Using HR Metrics Effectively
Efficiency is the key to success in business - the ability to deliver better outcomes with the use of fewer resources. Every department in an organization strives to perform efficiently, and human resource management is no exception to the rule. HR managers are pressed to deliver high performing resources with least possible costs to hiring, training, and compensation. To be able to perform this duty effectively, amateur HR professionals need proper training. If an HR applicant goes in for an interview with command on these HR metrics and with knowledge of key HR functions, they become a priority candidate for the job.
Understanding Basic HR Metrics
HR metrics are well understood and standardized measurements that allow organizations to determine the potential effectiveness and overall value of their HR practices and ventures. These measurements are made out of the fundamental functions of an HR department, which are common among virtually all industries and organizations. Following is a list of the three basic HR metrics others are built on.
- The first and foremost metric of an HR team is to lessen the average cost the organization bears for every individual hired. This function is called the cost-per-hire function and is usually defined as the amount of resources spent on hiring a new employee.
- The next one is the ratio between the organization’s overall expenditures and the expenses incurred by the HR department. This metric allows quality human resource management but within limits and budgets.
- The final key metric of an HR department is their ability to fill a vacancy. The faster an open position is filled (in terms of days) the more effective this function seems to be.
Command on Human Resource Metrics through Training
When it comes to the human resource metrics, one has to understand there is no agreed upon number of them. It changes from industry to industry. However, the key HR metrics can be made into 4 categories under which any number of these specific metrics fall. We have listed the three essential ones above, which fall under the category of cost focused human resource metrics and the rest of these fundamental metrics categories are as follows:
- PERFORMANCE FOCUSED HR METRICS: These metrics are devised to focus entirely on the success of the recruitment process, which determines the performance of the HR department as a whole. This category of metrics is particular important for organizations working with a project based model where employee performance is critical to the customer satisfaction and service quality. The category includes human resource metrics like average time to promotion, potential vs. performance, referral program success, and offer acceptance ratio.
- BOTTOM LINE FOCUSED HR METRICS: These metrics are aligned to the various aspects of revenue generation and how much an employee contributes to the bottom line. These are necessary for all organizations and are used to determine the future compensation and even retention of employees. They include metrics like billable hours per head, healthcare per head, project time ratio, overtime cost, and revenue per head.
- SOFT SKILL FOCUSED HR METRICS: These metrics are more focused on the personal side of the employees and measure various personality attributes to determine leadership potential mainly. However, these metrics also show an employee’s capacity to work in teams and if changes are needed in the organization’s environment to nurture these soft skills through various means. These human resource metrics include wellness, vision alignment, collaboration, innovation, and communication, among others.
Our Products to Help You with HR Analytics
Lorman Educational Services is a growing institution that provides quality education and training programs to amateur and growing professionals. Our domain of human resource management is also filled with various programs and products focused on HR analytics and metrics in particular, as you can see below.
Compliance Training - Unlimited Access
Stay compliant and earn continuing education credits by taking our online courses today. Earn more by signing up for the Lorman All-Access Pass. With the All-Access Pass you get unlimited access to our entire catalog of courses, resources, videos and other training material. For 12 months you have access to a growing and updated library of courses to help you stay compliant in your profession and in your business.
