What Are the Top KPIs for an HR Manager?

Hiring an HR manager can be an important step for the growth of your company. Like other employees, you need to evaluate their performance. To do so, you need to determine the key performance indicators (KPIs) to evaluate your HR manager.

You may also consider conducting an annual or semi-annual performance appraisal for them.

But what are the top KPIs you should consider to evaluate your HR manager? And what should you as a general manager, CEO, or HR director look for during this evaluation process?

Read on to find out!

HR managers: Duties, skills, qualifications

Before you can evaluate an HR manager, you must first create a clear job description that lists what’s expected of them.

This should cover their key responsibilities, required soft and technical skills, and the qualifications they need to perform their role.

HR manager responsibilities

The HR manager’s duties will encompass various elements of the HR field.

However, it’s worth mentioning that these duties may vary based on industry and the size of the company.

Here are some of the responsibilities of an HR manager:

• Creating an HR strategy for the company.
• Managing an HR team covering organizational development, recruitment, training and development, and personnel affairs and review the KPIs for each.
• Collaborating with marketing to improve the company’s employer branding.
• Contributing to recruitment marketing efforts.
• Creating and consistently improving the company’s employee rewards and recognition program to boost employee loyalty.
• Creating a compensation and benefits strategy with policies and KPIs, covering all salary grades within in the company.
• Staying up-to-date and regularly review local salary surveys to ensure the company pays market-relevant salaries and provides suitable benefits to employees and managers.
• Collaborating with other teams, including marketing, sales, software development, and others to ensure smooth workflows and the right talents are hired.
• Creating an employee handbook with clear HR policies for the entire company. It should cover employees, whether they are working in a remote, hybrid, on in-house capacity.
• Ensuring job applicants get a positive candidate experience.
• Supporting team leaders and middle managers in evaluating their employees using different types of performance appraisals.
• Conducting budgeting for the HR department and other teams.
• Collaborating with the finance department for monthly payroll and benefits.
• Conducting mass recruitment for certain roles like nurses or civil engineers.
• Contributing to the creation of the company’s business development strategy.

HR manager skills 

An HR manager should have a combination of technical HR skills, people management skills, and other soft skills.

The most important skills an HR manager, and other HR personnel, should have are:

• Strong negotiation skills
• Strong communication skills
• Conflict resolution
• employee and company needs

Evaluation: Top KPIs for HR managers

Now, let’s look at the top KPIs you need to consider when evaluating the performance of an HR manager.

You’ll find that many of these KPIs overlap with broader HR and recruitment KPIs. That’s because an HR manager’s role covers recruitment, employee engagement and retention, organizational development, employee training and development programs, strategy, and more.

1. Employee turnover

One of the most important metrics in HR and in evaluating HR managers’ performance is the rate of employee turnover.

Referred to as the rate of attrition, the employee turnover rate can be the reason candidates apply for jobs or avoid your company. A high employee turnover indicates one or more issues within the company.

There are many factors that affect employee turnover, from micro-management to low salaries, to disorganized teams, among others.

It’s the HR manager’s responsibility to not only maintain a low turnover rate, but also figure out why people leave. To do this, they need to conduct exit interviews and attempt to solve the issues driving team members away.

Further reading: How to Calculate the Cost of Employee Turnover

2. Time to hire 

Another recruitment KPI, the time-to-hire metric looks at the average time or number of days it takes to fill a vacancy.

A long time-to-hire means there are issues plaguing the company’s recruitment cycle and process. A short time-to-hire indicates an efficient hiring process.

3. Employee engagement and satisfaction levels 

An important, albeit often overlooked HR manager KPI is that related to employee engagement and satisfaction. This metric ultimately impacts employee retention and reduces turnover.

Employee engagement poses a major challenge to many HR personnel, including HR managers. It’s not about keeping employees happy, but about listening to them and empowering them. It’s a two-way street where employees and the company benefit.

HR managers should find ways to engage employees, increase their satisfaction levels, and help them improve their productivity and performance.

This can include creating an employee rewards program, improving it, and maintaining a high participation rate. To do so, HR managers should set employee engagement KPIs and measure them on a quarterly or semi-annual basis.

Further reading: How can technology increase productivity in the workplace?

4. Compensation and benefits 

The HR manager is responsible for creating the company’s compensation and benefits strategy, ensuring it’s an inclusive strategy.

This includes reviewing the company’s current salary structure, ensuring the company pays salaries in line with the local market.

They should also stay up-to-date with local economic reports, salary surveys, and ongoing changes in competitors’ compensation and benefits schemes.

5. Compliance and legal

Part of the HR manager’s role is to ensure the business adheres to the local labor laws, maintaining regulatory compliance. They should ensure the company avoid legal issues and is up-to-date on all labor law regulations or amendments.

6. Training and development planning 

An important aspect of an HR manager’s responsibilities is creating a training and development (T&D) plan for the different teams in the company. This involves collaborating with team leaders and managers and the employees themselves.

HR manager KPIs also include creating a training plan, setting up training and development KPIs, and reviewing the T&D participation rate. This is the average number of employees who take part in a training.

They should also review employees’ learning progress and the effectiveness of the training program on their work or productivity.

7. Rate of Absenteeism 

How often employees take time off, aside from their paid-time-off (PTO) is an important HR metric, and one HR managers need to keep an eye on.

While employees have PTO as a work benefit, HR managers should see how often they take additional time off and what their reasons are. Without falling into the micromanagement trap.

A high rate of absenteeism among employees indicates bigger underlying problems such as employee burnout, micromanagement–which leads people to take time off to go to job interviews–team incompatibility, among other issues.

8. Current and new employee retention rates

Besides measuring employee attrition rates, HR manager KPIs include reviewing and measuring the rate of retention. This applies to both current employees and new ones.

For new employees, it’s important to see how long they stay after being hired and after their probation or training period.

A high turnover following the probation period could mean the job communicated during the interview wasn’t the same as the one they found when they joined.

On the other hand, a low turnover of new employees indicates a strong onboarding and orientation process, strong team management, and a positive work environment.

HR manager roles based on industry

As mentioned, HR managers’ responsibilities can differ based on industry. So, in addition to the above KPIs and duties, some industries may come with different requirements.

For example, in the construction industry, HR managers need to conduct manpower planning when their company receives a tender. They need to ensure they hire the right number of people, create a correct hiring estimate, have a hierarchy of roles,…etc. needed to fulfill the obligations listed in the tender.

Another example is the call center industry. This is an industry known for its high turnover rates. HR managers in call center companies or recruitment agencies, like Tawzef, that offer call center outsourcing services, need to plan ahead.

From adequate sourcing and selection to recruitment to providing training for new employees. Then they have to see who passes their training and can begin working directly with clients.

With services like call center operations, training periods can last from a month to six months. So, the recruitment process is considerably long with many moving variables.

Further reading: 8 Reasons Why You Should Consider Call Center Outsourcing

Wrapping it up

With workplaces evolving and changing, an HR manager’s role is ever-growing and never over. For example, HR industry trends for HR management involve

• Focusing on sustainable development for the company and teams
• Closing the skills gap between employer needs and candidates
• Constantly reviewing and improving the employee lifecycle
• Improving work collaboration in remote and hybrid settings
• Among others.

Last but not least, with more duties landing on their plate almost every day, HR managers too may get overwhelmed and burnt out. Something they need to avoid.

As companies grow, HR managers and CEOs should consider expanding their HR workforce or complementing their internal needs with services provided by HR consultancy companies.

This allows the HR manager to focus on the internal areas that require their attention, while giving additional responsibilities, especially time-consuming, lengthy ones to outside, experienced sources.

Whether they need help with recruitment services, including bulk recruitment strategies, or building a good HR strategy for teams in a different country, HR companies and employers of record can come in handy.

Want to support your HR manager and improve your company’s HR functions? Get in touch with Tawzef. We’re an HR consultancy with over 15 years of professional working experience in the Middle East and North Africa (MENA) region.