KPIs are the ones where you can measure the success of departments, employee satisfaction, and maintain effective practices in organizations are the key roles for HR managers. The fact is organization’s success is defined not only by the profit or revenue growth but also by the motivated, talented and happy workforce environment. For this HR managers need to execute the company strategy and achieve objectives. MBA human resource management colleges in Tamil Nadu explain the importance of HR KPIs that reflect on organizational performance. This article highlights the KPIs to determine the HR department’s success and contribution to overall organizations.
What do you know about HR metrics?
These concepts of HR metrics and KPIs are usually included in the syllabus if you’re pursuing any of the best MBA colleges in madurai. It is nothing but the key data points where it helps organizations track the human capital and measure how effective the human resources positions are. The analysis of data from what is working well, areas that need improvement and trends that need to be expected in future are some of the key factors to define HR success.
The Most Important HR Metrics and KPIs:
Turnover rate: In an organization, there will be diverse employees whose performance varies and there are a lot of factors that need to be considered. You will always discover the high-performers because of the office environment. It is a fact that good employees will choose to stay even when they have a lot of options available in front of them because you provide a reason to stay. It can be a relaxed working environment where employees thrive, offering incentives and facilities to make them stay. HR needs to be sure about how employees feel while working in your company. If they choose to leave, ask them the reason which you can avoid in future if there are any faults.
- Cost per Hire: In the management team, hiring is one of the important activities which is generally handled by the company HR. If the hiring process is flawed, there will be an issue with the kind of output and end up in acquiring poor-performing employees which may influence the existing employee mindset. This HR KPI measures the number of resources you invest in each new employee including cost for marketing, referral incentives, cost of recruiter, selecting CVs, subscription to recruitment apps, interviews etc.
- Employee productivity: It is an essential metric in HR KPI where you can roughly estimate productivity by dividing the total sales within a particular period by the number of employees. There are more variables in measuring employee productivity as a KPI. For instance, the amount of time employees work, number of days working, qualifications, and resources spent on them are used to evaluate their productivity.
- Training costs: It is one of the helpful metrics to track the cost which you spent on employees for the development. There will be specific training for the employees to upgrade themselves, if you find some of them are not performing do preferred options for them. However, the return on training is usually higher than the investment employees grow in confidence after they are upskilled, even showing the results whether training was successful or not.
- Job referral percentage: In today’s times, referral is one of the popular ways to hire employees because of the trust factor. If the referral rates are high, then your present employees are happy with the things in the company. Job referrals are one of the greatest ways to recruit candidates who are more likely to stay with the company. This may reduce your time, effort and money than your traditional method of hiring.
- Absenteeism: If the employee often takes leave, then there is something wrong with the way your company operates. HR managers need to discover genuine ways to find the reasons why the absenteeism rate is increasing and needs to be monitored. If the employee’s absenteeism reflects on the company’s growth, then you need to understand employees are not happy at the workplace.
- Know the time to fill new employees: In an organization, if there is a vacant job position for a long period, then the HR manager is responsible. It means the time taken to fill the new role after the vacancy is posted, needs to monitor the hiring process and resources utilized. This KPI helps to assess if there are hiring possibilities like after layoff or if someone quit without warning. The tip is to look for candidates who have the required skills with strong leadership qualities while recruiting the new ones.
- Recruiting conversion rate: This metric measures the number of applications turned out as employees once the recruiting process ends. There are lots of factors that need to be considered, however it is applicable for large companies where they need to find the right one from the pool of candidates. In the case of small or mid-sized companies, you can have a specific number in mind and may discover the efficacy of the hiring process. The main goal for this metric is to discover the sources that give the candidates the best. The metric can be measured after comparing it with various other metrics like cost per hire for each metric.
- Overtime hours: This is one of the crucial metrics as it has to be measured from two different perspectives. Like when employees choose to extend their willingness to work overtime for the business or employees choose to work overtime for extra pay. However, businesses need to be careful when they choose to extend their time for employees and it directly affects the work-life balance. Sometimes this may cause loss of motivation to work and it badly affects the quality of the employee’s work, leading to an increase in absenteeism.
- Duration in the position: Employee exits because of not rewarding or keeping them in the same position. If they feel they are not being promoted, then it is common to search for new opportunities outside the company. Therefore, you need to find the opportunity for growth within the company and discuss it with management after measuring the quality and productivity of an employee.
HR KPIs are essential for measuring the performance of the HR department and now there are various tools and advancements in technologies that assist in analyzing and driving data-driven decisions that are easy for measuring the organization’s success.
