TOP 10: the KPIs that every company should measure

Organizations around the world are emphasizing how to retain the best talent in the market. As they grow, they're looking for ways to show prospective employees that it's a great place to work and that the candidate will not only be well compensated but also have fun.

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It's impossible to assess where your business is if you don't measure its progress. You need to understand what activities existing employees love and what policies they don't. Only then will you know if you are performing adequately as an employer. If you want to measure your success, then you need to have performance indicators and monitor them like a hawk.

The metrics that have a direct link to organizational strategy are the HR KPIs. They can be used to understand the effectiveness of human resource policies for the company. They are defined based on human resource outcomes that help achieve business objectives. These KPIs are used to optimize your recruiting process, employee programs, workplace issues, employee relations, etc. Nowadays, companies know that their growth is directly related to the treatment their employees receive.

How to select HR KPIs?

All KPIs are selected with business objectives in mind. By finding the HR KPIs, all stakeholders, including senior executives, managers, and members of the HR area must be present. The KPIs of human resources will be completely different from those of the other departments. But in general, all the KPIs chosen by various departments should work together to achieve business growth.

HR is an integral part, as they are directly responsible for the welfare of employees. Some of the KPIs that we have chosen in this article have to do with the success of the business while ensuring that employees perform at their best.

Each of the KPIs you choose should be based on the universal theory for goal setting: SMART. 

S - “Specific”

M - “Measurable”

A - "Achievable” 

R - “Relevant”

T - “Time-bound”

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The best part about KPI measurement is that you can track your progress over weeks, months, quarterly, semi-annually, and annually. By doing this regularly, you will be on top of the growth of your business.

Note: The goals you have for your KPIs should resonate with your company's growth plans. If you are not aligned with it, then the whole exercise is useless. When you look at the results and compare them to previous scores, they should be able to predict growth. If you think there is no progress, then you need to redraw your goals or figure out what is wrong with your current processes. You must work on the data you get from your KPIs to make business decisions that will positively impact your company.

The top 10 HR KPIs that are most relevant to most organizations and will help you measure the success of your HR department are:

1- Training costs

It's a useful metric because it helps you track the costs you've spent on developing employees. If you find that there is specific training and that you have given it the best performance, you can use it for most employees, but if you find that there are courses that did not help at all, you can remove it from your training plan.

Every new employee must be able to keep up. If you find that some of them do not work well because they lack particular training, it is your responsibility to find out if employees were not ready or if it was too early to train them. Fortunately, most of the time, the return on training is usually greater than the investment made. Employees grow in confidence after they are trained, you'll see in the results what these employees produced when they start working.

To find out if the training was successful or not, you can conduct a test session in which you could evaluate the candidate's performance based on the training. This will allow you to decide if there was any improvement or not.

2- Employee productivity

This is an exciting metric as it is essential and foundational. While you can get a rough estimate of productivity by dividing total sales during a particular period by the number of employees, we suggest you dig a little deeper. More variables can be involved when measuring employee productivity as a KPI.

Factors such as the amount of time your employees work, the number of days, their qualifications, the resources that are used in them, etc., can be used to evaluate their productivity. When you continuously measure productivity, you will be able to know how well they have performed, and there will also be a benchmark against which your work will be compared. It will also help them understand how much work they have done so far, how that work is doing, and how they can be better professionals by improving their work. Constant measurement of worker productivity will also result in higher profits as well as greater motivation for them as they will feel that the company cares about their progress.

3- Hiring costs

Recruitment is one of the most important activities carried out by the management team and human resources. If your hiring process is flawed, not only is there an issue with the kind of outcome you'll get from underperforming employees, but you'll also see that it will have a direct impact on the motivation of your existing workers. This KPI measures the number of resources you need to invest in each new employee. It includes all marketing costs, referral incentives, the cost of the recruiter's time, selecting resumes, subscribing to recruiting apps, conducting interviews, etc.

The costs associated with hiring have a big impact on your bottom line. That is precisely why you should not consider recruitment as a simple process that does not affect much since it has a direct effect on everything your company does. Your business cannot function without the help of workers who have to be efficient in what they do. As a business person, your job is to invest in employees that will give you more income than you are paying them.

By measuring this metric, you discover what the recruiting source is for each of them. What is the most profitable source? Use all this information to optimize your hiring process so that it does not take up many resources, providing the greatest number of results.

4- The turnover rate of high-achieving artists

There will be different types of employees whose performance varies, and there will be many factors that will be responsible for this. An 'A' employee who is good at your company might not be a good fit for a different company. It could be because they are happy with the culture in your company, while they may be wary of a different atmosphere where they have little freedom. This will keep them from giving their best.

You will always find that high achievers thrive because of the office culture. They are extremely sensitive to the work environment. Why? Because they are continually persecuted by other companies that want their talent. Good employees always have plenty of options ahead of them, and if you need them to stay, then you need to make sure you give them reasons to stay. A relaxed work environment is good. Ask your employees about the reasons why they would stay in your company. What do they like? Is it better than all the other companies they have worked with before?

The answers to all of these questions will help you understand how you can reduce high-performing employee turnover. You will be able to offer them incentives and facilities that will attract them and make them stay. If your best employees are leaving, then have an exit interview with them where you understand what went wrong and how you can ensure you don't make such mistakes in the future.

5- Job referral percentage

Referrals are one of the most popular ways to hire new employees because there is a trust factor. Also, if referral rates are high, it means your current employees are happy with things. Why? Because people will refer their friends only when they already have a decent experience in the current company. Otherwise, they would not be a part of any referral program, even if it seems lucrative to them.

Job references are also a great way to hire suitable candidates who are more likely to stay with the company. By not following the traditional method of hiring, you will be able to reduce expenses since the usual method requires a lot of time, effort, and money.

6- Absenteeism

If your employees often leave, it means there's something inherently wrong with the way your company works. While there may be genuine reasons why employees might not be able to come to the office, you should also monitor to see if there is a massive trend of absenteeism. If there is, you only have one answer: your employees are not happy in the workplace.

The formula for absenteeism = (total number of workdays missed) / (number of workdays available)

You shouldn't make your employees think they can't leave because it's their right. You should be a little more careful about absenteeism only when you notice that it is a trend among the majority of employees. For those who have genuine reasons, you shouldn't disregard them. When your organization grows, it will be hard to track, which is why having “absenteeism” as a KPI will keep you on your toes.

7- Time to fill a position

Let's say the role of Head of Digital Marketing has been vacant for a long time. Do you understand the implications of this? Who will monitor social media posts? Who will handle the paid ads? Who will control the various software you have subscribed to? Will the marketing part be handled effectively by the headless marketing team?

What does 'Time to Fill' mean as a KPI measure? It measures the time needed to fill a new role after the job posting has been posted. Track the efficiency of the recruiting process and how optimally recruiting resources are being used. It also helps to assess whether it is well planned if there are hiring contingencies like a layoff or if someone has quit without notice. These are all situations that will happen without a doubt.

Companies must invest time and effort in reducing the time it takes to perform a job. We suggest not concentrating on just reducing the number because that is not the goal of the process. The goal is to find a technically strong candidate with leadership skills.

8- Recruitment conversion rate

This KPI measures the number of apps that eventually become employees after the process is complete. Many factors depend on this number. This KPI applies only to large companies when they are not sure of the number of candidates they want to select from a pool. When it comes to small and medium-sized businesses, they usually have a specific number in mind.

You can use this KPI to include all the steps you choose during the hiring process and their effectiveness. The main objective of this KPI is to find out which source offers the best candidates. It is a measure of HR performance more than anything else. In this, compare the different methods you use along with the cost for each of them. With this data, discover which is the best method that will adapt to your business and your budget.

9- Overtime

Overtime is a fantastic indicator as it tells a lot about the willingness of employees to stretch their hours for the business. But it could also mean something tragic where employees could be working overtime just to get the extra pay. HR's work consists in discovering the difference between these two.

If you see a lot of overtime when the amount of work has increased for the entire company, then there is nothing to worry about. But if there is no specific reason for the increase in overtime, then you must be careful and make the appropriate changes so that overtime occurs only when requested by the company.

Companies must also be careful not to tire their employees. If employees feel that they are overworked, even extra pay would not be a source of motivation for them. They will lose their motivation to come to work every day, and you won't see your best work reflected there as well. Absenteeism will also increase. If there is overtime almost every day, then there is something inherently wrong with your process or the way your employees work.

10- Net promoter score

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Depending on what goals you have, NPS can be a game-changer. It will help you uncover trends that might have previously been ignored because employee word was not taken into account.

Conclusion

If you choose the right HR KPIs, you will show everything to the organization. Once you continue to measure these KPIs, you will need to monitor your progress at both the department and organization levels. Be sure to share it with all stakeholders and course correct if the need arises.

Create an HR - KPI panel where anyone in the organization can easily access all this information. By sending it out to the entire organization, you can make others understand the strategic importance of the department and it will help show how they are performing in front of others. The goal is not to show them in low light, but to use the metrics to keep improving. Only when you receive positive and negative results will it grow as a company.