When most people think of KPIs (Key Performance Indicators) they think of economics or production. While KPIs can be used in these areas it is also a valuable asset in Human Resources. KPIs is a term for a control mechanism that can help an organization or a department assess the progress on achieving their goals. You can read more on KPIs here. KPIs thus provide information about how the organization or department performs in relation to its goals. Using KPIs in HR matters because you need to be able to measure on something to make sure you are strategic in your HR. Before setting your goals and KPIs for HR, make sure you agree with the guidelines to setting SMART goals and the basics of KPIs.
We are offering 6 options, but the choices are endless. We would like to say however that a practical rule of thump to keep is to keep the number of KPIs sparse. Focus on the essentials and leave the rest out. Doing this makes it much easier to focus on the important KPIs.
Below are our examples of how to use KPIs in HR; Diversity, Employee turnover, Salary competitiveness, Absentees, Accidents in the workplace and Employee satisfaction.
This KPI will keep track of how satisfied the employees are working in the orginasation. This is a key metric underlying talent retention. Using a company-wide survey can be helpful in gauging employee happiness. In this case you should take care which data to use, since this is a value, that is not originally quantitative, but has been made so.
These numbers could be averaged or the amount of low numbers compared to the amount of high numbers.
You can track these employee satisfaction metrics over time for meaningful trends if your sample size is high enough.
An example could be a company that has set a goal to minimize the number of workplace accidents. This could be shown as a KPI over accidents per year.
Based on the average value of the hour worked the impact of absenteeism in the company’s costs can be quantified. A increase or decrease in this KPI might be interpreted in connection to other circumstances in the organisation or environment.
A way to calculate this might be:
(Total number of lost workdays due to absence) / (Number of available workdays in an organization)
To determine your employee turnover rate, take the number of employees who have departed the company and divide it by the average number of employees.
If you have a high employee turnover rate, spend some time examining your workplace culture, employment packages, and work environment.
An example could be a company that has set a goal to improve their gender ratio. This company decides to measure the total amount of women hired in a certain position compared to the amount of men hired in the same position.
Using comparative KPIs the company finds out they have 75% men hired and only 25% women in the same position.
The company sets the strategic goal to increase this number by 2% over the next two years. This is regularly consulted on.
This KPI will keep track of competitiveness of the salary compared to competitors. This is an important factor in employee satisfaction and in retaining the workforce.
The KPI for this can be determined by dividing the average company salary by the average salary offered from competitors or by the rest of your industry.