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Many centuries ago, Galileo Galilei said: “Measure what can be measured, and make measurable what cannot be measured”. This sentence could seem like a premonition of the current importance of data analysis.
Currently, measuring capability has become a crucial point for every company and its departments. There is no exception. By measuring working actions we are able to draw conclusions, to learn and to improve our ability to make correct decisions.
Every single HR department should think about which indicators are more useful for them. We strongly recommend you to simplify the number of metrics: the best thing to do is to choose a small number of them, but to make sure that they provide us with useful information to help us decide about future actions.
Here we will suggest you some useful metrics that will help you assessing the main HR functions:
A common mistake in reviewing the salaries is to focus on metrics that link economic incentives with productivity.
This is not a good practice because this kind of indicators simplify too much the reality. People emotionally engaged with the company are more productive when a series of conditions apply; conditions that increase their commitment to the business.
Salary is just one more incentive, but contrary to common belief, it is not even the main motivational factor.
We propose you two metrics to draw conclusions about your salary system:
1) Percentage of wages out of market
By comparing your salaries with what is being offered in the market you will get an insight about your capacity to attract and retain talent.
It is important to take into account that the most productive people are more selective when choosing employment. So, if our salaries are noticeable lower, we will have huge problems for recruiting the best candidates.
A company with the ambition of becoming a leader in talent attraction at least has to establish its salaries in the top 75 percentile of the market. Meaning that the wage being offer for a particular position should be higher than what is being paid by the 75% of the companies from the same industry.
If you are wondering how to make a salary comparison, we recommend the following link, where you will find useful information about salaries.
2) Percentage of wages that do not meet internal equity criteria
A perception that there is an important pay gap within the firm, normally has a bad impact in the workplace and can be seed of conflicts.
This is the reason why it is important for companies to establish a maximum salary difference criteria between employees within the same level. It is recommended to use metrics to monitor that the criteria are being followed.
Also, it is convenient to make sure that there is no gender pay gap. Unfortunately, still nowadays many women get paid less money for doing the same job than men. It is an unfair situation that also can damage the company’s image.
Commitment, motivation and work environment
"Commitment", like "motivation" or "work environment" are concepts difficult to define. However, they are critical for every company performance. So we need to find appropriate KPIs to evaluate them. We propose you the following indicators:
1) Exit survey’s results
By collecting the opinions of those employees who leave the organization, it is possible to detect measures for improving talent retention.
2) Employee’s suggestions
Transmission of ideas is a signal of commitment. It is not only interesting to know the number of proposals but also to be aware of how many of them are accepted and implemented.
Data provided by this indicator reflects the organizational culture and the company’s innovation level.
3) Employee commitment index based on surveys
This indicator shows the employees' identification with the company’s values and goals. Also, it allows us to find out what drives the current situation, and helps us on finding possible solutions.
Training and talent development
Companies should help their employees to perform at their highest level. For that purpose, usually some training it is needed.
In addition, the company can develop internal talent through professional promotions. By doing this, businesses make the most of the talent they already have, and avoid the loss of the best employees due to a lack of opportunities.
For measuring the efforts in talent development, we suggest you the following indicators:
1) Percentage of workers who believe that promotions are based on the merit
It is key that the workforce has the perception that internal promotions are based solely on their own merits. This works as an incentive and contributes to the retention of talent.
2) Rate of employees who believe they have adequate support to achieve the objectives
With this type of information we can detect structural problems and evaluate the need to invest in training. Employees should have an option to express the causes that motivate their belief. Thus, we will be able to work out what actions will help us to improve the situation.
3) Improvement percentage of training on results
All the formative actions thave some specific objective. For example, to reduce time devoted to a task, to reduce costs, to reduce the number of accidents at work, etc.
It is a good initiative to measure the training programs' effectiveness by their impact on the goals. This allows us to determine its utility and to decide whether it is necessary to make changes.
Recruitment and selection
There are many metrics that can shed light on our selection’s processes performance. Here we will show you three key metrics that provide all the information needed for a more efficient recruitment:
1) Cost per hire
One of the applications of this indicator is that it allows us to evaluate the convenience of outsourcing our selection processes. To do this, we must make a complete measurement of all internal recruitment costs.
It is not advisable to evaluate this metric in isolation. If we do so, we take the risk of considering the recruitment as an expense; when actually it is an investment. The best thing to do is to look at how the evolution of cost per hire affects the following KPI: the quality of the new hires.
2) Quality of new hires
It is a metric that represents the value a new employee adds to the company's goals and performance. It is a subjective concept; so the company has to define what characteristics represent the quality and which indicators best reflect it.
3) Hiring time
It is the period that elapses from the detection of a vacancy until the selected candidate starts working in the company. Its analysis allows us to identify bottlenecks in selection processes.
It is important not to jump to conclusions in the results of this metric. This indicator has an influence in the cost and quality of hiring, so its evolution must be analyzed along with the previous two metrics.
Lastly, remember that a good metric system is your best ally to improve on all the functions related to talent management.
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