11 HR KPIs and Metrics to Measure for Better Business Performance

11 HR kpis and metrics for Better Business Performance

To run a successful company, you need to have KPIs and metrics that show you’re moving in the right direction in order to achieve your goals.

Each team or department in your company should have its independent KPIs.

But when you examine your company’s overall growth, you’ll need to review growth metrics, from your sales and marketing teams, and HR KPIs and metrics, provided by your HR team.

In this article, we’ll focus on HR KPIs and metrics for businesses.

This article is part of a series on KPIs and metrics across several HR functions.

Metrics vs KPIs: What’s the difference?

metrics VS kpis

Metrics vs KPIs

KPIs stand for key performance indicators. Many, in the HR field or in any other field, often use KPIs and metrics interchangeably. But there’s an important difference to note.

Both KPIs and metrics refer to measurements used to track progress or performance. But the main difference between KPIs and metrics is that KPIs are ‘specific’ measurements used to track ‘specific’ goals.

Meanwhile, metrics are considered broader. Analytics Agency defines metrics as “any type of data collected as part of routine business operations.”

This means that any data you collect can be considered metrics, whereas with KPIs, you set specific KPIs to measure something specific, to achieve a specific goal.

Why are KPIs important?

It’s important to have KPIs for each team or department in your company because:

  • KPIs help you measure the performance of your employees, teams, activities, marketing and sales efforts…etc.
  • KPIs help you see your current business performance and set goals to improve that performance.
  • KPIs show you if you’re moving towards your goals (or not).
  • KPIs can help you set a strategy (for any team or member of your organization).
  • KPIs can be used for employees, teams, efforts, manual labor, automation, anything.

What do HR KPIs and metrics include?

4 main categories of hr kpis

Main Categories of HR KPIs

Going back to the focus of this article, which is HR KPIs and metrics, let’s explore the categories that fall under HR KPIs and metrics.

Now, let’s look at what falls under HR KPIs and metrics and what each of them means for your company.

There are 4 main categories of KPIs that are part of HR KPIs. These are:

  1. Compensation & Benefits KPIs
  2. Recruitment KPIs
  3. Employee engagement KPIs
  4. Training KPIs

Let’s look at each of these in brief. This article will cover more than 10 HR KPIs and metrics.

Other articles in this series will cover compensation and benefits KPIs, training KPIs, recruitment KPIs, and employee engagement and retention KPIs. But first, let’s look at each of these in brief.

1)  Compensation & Benefits KPIs

Put simply, your compensation and benefits KPIs help you offer competitive salaries in-line with your local market.

They also support your broad compensation and benefits strategy, which is part of your overall HR strategy.

2)  Recruitment KPIs 

These are probably the most important types of HR KPIs and metrics. That said, they’re quite often overlooked because companies are in a hurry to hire.

However, measuring and reviewing your recruitment KPIs can transform your entire hiring process.

It can also determine which positions you should use structured interviews, unstructured interviews, or hybrid interviews for best results.

3)  Employee engagement KPIs 

Since the pandemic and the increase in work-from-home jobs, companies have had to create and use employee engagement tactics.

Employee engagement isn’t a new concept, nor is it pandemic-related. But the pandemic has made it vital that companies engage their employees regularly.

Employee engagement increases employee retention, improves team building, and contributes to employer branding.

To see if your employee engagement activities are effective and sustainable, you should create and measure your employee engagement KPIs.

4)  Training KPIs 

When training your employees, it’s important to see:

1)    How is this training helping your employees? (Is it increasing productivity? Reducing costs? Simplifying the workflow and cutting time spent per activity, for example?)

2)    Are employees satisfied with this training?

3)    Was the duration of the training sufficient? Or do employees need more time to learn how to use the software? Or more time to implement what they’ve learnt? …etc.)

There are many key performance indicators for training but that’s a topic for another post.

Top 11 HR KPIs and metrics to measure

top 11 HR kpis & metrics

TOP 11 HR KPIs & Metrics

Now, let’s look at the top 10 HR KPIs and metrics that employers and HR employees should be measuring.

1)  Rate of absentees (Absenteeism rate) 

Whether you’re an HR specialist or manager, one of your KPIs for HR should be the absenteeism rate. This is an employee-related metric that shows you how often employees take sick days or unscheduled time off.

The absenteeism rate doesn’t cover scheduled vacations like annual leave.

While there are many reasons employees may take unscheduled vacations or time-off, there are often underlying issues.

Often employees would not show up for work because of being unsatisfied or unhappy or due to severe burnout.

The absenteeism rate negatively affects payroll calculations, workflow and productivity, and the overall team spirit. It’s an important HR metric because it helps HR see patterns and address issues in certain teams.

 

“To calculate an absenteeism rate, divide the number of unexcused absences by the total number of expected workdays within any set amount of time. Then, multiply the result by 100 to reach a percentage. The closer to zero, the better.” Forbes

 

2)  Absence rate per manager 

This is another absence-related metric but with a focus on managerial roles. As mentioned, employees take unscheduled time off for many reasons.

However, your HR team may notice that certain managers have a higher rate of unscheduled employee absences than others.

This may indicate that these managers are micro-managing their team and thereby prompting them to not show up for work. Or that these managers are overworking their team and thereby increasing employee burnout.

3)  Employee turnover rate

The employee turnover rate measures the average number of employees who quit your company during a certain time period.

Also called the rate of attrition, the employee turnover rate includes employees who are let go or laid off.

To calculate the rate of employee turnover, you’ll need to divide the number of employees leaving your company by the total number of employees at the start of that period. Then, multiply the result by 100 to get a percentage.

 

While there are many reasons for employee turnover, such as the hiring mistakes employers make, you should find out why they’re leaving. This should be part of your employee exit strategy.

Further reading: How to Calculate the Cost of Employee Turnover

 4)  Employee growth rate 

The employee growth rate measures how much the number of employees in a company grows–or shrinks–over a period of time. That’s why it’s sometimes referred to as the ‘company growth rate.’

It’s best if your HR team measures your company’s employee growth rate metric every 6 months to a year.

Calculating your company’s growth rate, or lack of it, can help you review your company’s overall growth KPIs and metrics. It can also contribute to your HR budget planning, which in turn helps you predict your company’s future needs and the finances required to grow.

5)  Overtime expenses

An important business and HR KPI and metric is overtime costs or expenses. As a business, you should know how much you’re spending on employee overtime.

While it’s normal, and acceptable, to have employees work overtime every now and then, it shouldn’t be the norm.

Overtime pay can dent your company’s revenues and should be addressed. Why are employees working overtime? In this case, hiring more people to support your teams is cost-effective and can boost productivity.

In addition, frequent overtime will likely increase employee burnout and turnover.

6)  Employee productivity 

When looking at employee productivity, it’s important your HR team gets clarity on what productivity means for each team.

Your digital marketing team’s productivity isn’t the same as your accounting team’s definition of productivity. And both teams have different meanings for productivity compared to your finance and HR teams.

Moreover, productivity shouldn’t be measured by who comes to the office or the number of hours your employees work.

7)  Employee satisfaction 

Though this is an often-overlooked KPI for HR teams, it has been gaining attention in recent years.

Many employers, especially in the Middle East, don’t take their employees’ happiness and satisfaction into consideration. They think it makes the work environment professional.

But the truth is, talented employees are as picky about their employers as employers are picky about them.

The employee satisfaction KPI is sometimes referred to as the Employee Net Promoter Score or ENPS. It looks at how satisfied your employees are at working with you.

Happy employees tend to be more collaborative and productive. They put their work first and see your organization as an extension of them, making them more committed to your growth.

8)  Employee retention rate 

In addition to calculating your employee turnover rate, you should also measure your ability to retain employees. This is called the employee retention rate and it’s the opposite of employee turnover.

This employee retention metric shows you how long employees continued to work for your company during a period of time.

To calculate your employee retention rate, you’ll need to divide the number of employees in your company during a specific period by the total number of employees.

9)  Retention rate per manager

This is a sub-category within employee retention, where the HR team looks at how well managers are retaining their employees.

Managers with a high rate of turnover may have problems that need to be addressed. Problems may vary from the manager being inefficient or a micro-manager and therefore drives people away. Or they may be overloading team members, hiring unskilled candidates, among other reasons that cause the same result: More people leaving.

10)  Company performance

Your company’s performance is different from its growth rate. Company performance is a high-level HR metric that looks at how well your employees are performing compared to how engaged they are.

11)  Employee performance KPIs 

Last but certainly not least, one of the most important and widely-used HR KPIs is employee performance metrics and evaluations.

Many companies regularly conduct employee performance evaluations to keep and see if their employees are up to par. These evaluations can be conducted on a monthly, quarterly, bi-annual, and/or annual basis.

The job requirements and the type of role may dictate often managers and HR personnel conduct performance evaluations.

Employee performance evaluations include:

Employee assessments include various types of tests including psychometric tests, language assessments, emotional intelligence tests, among others.

 

How often should you measure HR KPIs and metrics?

how often should you measure HR kpis & metrics

How often should you measure HR KPIs & metrics?

By now you should have an idea about which HR KPIs you want to measure in your company.

But the question remains: How often should you track those HR KPIs and metrics? Weekly? Monthly? Bi-annually? Annually?

The answer is it depends. That said, you should measure HR KPIs regularly.

Some KPIs are broader than others and can therefore be measured every 3 to 6 months. On the other hand, KPIs like employee productivity and employee performance should be measured every month to 3 months.

 

Get HR support with Tawzef

Measuring your company’s HR KPIs and metrics, including those for recruitment, compensation and benefits, and others, isn’t a one-HR-specialist-job. It requires an HR team.

And not just any HR team. You can’t hire several junior executives, have them to create and measure KPIs for your business, and get great results.

In addition, when adding KPIs and metrics, it’s important to have clear goals that you want to achieve. Having KPIs without a goal in-sight results in time and money wasted.

You need an HR team that understands HR from A to Z. You need an HR team that can help you set goals and targets, set milestones, and create KPIs to measure to achieve those goals.

Of course, you can do that in-house. But not many companies have the capacity to hire a full-time in-house HR team. Meanwhile, other companies have an HR team that’s overwhelmed with administrative and financial responsibilities.

So, what can you do? You can reach out to Tawzef. We support your company with HR strategy that meets your needs and guide your HR team to create effective and achievable HR KPIs and metrics that translate to growth.

Tawzef is an HR service provider and consultancy. We help businesses outsource many or all of their HR functions. This includes but is not limited to outsourcing your payroll and manpower needs, conducting assessments including psychometric tests, business process outsourcing, among other services.

In other words, as an HR outsourcing service provider, Tawzef is well-position to drive your business forward.

Get in touch with the Tawzef team and let us help you manage your HR needs including your HR key performance indicators, while you focus on growing your business.  

 

 

 

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