You must know what are HR KPIs, what is it and how to use it.
If you are an HR professional, you may know what are the Key Performance Indicators (KPI), if you are a manager you may not see the term buy know very well that some employees have a better performance than others.
We will see what is the common HR measurements, compare to HR KPIs means in an HR department?
The following are some of the examples on efficiency of the HR functions:
- Cost per hire: It is the cost associated with a new hire. It is not only important to know how much it cost in hiring, but it is also important to see if the money spent is used to hire right people. (Boudreau; Lawler & Levenson, 2004)
- Time to fill up the open position: It is the total days to fill up a job opening per each job. The shorter the time, the more efficient of the HR department in finding the replacement for the job
- HR expense factor: It is the ratio between total company expense and HR expense. It shows if the expenses on HR practices are too much in terms of the whole company expense.
What Are HR KPIs?
A KPI is a performance measurement that is related directly to your organization’s goals.
Not all the data that you collect as an HR is KPI, but all KPI data have numbers associated with them.
By tracking your KPIs and compare them on a monthly base, you could see the performance of your HR department concerning the completion of the company’s goals.
How To Select Your Organizations HR KPIs?
KPIs are related to your business-specific goals, as Owners and senor managers set the goal; they need to work together with mid-level managers and HR managers to develop the right KPIs for each department and the whole business.
Each department will have its kind of KPIs. As they have different activities, but working together will help to achieve the overall goals and strategy of the business.
HR KPIs Positive and Negative Indicators
Some HR KPIs are leading indicators, while others are Indicating lagging KPIs.
When you deal with the lagging indicators, you can figure out what the future brings you.
If you see that sales are increasing, it may mean that you will need to hire more salespeople in your sales department. Another situation may be that the productivity of your workforce is the indicator of how much your company will have to spend to expand labor costs.
The legging indicators will show you the past—employee turnover is a lagging indicator that influences the “job satisfaction and employee engagement.
Sick days and absentees rate is a lagging indicator that affects the cost of labor.
Here is a traditional balanced scorecard that measures four areas:
- Financial development
- Customer relations
- Process timing
- Learning and growth
Here We Can See a Sample HR KPIs
There are hundreds of types of KPIs for each different HR department. We will review the following KPIs that common for measuring the success of an HR department.
As an HR manager, you will want to review this list of optional HR KPIs and determent, which one will be the best for your HR department is the best contributing to the business.
We define these Performance indicators keys because they show us the status of our business concerning the most influential factors as the turnover rate of our workforce.
Quote from Chron-s website
A high turnover rate can result in low employee morale. This may stem from overworked employees who have had increased workloads and responsibilities due to a lack of an active or trained workforce. New employees are not immune. They too may suffer from low morale as they struggle to learn new job duties and procedures.
Losing employees to your competition is an important fact to know and react to correct. Hiring and training new employees are costly. If you see that your turnover is going higher, you need to check the way it is happening and make the change necessary to stop losing your workforce.
Absenteeism, in manufacturing business, affects all your production flow, One missing worker can stop a whole team on the production line. You must know why your people are not coming to work and find a way to avoid this problem.
There is a connection between high turnover and absenteeism to employee satisfaction. Simple logic, a happy employee will not look for a new job or will stay at home instead of coming to work just because he feels like have a day off. The satisfied worker will be engaged in the responsibility at the workplace.
As a result, companies will want to measure employee engagement and What Makes Up Employee Satisfaction?
Quote from Chron-s website
Employee satisfaction describes the level of happiness workers experience. Employee satisfaction is an important element within a business because it directly relates to the productivity of employees. Workers who experience high employee satisfaction are generally more productive than unsatisfied workers. Companies must understand what contributes to employee satisfaction and implement necessary steps to improve morale
HR KPIs Sample
First is the employee’s satisfaction and engagement. If you measure your workforce satisfaction, you can get the alarm before you start to see the results in the two KPI mentioned bellow.
Turnover rate is a KPI that you need to monitor if you want to avoid losing your best-trained employees once. Once you see that a few employees more than the regular rate, you will be able to take the necessary measures to keep your so valued employees.
Tracking the rates of satisfaction and the effect of it on the turnover and absenteeism will need your reaction in case the results are showing a low rate of satisfaction and high rates of turnover and absentees.
Sample HR KPIs
Measuring an HR department will mean evaluate the people that have to measure your entire workforce. HR KPIs will include:
- Absenteeism rate of the hourly employees
- The satisfaction of the benefits
- The employee’s productivity rate
- The index of employees satisfaction
- The index of the employee engagement
- The hiring quality
- Turnover rate
- Full-time, part-time, and contract employees quantity
- The average time being your employee
- The average time it takes to fill a job vacancy
- Your cost per hire
- Training and onboarding cost per employee
- Diversity rate
- How many candidates are
- interviewed per hire
How To Put an HR KPI Scorecard Together?
Edward Deming’s quote
“Without data, you’re just another person with an opinion”
First, define your goals. KPI is only numbers without a goal that you are looking for its achievement. Your goal will tell you what information you need for its realization.
The second step is deciding what KPIs match your organization or departmental goals and values.
Make sure that your KPIs meet the SMART goals criteria SMART. The HR KPI must be:
If you hire only a few new employees in the whole year, do not look for “Training Cost per Employee” as a KPI. Only if your HR department hires 50 or 60 new employees, it is where you have to look for KPI. There is meat in this case that you can see how to do better.
Having so many new employees make it essential to see the “Training Cost per Employee.” Under this definition, you should check the area for the training lessons with all its furniture and equipment, and the trainers you will need to use for your newcomer’s school. You must be able to monitor and calculate the cost of the onboarding of your new hires. There is no sense in KPI if you can not get the numbers for this cost.
What more Should You learn About HR KPIs?
The data you collected over some time will be shown on the scoreboard. To be able to get something from the information you need to see it per month or quarter, it may be different in some more active business.
Your HR KPIs should be aligned with Your Organization’s Business as a Whole?
Do not lose the general view of the business. You, as an HR, can look at improving your department performance. Bout your sales department, and the General manager may have an emergency with pushing some new product and will ask you to hire as fast as possible some significant number of a new salesperson. It may drive you to use external hiring agencies, which will raise the cost of hiring but will make the response to the need for more sales power.
Your department is made for manging Humen Resources you are under the needs of the company to have the best employees you can find in the market, train then as good as possible and do it with less money possible. Do not forget that the company has its need to be flexible and find the right solution for the primary goal of making money.
Adapting your goals to the company’s primary goal will be above your department’s narrow view. You have to be able to find enough workforce for the changing needs of your organization.
Disclaimer: John Wolf and paystubmakr.com are making a total effort to offer accurate, competent, ethical HR management, employer, and workplace advice. We do not use the words of an attorney, and the content on the site is not given as legal advice. The website has readers from all US states, which all have different laws on these topics. The reader should look for legal advice before taking any action. The information presented on this website is offered as a general guide only