Employees are an investment. With the help of these HR KPIs, you can successfully calculate exactly how much return you are getting on them.
Richard Branson, founder of The Virgin Group, once said “Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.” This underscores the importance of the employees to the success of any business. Inasmuch as the endgame of businesses is to serve the customers, you need to employ people to serve those customers. Your workforce determines how your customers are treated, which in turn determines the success of your business.
The COVID-19 pandemic has reminded us of how important it is to have a strong workforce. During the worldwide lockdown, companies relied on the ability of their workforce to innovate, create, and leverage technology in order to stay afloat.
In the same way, it is critical for businesses to hire the proper people and assign them responsibilities that are appropriate for their skill sets. It’s also crucial that they get the most from their employees. The utilization of data is one simple approach to accomplish this. What kind of data do you need? KPIs (Key Performance Indicators).
What are KPIs?
A KPI, or Key Performance Indicator, is a metric that you can use to assess how successfully your firm is reaching its objectives and goals. This isn’t to say that every metric you can track is a KPI; KPIs are only metrics that are relevant to your objectives and strategies. With the right set of metrics, you can create a high-performing workforce and measure employee productivity.
KPIs give teams:
- Goals to strive towards
- Milestones to track progress
- Insights to help everyone in the company make better decisions
Key performance indicators assist every element of the organization, from finance and HR to marketing and sales, move forward at a strategic level. With the era of the new normal upon us, the landscape of a lot of things is changing, including work.
Here are a few employee KPI examples to look out for in 2022.
Arguably one of the most important metrics, the productivity of any workforce is important. The success of the company rides on it. This HR KPI assesses your workforce’s efficiency; it examines how long it takes your staff to do their responsibilities and how well they perform them.
The average method for calculating employee productivity is to divide total revenues by the number of employees. Consider all of the factors that can affect your employees’ productivity levels while measuring this KPI. This includes the amount of time people spend at your organization, their performance, the number and quality of the products delivered, and more.
Although this comes off as a manufacturing-oriented strategy, it can be applied to other industries as well. The data you get will aid you in developing strong future office policies and also help adjust redundant methods.
According to studies, only 15% of employees engage in the workplace, and it’s no news that uninterested or unmotivated employees are more likely to call in sick or take time off.
This is why you have to measure this KPI accurately and regularly. Absenteeism rates directly affect employee productivity. When absenteeism rates are too high, it reduces overall productivity, affects company schedules, and is just generally bad for business. To calculate the rate of absenteeism, consider how many hours your employees work on average. The outcomes will represent your employees’ degree of motivation and commitment to their jobs.
If you’ve noticed that your absenteeism rate has been higher than usual in recent months, determine the cause, implement appropriate measures, and correct the problem. At a time when countless workers are becoming increasingly disinterested in work and life, one sure way of reducing employee absenteeism rates is by hiring employees who are self-motivated and are interested in what your company does. Employees who connect with the vision and mission of the company are more likely to not be absent.
Cost per hire
Hiring the right workers at the best possible cost is extremely important to the success of any company. While you want to get the best out of your workforce, you also want to make sure that your workforce is capable of producing the best.
This KPI primarily calculates the amount of money the organization has put into each employee. These costs add up quickly in a company’s budget, which is a good reason to treat this KPI seriously. “Cost Per Hire” covers the expense of advertising the post, reviewing and selecting candidates, performing evaluations, and everything else.
Beyond salaries and all the perks that come with the job, you still need to measure how satisfied your employees are. This is especially important if you want to keep your best hands from being poached by competitors. Hence the inevitability of this KPI.
To do this, you need to take regular employee satisfaction surveys. If anyone raises concerns, address those potential issues promptly and wisely. Remember that you’ll need a team to help you reach your goals, and only satisfied team members can give their all.
Voluntary attrition or turnover rate
Turnover Rate (Voluntary) is a metric that assesses a company’s ability to attract, develop, and retain high-quality employees over time. Any organization that has a high rate of voluntary separations should be concerned, as these departures may point to a deep organizational or industry-related problem. Voluntary separations may be the result of concerns with the company’s work environment, poor benefits or pay packages, and/or frequent disagreements with management. While some turnover is unavoidable, use exit interviews and other comparable approaches to identify what, if anything, both parties could have done differently to avert the breakup.
Calculate this KPI using 2 values:
1. The total number of employees who left the company voluntarily during the measurement period
2. The average number of company-wide employees working for the company during the same period
Voluntary separations include any incident in which an employee voluntarily resigned, retired, or left their employment. For this calculation, do not include forced terminations or layoffs.
Why KPIs are necessary
Getting the best out of your workforce is integral to the success of your organization. To do this KPIs are absolutely necessary. These KPIs can provide you with useful information that can help you make better decisions and solve problems. The era of the new normal is upon us; to level up your organization needs all the help it can get. Employee KPIs are one more tool in your HR bag.