inclusive your workplace is. In essence, they look to see if people of various identities and backgrounds are present, treated with respect, and given equal access to opportunities and resources. Diverse workforces foster a sense of belonging and produce 19% more revenue.
You can track a variety of diversity and inclusion metrics, from racial and sexual identity to age and religious affiliation. All are important, but the ones you focus on will depend on your unique organizational goals. One place to start is by comparing your workforce demographics with your surrounding environment. At minimum, your workforce should meet the demographic breakdown of your surrounding city for each metric.
It’s important to note that diversity metrics are not just numbers to achieve. They’re only the first step. It will take continual effort to make workplaces safe and equitable for everyone.
Reflects: Retention and hiring costs
Turnover rate measures how many people leave your organization, whether voluntarily or involuntarily. A low turnover rate indicates successful retention efforts and can save you thousands of dollars in employee replacement costs.
When measuring turnover rate, gather additional context to make targeted changes. For example, you may separate turnover rate by internal and external departures. If your turnover rate is high due to internal transfers, you may not need to worry as much. Employees aren’t actually leaving your organization, they’re just moving to a different position. You may also analyze turnover rate by department. If one department’s turnover rate is significantly higher than the others, why?
Similarly, assess each employee’s reason for leaving. If they left involuntarily, was it due to something uncontrollable, like an illness? Or was it the result of a poor hiring decision or rushed onboarding process? If they left voluntarily, what could have enticed them to stay? Better benefits? Different projects? Asking these questions can help you dive into your data, identify the issue, and persuade leaders to implement a fitting solution.
Using HR Metrics Strategically
You already have HR data at your fingertips – why not put it to use? Tracking the right metrics is the first step to making data-driven decisions that positively impact your business. After all, your metrics are only as good as the data you capture and store.