Most HR metrics present a tactical—rather than a strategic—picture of employee management in an organisation. This makes them pointless for CEOs. As a CEO, you cannot afford to spend precious time trying to uncover hidden insights from routine HR metrics. What you need is access to a few high-impact data sets that will reveal key insights into your HR programme.
If you are a CEO, ask your HR manager to identify a set of key metrics that could help you view things from a strategic perspective. Below we list six important metrics that will definitely be of interest to you. Use them to discover strategic information about your HR operations and improve employee-related decision-making to help your business grow.
1. Workplace Productivity
Workplace productivity is a useful indicator of the overall success of your HR policies. It is calculated by dividing the total value of the goods and services produced, by the total number of manhours used to generate that output. So, if you produce goods and services worth AED 100,000, and take 500 manhours to produce them, your workplace productivity would be 100,000/500, or AED 200.
The metric can also be modified to calculate productivity per employee by dividing the total output by the total number of employees. The figures can be supplemented by profit per employee, salary increase vs revenue increase, and similar metrics to present comprehensive productivity data to the CEO.
2. Performance Management Metrics
Besides workplace productivity, performance management data can be instrumental in helping CEOs assess the success or failure of their HR initiatives. The following metrics, in particular, are useful in evaluating the quality of employee output at a macro level:
- Average rating
- Problem employee rate
- Rehab and termination rates for problem employees
- Average cost to terminate
Tracking performance metrics enables you to assess the quality of work emanating from your workforce. It also enables you to improve business operations by aligning your employees with your business goals.
3. Employee Engagement
The subjective nature of employee engagement calls for evaluation methods that rely less on numbers, and more on opinion, to capture the mood of the organisation. Some of the common methods employed by HR departments to calculate this metric include:
- Pulse surveys
- One-on-one meetings
- Retention and exit interviews
- Employee net promoter scores
Employee engagement is a key factor influencing workplace productivity and therefore the wellbeing of the company. Engaged employees bring multiple benefits to the business including better productivity rates, improved work quality, and greater customer satisfaction, with all these leading to higher profitability.
4. Turnover in Key Jobs Weighted by Performance
The resignation of any employee is always bad news, but when a top performer quits an organisation, the blowback can be especially nasty. This metric can help organisations curtail such losses by helping them quantify the damage.
To arrive at this metric, ask your HR manager to zero in on the key jobs, then calculate the number of people who voluntarily quit those jobs. Add a weightage to each employee depending on their performance. Once that’s done, instruct your HR manager to sit with the finance team to devise a way to calculate its monetary impact.
5. Leading Termination Reason
Besides key departures, it is also important for CEOs to know why their employees are leaving. Identifying the leading reason for termination could help you understand whether there are structural HR problems in the company.
Include both voluntary and involuntary terminations while calculating the metric. If the leading reason for termination is involuntary, is it because there are loopholes in the recruitment process? And if it is voluntary, what are other companies offering its employees which your company is not? Drill down to the specifics to understand the key reasons behind the mass of your resignations. The exit interview is an excellent way to gather the information you need because departing employees are more likely to be frank about their experience in the company.
Putting the Focus Back on HR
There is a tendency among CEOs to ignore the requirements of HR as it seen as a cost centre. Instead, taking on risk, leveraging technology, managing innovation etc. take up more of the mindspace of CEOs because they share a direct link to growth. Yet, the fact remains that companies which prioritise the needs of their employees are also the ones that show robust growth and profitability. The above metrics can help CEOs put the focus back on HR without wasting their time on non-essential data.
If you are dissatisfied with the data after taking a look at them, it could be time to revamp your HR policies. You could also consider outsourcing your HR operations to improve the quality of recruitment and employee management while keeping costs under control.
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