HR Metrics that will Skyrocket Your Strategic Credibility
Having a solid grasp on HR metrics is the first step in adapting to our data-driven world. And yet, if your HR metrics focus only on your goals and don’t align with your organization’s bottom line, you could be inadvertently destroying your chances at ever claiming your rightful seat at the table.
If you employ a set of HR metrics that you use to measure your success, have you done your due diligence to attempting to tie how you measure your personal success against how your company measures its success? In other words, are your HR metrics easily translatable into the language of your business (money)? If not, it may be time to rethink and redesign your HR metrics strategy.
Dr. John Sullivan on behalf of ERE wrote recently about some HR metrics that not only affect HR, but have high impact from a business perspective as well. Let’s review some of them in today’s post.
Revenue per Employee
This is one of those HR metrics that does exactly what it says it does: it measures the amount of revenue produced by the number of employees that work at the organization. Organizations that produce a high revenue per employee metric are corporations that are high producers.
This one is really simple to calculate: take your company’s annual corporate revenue and divide it by the number of employees. The higher the number, the higher the impact of these HR metrics. Another convenient aspect of this particular metric is that the information is public. Check out Marketwatch to determine how your numbers compare to your competitors.
Quality of Hire Performance Improvement
HR metrics like this one boasts success not only for the organization as a whole, but for HR professionals involved in the hiring process as well. It essentially measures your quality of hire output compared against employees that formerly served in that position.
If you can execute HR metrics like this one properly, you can undo a lot of the stigma surrounding HR professionals’ lack of strategic insight.
Here’s how to measure Quality of Hire Performance Improvement:
- Shoot for tracking an output metric that already exists in performance based position where production matters – sales is a great option.
- Monitor your new hire’s yield. If it’s higher than the former employee’s productivity, you’re guaranteed to make significant strides in your strategic value. This means that you hired someone who enhances the company’s performance.
Turnover in High Performance Positions
Despite what a lot of HR professionals believe, turnover from all employees is not created equal.
Of course, it’s easy to assign a broad-sweeping percentage to the number of employees you lose in a set period of time, but in the grand scheme of HR metrics that impact the company, that number doesn’t mean much for two reasons.
The first reason is that a percentage is simply a percentage without context. Is that number high or low compared to the turnover averages in your industry? Is it better or worse than it was 12 months ago? 18 months ago? Context is everything, and nothing says context quite like money does.
After you’ve compared your percentages with other data and created an idea of where you stand in that regard, without tying that number to a dollar amount, you’re not going to have much ground to stand on from the perspective of your organization’s bottom line. Figure out what it cost you to onboard a new employee (calculating recruiting costs, how much money was lost due to the position being unfilled for a period of time, training costs, etc.) and then present that to your executives. Those numbers mean a lot more because they express the situation in terms of actual financial impact.
The second reason a percentage is essentially useless when weighing the effects of HR metrics is that losing a top performing employee hurts worse for the company than someone who produces an average amount.
To calculate the true loss of this scenario try weighting your turnovers. So, high performing employees would be assigned a higher weight than employees that perform on par with your averages. You can determine the weight by adding the percentage above average that the high performing employee produced.
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