Successful companies value their workforce the most. Gone are the days of traditional workplace environments where everything used to be formal. Now, with every passing day, workplace ethics tend to be more flexible. 

With so much convenience at hand, how come an organization analyzes performance and defines goals? One of the ways to do this is evaluation through HR metrics. Undoubtedly, human resources is an integral part of any company. 

Moreover, you can assess various personnel strategies, staff analytics, and HR metrics to get to know where all these indexes are leading your company. 

Whether you run a small or large company, the sooner you start observing your HR metrics, the better it is. So let’s see why these metrics are so important and how to use them. 

What are HR Metrics? 

HR metrics are quantitative measures used to track and assess the efficiency and effectiveness of human resource management practices. These are data points that help you track various HR technologies. For example, staff performance, preservation, compensation, engagement, cost-per-hire, time-to-hire, and many more.  

With one or more of these data points, companies can keep their performances following the set rules and defined objectives. Also, it helps make adjustments as and where required. 

Simply, HR metrics are a better way to face unforeseen events that may arise in the future. Thus, protecting you from any mishaps or losses. 

How to Use HR Metrics? 

Different businesses have different HR metrics based on their nature and requirements. They use these metrics for better operations and consistent growth. To do so, they must start with a hypothesis or question. Some examples are: 

• Is the turnover rate higher than your preference? 
• How much is that costing you? 
• How’s the talent acquisition process going? 
• Are you losing money on bad decisions? 
• Do you need new hires? 
• If yes, how many? 
• What new skills will people be learning? 
• Will any training be helpful? 

These are some questions that can be kept in mind to help you in decision-making. 

Some Key HR Metrics 

Here we have made a list of 10 basic metrics that could be useful for a company: 

1. Headcount 
2. Turnover 
3. Diversity 
4. Total cost of the workforce (TCOW) 
5. Compensation 
6. Spans and layers 
7. Employee engagement 
8. Talent acquisition 
9. Learning 
10. Workforce planning 

Now, let’s discuss them one by one: 

1. Headcount 

The first aspect an organization has to consider is the number of people working for them at any given time i.e., headcount. As most of the finances of a company are set for its people costs, an accurate headcount is important. 

Additionally, this index allows for better financial and people management. You may have a clear view of how many people are needed to attain your goals. Based on this count, you may make the staffing decisions. 

2. Turnover 

Replacing your employees may seem easy but it is not. This might cost one-half to double the employee’s annual salary. So, think twice before making such a decision. This will help you reduce turnover rates. 

In this regard, there are some controllable as well as uncontrollable measures. The contracts you want to terminate are under your control but unpredictable terminations can not be controlled. 

Hence, analyze the trends thoroughly to determine why certain employees tend to leave. 

3. Diversity 

In the corporate sector, diversity refers to the range of differences in a company concerning race, ethnicity, color, gender, age, etc. The majority of employees look for diversity while opting for a new job.  

A new concept is gaining popularity in many organizations i.e., diversity, equity, inclusion, and belonging (DEIB). The more diversity a workplace offers, the more skilled workers will be attracted to the organization. 

4. Total cost of workforce 

The total cost of the workforce includes several factors like headcount, salary, benefits, staff overheads, etc. With so many items on the list, TCOW often costs more than salaries to companies. 

One thing to be kept in mind is that TCOW helps build an efficient staff strategy. This eventually keeps you competitive in the industry.  

Metrics that must be considered are: 

• People — everything spent on staff from recruitment to onboarding, training, salary, and retirement benefits. 
• Overhead — the cost a company incurs per employee? 
• Facilities — the cost of office premises, equipment, and other services.  

5. Compensation 

The person working as your employee is always in search of better opportunities. If he has any complaints like a low salary, no benefits, no promotions, or workplace dissatisfaction, he will surely want to switch. 

So, compensation is one of the top reasons people leave their jobs as they are continuously comparing their packages to the median compensation for similar positions within a company or a target market. 

Compensation includes salaries, bonuses, paid time off, health insurance, retirement plans, and more.  

6. Spans and Layers 

Spans and layers refer to the organizational structure and hierarchy within a company. Spans refer to the number of subordinates or employees that report directly to a manager, while layers refer to the number of hierarchical levels or management tiers within the organization. 

With this metric, your employees can work together in better collaboration more effectively. Also, it makes it easier to evaluate salary grades and promotion opportunities. 

7. Employee Engagement 

The more engaged employees, the better they will perform. It is up to the organization how they keep their staff connected and involved in the day-to-day operations. Moreover, the behavior of management with their subordinates also matters a lot.  

As engaged employees are more productive. So, the burnout and turnover rates are also lower. 

8. Talent Acquisition 

Talent acquisition helps you identify and acquire skilled workers to meet your organizational needs. The talent acquisition team is responsible for identifying, acquiring, assessing, and hiring candidates to fill open positions within a company. 

Furthermore, all possible efforts must be made to avoid a bad hire as it costs businesses a lot. By using the metrics properly, the right hiring choice is made eliminating all the red flags. 

9. Learning 

Not every employee in your company is there for money. Very few are there who are in constant thirst for learning something new as they can not beat this. For this, they tend to change their jobs more often to learn new skills.  

So, learning metrics offer a track of employees’ career growth. Also, they help reduce voluntary turnover and absenteeism. Thus, improving engagement and individual performance. When your staff is in the learning phase, they won’t waste their energy on useless thoughts. Hence, proving beneficial for the organization. 

10. Workforce planning 

It is one of the most important metrics as it covers the basic strategy a company follows regarding its current workforce and future needs. Certain projects surely need more personnel having advanced and specialized skills. So, this metric helps fill the gaps if any persists. 

Without this, you risk your business of lacking the required people to accomplish your goals. So, having a proper staff strategy in place works wonders. 

Final Thoughts 

From all the metrics mentioned above, you can select the ones most suitable for your organizational growth. Not every metric is meant for every business. We must have missed some as many indexes could be considered. 

So, before tracking these, ensure that your selected metrics align with HR and company goals. Also, ensure the application of a mix of qualitative and quantitative metrics. 

Finally, follow the insights to make decisions. After tracking the metrics, it would be your strategic planning that will reap results. It’s ultimately up to you to find the appropriate solution and act on it.  

Therefore, continue tracking. Monitor your required HR metrics regularly to tackle any changes that may affect your business.