The most valuable asset that a business has is not its product or service offering. It’s the people within the company. They are the root of productivity and new innovation, not to mention they are the drivers of customer satisfaction.
Yet, despite this, it happens all too often where businesses overlook the evidence when it comes to employee management. Or, people success is measured purely for the sake of reporting. Instead, it should be used to understand what drives employee motivation and retention.
Companies that offer human resources software solutions in the UK include:
This is why HR metrics play such an important role, also known as people analytics. These help HR with creating proper action plans based on employee data to keep engagement and performance at an optimal level.
How Does HR Choose The Right Metrics?
Keep in mind that not all employee data will offer the same value. You can have a report on the number of people working within a department, but the data doesn’t really tell you more than that.
Useful metrics will show the HR department how employees act and perform directly affect the business as a whole. Moreover, they will indicate how engaged each employee is and how likely they are to stay at the company long-term.
If HR focuses on data like this, which is meaningful, it’s easier to spot issues early and take actionable steps to improve employee satisfaction that are still in line with the business’s overall objectives.
HR Metrics That Matter
Let’s take a look at some of the specific HR metrics that are used to connect the experiences of employees to results of the business. With this data, companies are better equipped to make decisions for the benefit of both the business and its people.
Employee Turnover Rate
This metric measures how often employees leave a company within a specific time frame. It’s quite a significant one because it gives insight into how employees feel about working at their current organisation.
A high turnover rate usually indicates some problems internally whether it be poor leadership or the employee feels they cannot advance further. Conversely, a low turnover rate is associated with a stable workforce where employees are satisfied.
Understanding the turnover rate can assist HR with finding patterns and then taking the necessary steps to retain their talent. For those who leave voluntarily, it’s worth conducting exit interviews to determine what led to their decision.
Employee Engagement
This refers to the level of emotional investment of an employee regarding their work and the company itself. Usually, employees who are engaged are more productive and loyal to the organisation.
HR can determine this engagement through surveys or one-on-one interviews where they can ask each employee about their level of job satisfaction and how they feel about management.
This metric is a proactive approach to preventing a high turnover rate by addressing disengaged employee concerns before they feel they need to leave.
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Absenteeism Rate
Another metric that reveals a lot of insight into how employees are feeling and coping is the absenteeism rate. This refers to the numbers of days in which an employee is absent from work.
If there is a high absenteeism rate, it could indicate employees are feeling burnt out or disengaged and unable to cope with work demands. If this the case, HR can step in to help adjust workloads or offer flexible work initiatives.
Performance And Productivity
These metrics work together to evaluate how well employees are achieving goals in line with the company’s objectives. This evaluation will usually come in the form of regular performance reviews or how customers respond to working with the individual employee.
They help HR in two ways. Firstly, HR can identify employees who aren’t meeting their deadlines to determine the root cause and address it. Secondly, they can give credit and recognition to those who are performing well.
Internal Promotion Rate
Internal promotion refers to how often a company’s existing employees are given the opportunity to take the next step in their career. In other words, giving new roles to employees as opposed to hiring externally to fill the same role.
If there is a high internal promotion rate, it shows that there are enough development opportunities which will retain the company’s top talent. On the other hand, if it’s low, employees may feel there is no room to grow and ultimately leave.
Effectiveness Of Any Training
Companies can invest a lot of time and resources on workshops or courses tailored to teach employees new skills. Of course, this is only one part of the training aspect and training effectiveness will determine how well the employee applies what they have learned.
In order to measure this, HR will have to do pre and post-training assessments or monitor promotion rates to see if employees have improved or not. If they are showing signs of improvement, it’s an indication that the training initiatives are worth the return on investment and offer meaningful learning.
