Part 2: Measuring Org Effectiveness: Key People Metrics and KPIs
I hope you found last month’s metrics insightful and helpful as HR plays a more strategic role in the organization. Speaking the language of the business, demonstrating an understanding of business objectives, and measuring/tracking success are all crucial to building credibility and demonstrating HR’s value to the organization.
Here are 4 more metrics and KPIs that HR leaders should consider reporting on quarterly:
Metric: Measure the impact of training/employee development programs on employee performance and business results.
How to Calculate: Training ROI = Net Benefit of Training & EE Dev Programs / Training & Development Costs x 100
Why It Matters: Demonstrates the value of employee development initiatives and their contribution to the organization's growth.
Metric: Track the diversity of the workforce, including gender, ethnicity, and age, and monitor inclusion initiatives' effectiveness.
How to Calculate (a few common examples):
Gender Diversity: (Number of Females / Total Workforce) x 100
Ethnic or Racial Diversity: (Number of Employees from Underrepresented Ethnic and/or Racial Groups / Total Workforce) x 100
Age Diversity: (Number of Employees in Each Age Group / Total Workforce) x 100 for each age group
Hiring Diversity: (Number of Diverse Hires / Total Hires) x 100
Promotion Diversity: (Number of Diverse Promotions / Total Promotions) x 100
Pay Equity Metrics:
Gender Pay Gap: (Average Female Earnings / Average Male Earnings) x 100
Ethnic or Racial Pay Gap: (Average Earnings for Underrepresented Ethnic/Racial Group / Average Earnings for Majority Group) x 100
Diverse Employee Turnover Rate: (Number of Diverse Employee Departures / Average Number of Diverse Employees) x 100
Why It Matters: A diverse and inclusive workforce fosters creativity and innovation, which can lead to a competitive advantage.
Metric: The number of HR staff relative to the total number of employees.
How to Calculate: HR-to-Employee Ratio = (Number of HR Staff / Total Number of Employees) x 100
Why It Matters: This ratio can indicate the efficiency of HR operations. A balanced ratio ensures that HR can effectively support the workforce. (*A word of caution when using this metric…C-Suite leaders historically have under-invested in HR organizations, so benchmarks may be artificially lower than what is needed. There are economies of scale that kick in around 500+ employees, but organizations smaller than that should have higher HR-to-employee ratios.)
One HR professional to every 50-100 employees is a rough ballpark, but will really depend on many factors such as industry, number of geographic locations, the complexity of HR services/initiatives, technology/automation in place, and organizational culture.
Metric: Measure the readiness of internal talent for future leadership roles.
How to Calculate: Calculate the number of employees in leadership development programs or identified as potential successors for identified key positions. A simple way to do this is to track your internal fill/promotion ratio for those targeted roles versus external hires, as follows:
Internal Fills/Promotion Ratio (%) = (Number of Internal Fills or Promotions / Total Number of Hires) x 100
Why It Matters: A robust talent pipeline ensures that the organization is prepared for leadership transitions, preserves institutional knowledge, and reduces the need for external hires.
Demonstrating HR's Strategic Value
By regularly monitoring these HR metrics and KPIs, HR leaders can provide data-driven insights to senior management and demonstrate their department's strategic impact on the organization. These metrics not only help HR identify areas for improvement but also align HR strategies with the overall business objectives.
HR is no longer confined to administrative tasks and plays a crucial role in shaping an organization's success. To demonstrate their strategic value, HR leaders should measure and track key metrics and KPIs that showcase their contributions to employee satisfaction, workforce productivity, and the achievement of business goals.
Struggling with metrics and how to speak the language of your Executives? I’ve got you…
Apply for your complimentary Breakthrough Session with me and we’ll get you sorted so you make the impact you desire.
