Friday, December 3, 2010

The 3 MOST Important HR Metrics





Sometimes you take a risk when you ask your audience for questions that will be answered on your blog. I have been asking my readers over the last few weeks to send me questions that they have about HR Metrics and Analytics.

Well Ben Eubanks, @beneubanks (on twitter) and who writes the UpstartHR blog sent me the question, "What are the 3 most important HR Metrics?'

Wow, thanks Ben for such an easy question...NOT!

First, I would say that the metrics that will make my top 3 list have to be those that demonstrate they measure impact and/or results for the organization based on their own strategic outcomes. . So, you won't see metrics like these on my top 3 list:

1) time to fill
2) cost per hire
3) overall turnover (the more granular this number is the better, turnover by performance, by generation, by engagement level is a better measure)
4) Training investment/per employee
5) HR staff/headcount

While the above metrics may be good tracking measures, they really don't give me the insight I need to understand if:

1) The human capital in the organization is performing at it's best and highest level AND IF
2) The HR department is providing the right services and right people to get #1 accomplished.

So, if I am limited to 3 measures only, here are the ones I would choose: (drum roll, please!)

1) Percentage improvement in workforce productivity. This relates to #1 above. I would need to see improvement for what I am spending on people (cost)/ to what they are bringing in ($ generated). I would like to see this tracked on monthly, quarterly and yearly intervals and compared to previous years.

2) Dollars spent on HR costs for every dollar of revenue generated. This metric relates to #2 above regarding efficiency of providing HR Services.

3) Engagement Index-I think this number is a leading indicator to customer behavior which directly impacts revenue and profits. So, this number is critical not only to understand how engaged your workforce is, but it is an important metric when you take the leap to HR Analytics.

Ok, so those are my top 3, what are yours? Challenge me on these, let's chat!

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