4 HR areas critical to track: Why & How
“If we have data, let’s look at data. If all we have are opinions, let’s go with mine.” - Jim Barksdale
Over the years, HR has proven its ability to go beyond the operational side of managing people with its strategic approach backed by data trends and its direct impact on the business. This has made the role of HR data analytics an inevitable part not only for the HR world but also for business decision making. Measuring how you’ve performed in several areas of HR is imperative, but not enough. Knowing why you are measuring it and determining what you’re going to do with it is paramount.
“Information is not knowledge” - Albert Einstein
Companies across the globe have invested in platforms that integrate with the HRIS to provide people analytics at various stages of the employee life-cycle. But there are still many small & medium-size companies that either do not want to invest or do not have the necessary resources to.
Taking things in retrospect, whatever stage you are in, the given below metrics can be used to track and therefore, manage the processes more efficiently. It will be a good practice to create a consistent methodology of data collection, in order to achieve the right outcome and efforts can be adjusted in the right direction.
1. Talent Acquisition
a. Time to Fill: This metric shows the efficiency of the recruitment process by assessing the no. of days taken to close each position. Typically 30-40 days is considered ideal for closing the position and lesser the time, better it is considered. But in my opinion, speed shouldn't be measured only to identify the effeciency of hiring. It may take a little longer due to some inherent challenges of the position, but could end up in better output and performance with the right person. Rather, it is more of an indicator for better workforce planning.
Date of offer acceptance - Date of opening the position = ____ Days
b. Time to Hire: This metric measures the interaction duration of the candidate with the company. Obviously, the lesser the no. of days, the better it is for a good candidate experience. But let's not forget candidate experience is not just with the ones that crack the interviews. Candidates appreciate promptness and clarity in the process. Even if you miss out on that, they would still really appreciate a closure. Rather than avoiding being the bad cop who doesn't want to bring the bad news, focus on clarity and always close the loop. None of the employer branding measures can control the damage of a poor experience in the hiring process.
Date of offer acceptance - Date of application by the candidate= ____ Days
c. Source of Hire: This metric can be used to measure how many hires out of the total hired are from a specific source. Maintain a dashboard for measuring this % monthly, so that immediate action can be taken on the source that’s either not working, or if it’s working well, you can leverage it. It can also help in identifying if there’s a need to look for other sources if the current one/s do not work for a specific position.
For all positions in a month (recommended period):
No. of employees hired by a source / No. of employees hired * 100 = ____%
(Produce these percentages for each source & track the dashboard regularly)
d. Cost per Hire: This is a simple metric to help us track the cost spent on the total number of hires during different time periods. This can help us measure the strength of the internal hiring process vs. the external sources. These recruitment costs can be “job portal subscriptions”, “recruitment agency fees”, “employee referrals”, “advertisement cost”, etc.
For a specific time frame:
Total Recruitment Cost from different sources / No. of Hires - Rs. ____/-
2. Workforce Diversity
a. Gender Pay: If we are calculating this in % terms, it’s pretty easy to understand that the resulting % is the proportion of salary of Gender A as compared to Gender B. When not multiplied by 100, the resultant Rs. __ is the average salary paid to the employees in Gender A as compared to each employee in Gender B. This metric can be used to measure the pay-gap between any other areas apart from gender as well.
Average salary of Gender A / Average salary of Gender B =
___ % (if * 100) or Rs. ___
b. Diversity Ratio: This metric represents the percentage of a specific group of employees in an Organization out of all the existing employees. This helps an Organization understand and work on their diversity & inclusion initiatives. Such diverse groups may include no. of women employees, employees from LGBTQ community, persons with disabilities, employees from different nationalities, etc. Once it’s clear which area you are trying to focus on at an Organisation level, you can use these metrics to track & manage it. From increasing hiring for a specific group to increasing learning opportunities for them, to providing opportunities at leadership positions, there can be multiple efforts that can be taken and tracked over a period of time. For example, taking concious efforts towards hiring ___ % of women employees in the upcoming year and achieving this goal is a good indicator of the hiring efforts taken with focus on DEI.
Number of Employees in a Specific Group / Total Number of Employees) * 100 = ____ %
3. Employee Engagement
a. Employee Turnover Rate/Attrition Rate: Often used interchangeably, employee turnover and attrition have an underlying difference, which is - “replacement” (or “churn”). “Turnover” is the number of positions “replaced” by the Organization over a period of time.
Usually, an exit is followed by replacement of the position thereby maintaining the organisation structure, but there may be cases where an Organization decides to “not replace” a position. This may be due to:
a.) Downsizing
b.) Termination of a position (quite possibly in Mergers & Acquisitions)
c.) Merging of 2 positions due to redundancy, etc.
This kind of exit is termed as “Attrition”.
However, the occurrence of attrition is comparatively lower than turnover. Which is why, even though they denote different kind of departures, Organizations have adapted usage of these terms interchangeably.
No. of departures during the period / Average headcount of employees during that period * 100 = ____%
Average no. of employees during the period is (Closing headcount + Opening headcount) / 2
This is a negative position indicator, and therefore, the lesser the rate, the better it is.
b. Retention Rate: Once you know your turnover rate over a period of time, simply calculate the retention rate by: (100 - ___% of E’ee turnover).
For example, if the turnover rate is 10%, the retention rate is 90%. There is no blanket benchmark that is regarded as a good or a bad rate of retention or turnover. Organizations can compare their rates with the industry average in order to understand how healthy is their position as compared to the market.
c. Employee Net Promoter Score (ENPS): Conducting pulse surveys to guage employee sentiments on a regular basis is the new normal in Organizations. Having said that, try to include at least this one measure of engagement that signifies an employee's engagement level. i.e., ENPS. It is a simple and effective way of knowing your advocates.
Question: How likely are you to recommend your friends/acquaintances to join this Organization? (Scale of 1 to 10)
Respondents from 1 to 6 are: "Detractors"; 7 to 8 are "Passives" & 9 to 10 are "Promoters"
% of Promoters - % of Detractors = ___ score
(Technically it's a %, but is often denoted with the number as score)
In this computation, the respondents with “Passives” are ignored. Deducting detractors from Promoters will help in providing a true picture of “Net” result, without giving 2 different metrics. For example, instead of saying 67% are my promoters & 13% are my detractors, you’re simply saying in the form of a net result, that 54 is my Net promoters score (67-13)
4. Workforce Planning
a. Cost per Employee: Cost per employee is pretty simple and straightforward. It is the average cost spent on each employee including salaries, benefits and other costs like training, scholarships, etc. This would be an informative metric at the end of the year to look back and gauge the real-time impact of all the expenses made on the employees throughout the year and how it yields you monetarily (profits/new clients, etc.) and non-monetarily (retention, employer branding, etc.). The same metric can be broken down into specific costs for drawing specific inferences, like training cost per employee compared with Revenue per employee in the same year, (or after 2 years considering the learning curve).
b. Employee Growth Rate: This is a change of rate of headcount of employees over a specific period of time. It is calculated by:
(Headcount in Year 2 – Headcount in Year 1) / Headcount in Year 1 * 100
Higher the %, higher the change in the headcount over the period. This can be done at departmental level in large Organisations to keep a regular tab on the overall retention and hiring performance. A negative figure (especially Department-wise) would mean a reduction in the headcount over this period, (maybe) without the necessary turnover (replacement) in time. This can be alarming.
c. Salary Penetration: All job bands/positions would be linked to a specific salary range. When it comes to understanding the efficiency of compensation structures provided to employees while hiring or during promotions, this metric can be used as a base. This helps you identify the “penetration” of an employee’s salary within a specific salary range. This can also be used for identifying the penetration of salaries of our employees as against the market range for the said band or position if your focus is to give a competitive advantage in salaries. It should be noted that this metric will not give a very accurate result if the salary range used is too high.
Rs. (Salary - Range minimum / Range maximum - Range minimum) = Rs. __________/-
The resulting figure is the salary penetration as compared to the company benchmark or the industry benchmark.
The corporate world is, and will continue evolving and adapting sophisticated models of data management and analysis. But this article gives a headstrart in defining the purpose,
reinforcing fundamentals and guiding HR professionals to drive meaningful business growth.
It is necessary to collect the data keeping the end in mind, so that standardised and consistent data collected can help in building a strong foundation for analysing various trends and patterns. Connecting data points of different time-periods or areas by piecing these metrics together, can be instrumental in helping us draw a wholesome picture of the future action-plans & designing new initiatives.