KPIs have been around for decades. I have yet to come across an organization that is not using this type of goal to help themselves stay on top of their performance. And for good reason: they’re simple and effective.
KPIs typically monitor business-as-usual, the ongoing processes of an organization. This is different to OKRs, which focus on the most important problems to solve, or improvements to make, during specific periods of time. OKRs can vary a lot per organization, but you’ll see that organizations often have similar KPIs — regardless of size, geography, or industry. As a result, decades of experience with KPIs have developed useful standards. Standards that can easily be adopted.
Here are 6 Human Resources KPIs that every organization, including yours, should be tracking. (TIP: Here’s how you can set up these KPIs in your Perdoo account in just a few clicks).
Use these KPIs to make sure that all your HR processes run smoothly, and that you and your HR team become the best version of yourselves. Make better-informed decisions, improve performance, and tackle problems early on by using OKRs to help you improve your KPIs.
The HR function is often seen as a typical staff function. But it’s way more than an administrative silo that focuses purely on hiring and onboarding new team members, managing payroll, benefits, legal contracts, and compliance. You can turn your HR function into a cog that plays a pivotal role in the success of your business.
HR focus areas
Let’s first take a look at the four key areas that an HR team should focus on:
- Hiring and retention
- Employee engagement
- Performance management
- Diversity, Equity, and Inclusion (DEI)
We don’t want to end up with too many KPIs. As with all types of goals: less is more. But we do want to make sure all focus areas are covered. We want to make sure that our HR KPIs help us:
- Attract the right talent.
- Create an engaging employee experience.
- Establish a high-performance culture.
- Give employees the possibility to be their best at work.
- Track manager effectiveness and help managers become great leaders.
- Identify threats and opportunities for organizational growth.
- Align HR efforts to company strategy.
6 HR metrics that all HR teams should be tracking
This metric measures how your employees feel about your company. It’s based on the popular Net Promoter Score, which is a measurement of customer loyalty that was pioneered by Bain & Company.
eNPS simply asks “How likely are you to recommend our company as a workplace to a friend or colleague?”. Everyone who leaves a 9 or 10 is considered a Promoter. 7s and 8s are Passives. And everyone with a 6 or lower is a Detractor. eNPS is then calculated by deducting the % of Detractors from the % of Promoters: eNPS = %Promoters — %Detractors.
Employee Engagement Score
This metric measures how engaged your employees are, and how they feel at work. Perdoo’s upcoming Pulse survey is a simple yet effective tool to keep tabs on your employee’s pulse and measure their engagement on an ongoing basis. During each Check-in, Perdoo asks “How did you feel at work this week?”. Employees can leave a 1 (awful) to 5 (awesome) rating. The Employee Engagement Score is calculated by taking the average score of all Pulse surveys collected during a specific time period, which you can easily get from the Engagement Report.
Average Time to Hire
This metric measures the number of days between someone applying for an open position all the way to accepting the job offer and signing the contract. You then take the average for all closed positions.
Monitoring this helps you understand the efficiency of your recruiting process. It also helps managers in your business understand how long it takes on average to fill a new position that they create, which helps them with their planning.
Employee Turnover Rate
This metric measures the total number of workers who leave your company over a certain time period, which you then divide by the total number of employees in that period.
Be aware that employee turnover includes both voluntary and involuntary turnover. We recommend focusing on this more high-level number, instead of focusing (for example) purely on voluntary turnover. When the KPI is not performing well, you can drill deeper and investigate if the issue is with voluntary or involuntary turnover.
Check-ins help employees stay on top of the goals that they’re responsible for and help them reflect on their work and progress. They also form the basis of useful one-on-one meetings between managers and their direct reports — which should happen regularly and are essential to company success.
You want most, if not all, of your employees to Check-in at your company’s desired frequency (in Perdoo you can set this to Weekly, Every 2 weeks, or Monthly). You can then get your company’s Check-in Rate from your Engagement Report.
More and more companies realize the importance of Diversity, Equity, and Inclusion (DEI). The demographics of organizations vary a lot, so this metric needs to be tailored to the specific situation of your company. For example, at Perdoo we have more than 14 nationalities in our team, so it’s not a priority for each to create more diversity in terms of nationalities. However, we do have many more men than women in our team. That’s something we wish to change and therefore our HR team currently has a KPI that tracks the Female-to-Male Ratio.
Turning your HR metrics into KPIs
Your HR metrics need a desired target value in order to become a KPI. For example, our current Female-to-Male Ratio is 30%, but we want this to be at 50%. So we set up the KPI Female-to-Male Ratio in Perdoo and set the target to ‘50% or higher’. We now have a KPI.
To help you identify the right target values, it can be helpful to look at industry benchmarks. You can look up benchmarks online, speak to peers, or purchase Perdoo Coaching and let our consultants help you with this.
Once you’ve set up your HR KPIs, it’s time to evaluate their performance. Are your KPIs healthy (ie, are they hitting the desired target values)? If not, create an OKR to improve your KPI until all your KPIs are healthy.