HR metrics. Common HR Metrics. Examples of HR metrics

HR Metrics
Name
Institution
HR Metrics
Introduction
Often, it is possible to find that the human resources function within an organization is not generating any direct revenue. For most organizations, the various functions are measured or considered by their financial value, and the least beneficial is cut off or slowly condensed. However, a majority of organizations would never touch or feel convinced to compact or condense their human resources even though they do not directly see its value. Well, financial value is not the only metric organizations use to measure performance or value of a function. When it comes to the human resources function, organizations normally employ certain measures which aside from being specific to this function, help to determine its effectiveness and efficiency and hence the term hr metrics. A quick and simple definition of hr metrics can, therefore, be the vital or crucial methods which are used to quantify the impact and cost of the human resources function including the employee programs. Aside from the above, the hr metrics also measure the progress, success, and failure of some of the HR actions. HR metrics are quite priceless, and in organizations which understand their significance, they are an essential step before a business determines its future trajectory.
There are different reasons why organizations need HR metrics, and the most common or the most obvious reasons include:
* To be a strategic HR business partner – an organization cannot be considered as a strategic HR business partner if it does not employ HR metrics. It is through these metrics that a business can be able to position itself for certain approaches and also act from an informed point. Therefore, organizations need HR metrics for them to be considered strategic or calculative with their decisions.
* To track HR efficiency and effectiveness – the human resources department requires a lot of money to run and to maintain. Each year, this department will forward a budget to the finance department and expect to be funded. However, unlike the other departments, it does not forward anything in return which helps to showcase its financial performance. This makes it difficult to determine its value/effectiveness/efficiency from a business or financial standpoint. But through the HR metrics, an organization can track how effective and efficient its human resource department is. For example, it is possible to determine the impact or value of new employees something whose value cannot be financially quantified.
* To identify issues in the processes and take corrective actions – it is crucial for organizations to identify issues which come as a result of its actions and processes. However, it is also essential to understand that such cannot be quantified using the readily available metrics. Therefore, it will only take the HR metrics which will help to determine the challenges and problems with some of the decisions made and some of the adopted measures.
* Trend analysis for improvements in human capital utilization – an organization can never fully understand or know what works or what gets the most out of their employees without performing HR metrics.
* Forecast – HR metrics will also help organizations develop strategies and measures to approach the future or make predictions concerning the future. Organizations need to be able to make informed decisions which will impact the future, and it is only through solid measures that they can manage to do that. Knowing what the future holds is not an easy endeavor. However, it is only by instituting proper measures that it can work.
Common HR Metrics
There are quite a number of HR metrics which are employed by various organizations to help quantify the importance of the human resources function. Making the human resources, a data-driven department can be quite a challenge but one that a business ought to accept to live with if it is to make the necessary changes and improvements. ERC (2014) notes that “HR metrics and measurements can be powerful in showing” areas which can be improved to help an organization better meet the needs of the organization and its employees. While their relevance can take time to become evident, in the long-run, organizations come to experience the benefits of HR metrics. Some of the common HR metrics organizations employ target the recruitment process, onboarding, diversity, workforce, training, and mobility.
Examples of HR metrics
* The Absence rate – this rate is quite essential and is used to determine how often employees are absent. It is calculated by dividing the number of days employees are absent with the multiplication of the average number of employees during a month and their work days.
* Satisfactory level – the satisfactory level metric is one that is used to determine how satisfied the employees are with an aspect of the workplace or a decision.
* Training needs/ learning or skill gaps – this is a crucial metric as it seeks to determine whether the workforce needs to be trained or is lacking in an aspect which thus needs to be improved.
* Workforce composition – workforce composition is a metric that seeks to determine the diversity of a workforce. It is calculated by dividing the number of each group/race/religion/etc. by the total number of employees at a particular moment.
* Cost per hire – cost per hire is a common metric and is calculated by dividing the recruitment costs incurred by the organization by the compensation and benefits cost.
* Turnover rates – turnover rate can be calculated by dividing the number of employees exiting the job during a specified period with the number of employees during the same period.
* Turnover costs – turnover costs involve the total costs incurred during the vacancy period added to the total cost of the replacement added to the total cost of training and separation.
Impacts of HR metrics on Organizations
HR metrics influence and impact an organization in many ways. Some of these include:
* Making it possible for an organization to act from an informed point.
* Makes it possible for an organization to plan for the future with a certain level of certainty.
* Transforms a company into a data-driven organization.
How to use these HR metrics strategically?
1 Understand the role metrics play in talent analytics
HR metrics are measurable results from data collected through various avenues in the organizatio...