Without tracking the results of each HR initiative your company implements, it's difficult to determine which initiatives have merit and which are not performing up to your expectations. Several HR metrics make it possible to see how well you're doing in terms of hiring, training, and compensating employees. Using the right HR metrics will also help you tweak HR programs so that they produce better results in the long run. Here are some of the HR metrics you must know for 2014.
There are several recruiting metrics to pay attention to if you want to hire and retain the best employees. Calculate your ninety-day turnover rate to see how many employees leave the company within their first ninety days of employment. The formula for this metric is the total number of terminations in a ninety-day period divided by your headcount for the same period. If you had five terminations and a headcount of 100, your ninety-day turnover rate would be 5 percent. Monitoring this rate can help you determine if there's anything you can do to improve morale and prevent employees from leaving the company within their first few months of employment.
Cost per hire is one of the most important recruiting metrics because it tells you how much money you're spending to find the right employees to fill open positions. You determine your cost per hire by dividing your total hiring expenses for the year by the number of new hires. If you had hiring costs of $20,000 and 10 new hires, your cost per hire would be $2,000. Costs included when calculating this metric include advertising costs, recruitment-related travel costs, and the cost of attending job fairs. You must also consider the internal costs of hiring, such as the salaries of people on your recruitment team. Using this HR metric will help you determine if you need to reduce recruiting costs by implementing new initiatives.
Many HR metrics relate to recruiting, but there are also metrics available to help you determine if your compensation, benefits, safety, and labor relations programs are yielding positive results. Your benefits cost factor, which is calculated by dividing the total cost of all benefits by the number of employees you have, will help you determine if you need to cut costs. Determining the average compensation paid to each full-time-equivalent employee makes it possible to determine if your salaries are competitive for your industry. This metric is calculated by dividing total compensation costs by the number of FTEs employed by your company.
Using HR metrics has several benefits for employers. Many metrics will help you determine if your HR costs are on par with those of other companies in your industry. These metrics will tell you if you're within your budget or if you need to cut costs. Some metrics will help you determine if your compensation and benefits packages are attractive enough to convince talented people to join your company. Used properly, HR metrics will give you a wealth of information you can use to improve company HR initiatives.
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