Issue: You probably track several HR-related numbers, but are you sure you're tracking the right ones?
Benefit: By tracking the right metrics, you enhance your perception as a strategic partner.
Action: Ask executives and managers about their strategic concerns, then select metrics that reflect those concerns.
Most HR departments focus too much on transactional data, turnover and absentee rates, and not enough on strategic HR information when it comes to tracking metrics, says a new SHRM report on human capital measurement.
While turnover rates are important, they don't necessarily help your top executives when they're facing tough strategic decisions. So offer them metrics that do, and you'll enhance HR's role as a strategic partner.
How do you pinpoint which metrics matter most for your organization? Use these strategies:
Ask execs about factors that help the organization and departments run more smoothly, satisfy customers and turn a profit. A key question to ask managers: "What department numbers does your boss bug you about the most?" If you keep hearing the same answer, chances are you should be tracking a related HR metric.
Provide information, not just numbers. As you identify what's important to your organization's strategic success, the metrics that matter most should rise to the surface. But remember, your goal is not to deluge executives and managers with numbers: it's to provide information that they can use in making decisions about work force issues.
Example: If employee turnover is hurting customer service, tracking turnover rates is important. But it's even better to provide information gleaned from exit interviews about why employees are leaving.
Boost HR metric knowledge Metrics can be scary to many HR specialists who've built their careers dealing with people, not numbers. You can demystify metrics by reading up on the topic and networking with other HR pros to find out how their organizations use metrics.
Here are two good Web sites to help learn more about metrics: www.shrm.org/ metrics and www.staffing.org/metrics.
Some common HR metrics
Below are some of the more common metrics that HR specialists should track:
Revenue factor: Revenue divided by number of full-time employees.
Human capital value-added: Revenue , (operating expense [compensation cost + benefit cost]) divided by number of full-time employees.
Compensation revenue ratio: Compensation cost divided by revenue.
Compensation expense revenue: Compensation cost divided by operating expense.
Turnover: Number of employees leaving divided by average number of full time employees for period.
Turnover percentage: Number of employees leaving minus the number of employees who were desirable to lose (such as terminated or poorly performing employees) divided by average number of employees for period.
Recruiting efficiency: Total recruiting costs divided by total number of new hires.
Time-to-fill: Average number of days from when a job vacancy occurs until the day a new employee reports to work.
Time-to-hire: Average number of days from job vacancy to when a new employee accepts a job offer.
Cost-per-hire: Total recruiting costs, including advertising, search firm fees,
HR staff time, hiring manager time,, etc., divided by number of new hires.
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