People & Leadership

People analytics: 11 metrics that matter for HR teams

HR departments need to understand what their business goals are, then decipher what metrics are needed to determine progress.

People analytics is increasingly becoming the norm in HR departments.

Done well, it can help improve recruitment, increase staff retention and enhance employee engagement resulting in ultimately a more successful business.

What is People analytics?

People analytics means understanding your employee data just as you understand your customer data.

It’s about applying data-driven approaches to improve the visibility you have of your workforce, and how you manage and engage your employees.

It’s about understanding people and their behaviour in your company and acting on that data to create even better employee experiences and ultimately a loyal and productive workforce.

The value of metrics

Good measurements are key to the success of any organisation.

If you can’t measure or analyse your organisation, how will you recognise improvements or whether your actions have any value?

Ultimately though, measuring the speed of filling open positions means nothing if your candidate quality is low and your turnover is high.

In the first instance, HR departments need to understand what their business goals are, then decipher what metrics are needed to determine progress.

If one of the company’s objectives is to open a number of new offices within a year, HR and People teams 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 return on investment (ROI), HR teams need to ask the following questions at least quarterly.

  • 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 organisational effectiveness and impact?
  • Is the information from these measurements helping guide the success of our organisation?

Which metrics matter?

No data is inherently more valuable than the other, and there is no one size fits all strategy.

However, there are some common metrics that immediately impact talent acquisition, retention and engagement that are important to all businesses, especially in today’s competitive job market.

1. Labour turnover

Are you able to retain staff?

Labour turnover rates have shown a steady increase since 2012, in line with the gradually strengthening labour market.

One in five (19%) employees resigned from their job in 2017, up from 10% in 2012. How can you create employee experiences that make your workers stay longer?

2. Absence rate

Are there patterns in absence rates?

Although absence rates reached an all-time low in 2017, the cost of sickness to the employer went up.

HR and People teams can measure the effects of illness and ‘presenteeism’ on productivity, reduced customer service and missed business opportunities.

3. Total time to hire

How long does it take you to fill positions? The median total time to hire for managers is 13 weeks.

In fact, a quarter of employers reported that time to hire across all job roles is getting longer.

4. Annual leave

Are your workers taking a break? Can you spot patterns between those who have less days off than others?

What is their impact on productivity? Do you need to encourage your workers to take all their annual leave?

5. Pay awards (expected value)

Are your pay packages in line with your peers? How big is your gender pay gap? How will you reduce it?

Benchmark your packages for every pay grade against other businesses of your size and assess whether you need to, and can afford to, increase it or offer other incentives in order to attract and retain talent.

6. Number of employees per HR staff member

How big is your HR department and what is their focus? Can you identify any year-on-year trends with a diminished or enhanced HR and People team?

Often understaffed HR and People teams focus on process rather than strategy.

7. Engagement and job satisfaction

A staff pulse survey will tell you how your workers are feeling, staff turnover will indicate whether workers are happy to stay, and absenteeism rates will indicate whether your staff are happy and healthy.

This is an important metric to track as a drop-in engagement or job satisfaction should flag up a problem in your organisation early enough for you to rectify it.

8. Employee tenure

How long are your employees staying? What is the turnover in the top, middle and low-level positions?

Are workers happy? Or are you finding an unusually high turnover in one department or among a certain level of staff.

Do you need to instigate more training, more pay or simply more supportive managers?

9. Improvement in new hire performances

What is the success rates of new hires? Are they the right calibre?

Get it right at the beginning, continuously improve your recruitment and onboarding processes and you will see a year-on-year improvement.

10. Diversity metrics

Is your organisation really diverse?

Diversity of skills, thought, gender, education, ethnic and social background leads to better decision making, innovation, creativity and ultimately the bottom line.

11. Percentage of performance goals met

Are you setting the right goals and are you reaching those goals?

This takes you full circle to the start. Take time to set your goals. Make sure they are realistic, prioritise what can be achieved year-on-year and then think about your metrics carefully.

If you’ve done this then your metrics will be invaluable to you in measuring the progress of your business and implementing the appropriate changes to reach those goals.

The importance of regular benchmarking

Regular benchmarking is an indispensable tool for HR professionals. It is a mechanism for measuring processes, practices and results against the previous year and your competitors to improve performance.

To really make a difference to your organisation and to be at the heart of the decision-making process, provide actionable insights that will make a difference to your business.

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