Metrics generally measure one of the following:
• Increased job performance (e.g., new recruiting program
resulted in new employees with first year job performance ratings
that are 30 percent higher than under the old program)
• ROI (e.g., new commission plan resulted in $100 of increased
sales for each additional commission dollar paid)
• Impact of a program on revenue
• Decreased costs
There is a potentially endless number of metrics available
to the HR professional. The key is to pick metrics that focus on key
issues and tell the story. It may be that a series of single metrics,
when viewed together, tell the story. Below are some of the metrics
an HR professional may want to consider for each functional area of
human resources.
The recruiting or employment area is focused on hiring
the employees the organization needs to meet its goals. Measurements
include:
• Time to fill a vacancy
• Quantity and quality of applications based on recruiting
source
• HR cost per hire
• Voluntary turnover rate of new hires during first year
of employment
• Percent of new hires performing above average by the
end of the first year
• Percent of new hires performing below expectations by
the end of the first year
• Involuntary turnover rate during the first year of employment
• Satisfaction of managers with the hiring process based
on survey of hiring managers
• Quality and retention rates of new hires by recruiting
source
• Diversity ratios of new hires
In most cases, no single metric will adequately gauge
the performance of the recruiting function. Rather, some combination
of the metrics listed above along with others created by the organization
will provide the information necessary to measure performance and
effectiveness. The use of several individual metrics to measure a
function is often referred to as an HR dashboard and will provide
a more complete story of how the recruiting function is meeting goals.
The employee relations function is different than the
other HR functions in that it is a little harder to quantify. However,
if the employee relations professionals are doing the job right, the
company should see fewer lawsuits and complaints filed with state
agencies, lower settlements when complaints are filed, and better
outcomes when there are performance issues and/or conflicts in the
workplace. Some of the metrics that can be used include:
• Number of complaints filed by employees
• Percent of complaints that proceed to a state agency,
court, or other external dispute resolution
• Amount of time taken to resolve an internal complaint
• Percent of cases resolved with no money paid out by the
company
• Percent of cases in which large financial settlements
or awards were made
• Breakdown of the types of complaints made by employees
by department; e.g., sexual harassment, race, etc.
• Costs associated with employee relations as percent of
total operating costs
• Percent of cases in which documentation was inadequate
• Number of sexual harassment complaints
• Number of complaints of unfair treatment
• Number of hours spent on training managers on employee
relations issues
• Data from employee surveys on various employee relations
issues such as understanding of policies
• Dollars spent on attorney's fees
• Dollars spent on attorney's fees as a percent of total
employee relations costs
As with recruiting, companies will probably want to use
some combination of these metrics as their employee relations dashboard.
Comparisons from year to year will help evaluate the effectiveness
of the employee relations function.
Compensation programs are all about the numbers, and
as a result, metrics are relatively easy to apply. Measurements may
include:
• Compensation costs per dollar of profit
• Compensation costs per dollar of revenue
• Analysis of performance and production levels of employees
paid in the top 30 percent of their salary range
• Total compensation costs as a percent of total company
operating costs
• Analysis of compensation levels to the marketplace and
key competitors
• Forecast compensation needs based on future plans
• Compensation mix, meaning fixed salaries versus performance-driven
compensation
Training is another area that can be difficult to quantify.
However, it may be helpful to look at metrics that target the type
of training and what it was intended to accomplish. For instance:
• Cost of sales training as a percent of total sales
• Increase in hours of sales training compared with increases
in sales
• Changes in performance levels of employees who received
training
• Percentage of employees who cite lack of training or
advancement as a reason for leaving
• Identification of key employees and percent who have
received training
• Percent of performance appraisals that include training
goals for employees