People Analytics – 11 Metrics that Matter
People analytics is increasingly becoming the ‘norm’ in HR departments. Done well, and it can help improve recruitment, increase staff retention and enhance employee engagement resulting in a better run organization and ultimately a more successful business. But the success of people analytics is dependent on the data measured, so how do HR departments decide which metrics matter?
The value of metrics
Good measurements are key to the success of any organization. If you can’t measure or analyze your organization, how will you recognize improvements or whether your actions have any value? In the first instance, HR departments need to understand what their business goals are, then decipher what metrics are needed to determine progress. So if one of the company’s objectives is to open up a number of new offices within a year, HR can review the critical positions needed for the new office, talent availability of those positions in the new location, and average time to hire to determine how long it will take to staff the office.
To effectively measure ROI, HR departments need to ask the following questions on at least a quarterly basis:
- Are we doing the right thing for our people, customers and business?
- How are we contributing to the top and bottom line?
- How are we measuring our organizational effectiveness and impact?
- Is the information from these measurements helping guide the success of our organization?
Being able to report 100% completion of performance reviews is great, but if there are no effectiveness measures (e.g. targets hit, positive client feedback, new business won, leadership skills shown) then the metric is of limited value.Similarly, measuring the speed of filling open positions means nothing if your candidate quality is low and your turnover is high. Focusing on outcome based goals, while measuring and tracking your progress, will keep you informed as to progress being made, identify performance shortfalls, and provide insights for the business going forward.
XpertHR Benchmarking revealed that recruitment, absence and attendance; and reward emerge as key areas of HR metrics data in 2017, but the ratio of employees to HR staff ranks first as HR automation and new HR tech investments improve efficiency and revise service models. Indeed, HR professionals can look at any number of criteria, but the most common metrics that matter are:
- Number of employees per HR staff member
- HR cost per employee
- Labor turnover (voluntary resignation rate) and regrettable turnover for critical talent
- New hire turnover (within the first year)
- Cost per hire
- Time to fill
- Quality of hire
- Gender gaps for pay and promotions
- Bench strength
- Organization design and span of control
- Pay awards (expected value)
Once the metrics have been agreed, they need to be measured on an ongoing basis to monitor progress. Problems can be identified and addressed as they occur. For example, if figures show that women in a certain department are leaving the business at an unusually high rate, HR can look into the reasons for this. Once the problem is identified, the business can get to work to fixing it to ensure that great talent is not lost and that they can continue to engage their people and enable them to do their best work.
Regular benchmarking is an indispensable tool for HR professionals. It is a mechanism for measuring processes, practices and results against the competition to improve performance. It enables HR departments to measure company performance compared to similar businesses. For example, if a business is considering increasing the starting salary for new graduates, it can check against its peers to assess comparative ratings, create an attractive and competitive package to attract talent, while not adding unnecessary costs.
Some HR departments are still only using dashboards and analytics in an administrative and operational capacity, sometimes reporting on statistics that don’t really have any significant impact on the business, often because the wrong metrics have been used. To really make a difference to their organizations and to be at the heart of the decision making process, they need to provide actionable insights through the effective use of people science.