10 Effective HR Metrics the Most Successful Organizations Get Right

Effective HR Metrics

HR Metrics are vital tools to measure the performance of HR initiatives and policies at the workplace. It is the way to assess an employee’s performance, productivity, innovative mindset, etc., and how the policies of the HR department are improving a comprehensive working culture at the company.

Companies employ key HR metrics to review employee’s performance and prospects. They make changes in HR metrics as per the evaluation and requirements for an improved working atmosphere.

Though there are dozens of metrics to measure, let us learn about the ten best HR metrics preferred by top management of leading organizations.

Top ten metrics employed by the HR department of leading companies

These metrics can be bifurcated into two categories: Active Metrics and Passive Metrics. The major difference between these two categories is employee engagement. 

Active Metrics involves direct involvement of employees and departments through surveys and polls etc. Passive Metrics are indirect employee assessments, not involving employees directly.

Active metrics

Employee net Promoter Score

eNPS is done through a poll to measure the organization’s image and employee’s perspective. The HR department launches a poll and asks a couple of questions, including scoring the company on a scale of one to ten and how likely employees are going to refer the company to family and friends.

eNPS happens anonymously, and every employee gets a questionnaire in their official inbox to maintain accuracy and privacy.

Job satisfaction

Efforts and policies to maintain job satisfaction are one of the primary KPIs of the HR department. Most successful organizations prefer this metric to measure employee’s satisfaction at a job because it directly affects their performance and eventually productivity.

Job satisfaction is measured through a simple calculation. The most acceptable formula for this metric is:

[{(Mutual trust and teamwork score) + (Compensation score) + (Job responsibilities score)} ÷ (Aggregate score)] * 10.

HR metrics example: [(8+6+9)/30] * 10 = 77 percent

Leadership approval

Mutual respect and understanding are vital for the overall company’s growth. Therefore, the HR department employs a leadership approval poll to determine the acceptance of senior management among employees through scoring on the scale of one to ten.

More than six means positive responses from employees, and less than six means management needs to consider ways to improve respect and acceptance among the workforce.

Employee engagement index

Employee engagement is a way to assess emotional attachment with the company. A deeply involved employee could be an asset to the organization. The HR department uses an index formula to measure the engagement aspect.

Formula: (Total employee engagement score) ÷ (Total possible employee engagement score) = (The engagement index score).

Passive metrics

Revenue per employee

This is a type of passive metric, which means it does not involve employees directly. This is a key HR metric for assessing a company’s performance by CFOs and CEOs.

It measures through a simple formula: (Total number of employees at the company) ÷ (Disclosed revenue of the organization).

Employee turnover

Employee turnover is the workforce’s attrition rate, especially within a year, measured by the HR department. It shows the effectiveness of various policies and measures. Companies get to know why people are leaving, the rate of leaving and joining, etc.

These data are essential to make and improvise strategies for skill retention. It also helps in making amendments in rules for higher job security, satisfaction, and justified compensation.

Measurement of productivity

Productivity is subjective, and it is tough to measure it quantitatively. To make it easier, organizations make a baseline, and employees have to prove their productivity as per the given benchmark.

Formula: (Number of working days from date of joining) − (Date for target achieved) = Time span taken for productivity

The cost of employee turnover

Leading organizations assign HR departments to calculate the company’s expenses on an employee’s stint at the workplace. This helps them to manage the budget, decide upon hiring, and several other planning requirements.

The churn rate of employees

The HR department assesses some of the crucial questions from this metric such as why people are leaving soon, reasons for an increased number of applications for voluntary retirement, etc.

This metric is vital to understand the reasons behind attrition, such as compensation, work culture, work-life balance, etc. Metric helps in diagnosis, which companies can refer to devise mitigation measures.

Recruitment drive

Recruitment is another important HR metric employed by leading organizations to assess their company’s image, employee expectation, and desire to work in the organization. Compare the time taken to fill a job role in your organization to other companies for the same job role.

If it takes more time, assess and improvise required sections such as work culture, competitive compensations, reviews on web and job portals, etc.

Conclusion

HR employs various metrics, and these are very powerful mediums to improve the company’s overall performance. For example, companies assess, measure, and make strategies for improved employee experience, internal and external image, productivity, and more.

Recommended Guide: The One-place Guide to HR Challenges and Solutions

Pawan Kumar

I'm a Content Marketer at Springworks. I've been featured in many reputed publications and online magazines! I'm an avid reader and movie buff. Let's connect on Social Media.

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