Important Key Performance Indicators(KPIs) for Strategic Human Resource(HR) management

Human resource is one of the important assets for any organization. Each and every organization require to review the performance of human resources with the help of measurable key performance indicators. Utilizing the talent of human resources is very important. In this article, we learn different measurable key performance indicators in human resources. If an organization wants to achieve human excellence follow the attached key performance indicators.

HR KPIs are divided into three parts in broader view as per attached below.

Employee satisfaction measures.

Turnover rate

The turnover rate basically measures how many employees leave your organization certain period of time. If you focused on more detail you individually calculate voluntary leave and involuntary leave of the employees. In general case chances the higher percentage of voluntary leave employees.

Turnover rate = (Numbers of employees leaving the organization/average number of employees in the organization) * 100.

Dismissal rate

The dismissal rate measures the number of employees terminated by the organization’s decision due to certain reasons.

Dismissal rate = (employees terminated by organization / avg. employees in the organization) * 100

Employee satisfaction

Employee satisfaction is basically measured based on employee feedback form filling it includes many criteria for employee satisfaction such as financial, work-life balance, flexible working hours, medical benefits, etc.

The average length of service

This KPI measures the average working cycle of each employee in the current organization if you require to bifurcate staff and workers or you can analyze combined also on yearly basis.

The first-year voluntary termination rate

This KPI indicates how new employees adopt the organizational system and set with the new environment. To measure this KPI with the number of candidates who leave the organization before one-year completion Vs the total candidate hired certain period of time.

First-year voluntary termination rate = Candidate leaves organization within one year of hire / total candidate hire period of the year.

Human resources operation

Absenteeism

Absenteeism measure of absent manpower against totality manpower. This KPI is very important for running an organization and many industries have faced major issues or project delays due to manpower absenteeism.

Absenteeism = (Absent manpower / total planned manpower) * 100

Overtime

Overtime is working more than normal working hours. This activity is planned or unplanned depending on organizational planning but its directly proportional to the absenteeism matrix. If absenteeism increases chances to increase overtime to fulfill the organizational requirements. Overtime measures on a monthly or weekly basis.

Average time for recruitment

To calculate the average time for recruitment calculate the gap between current employees leaving the organization Vs new employees joining the organization for the same position. Each and every organization of the human resource team maintain this KPI as minimum as possible to maintain organizational practices.

Average time for recruitment = new employees join the organization – current employees leave the organization for the same position

Average time to hire a candidate

Measure the average time for selecting a candidate for an open position. Measure this KPI on a quarterly and yearly basis.

Average time to hire candidate = Current employee leaves the organization – new employee selected for this position

Education and training

It measures the number of education and training sessions planned for employee’s certain period of time. In general case purpose to measure this KPI is for each and every organization plan to training sessions to boost the employee’s productivity and learn new concepts and technology.

Employee productivity

The organization is measure employee productivity with the help of KRA and KPIs each KRA and KPI is given the targeted points. The maximum points limit for KRA and KPI is 100 and productivity is calculated based on of 100 scores. The human resource department has a structural plan for employee review on a quarterly and yearly basis and reviews KRA and KPIs for targeted.

Employees working productivity = (KRA and KPIs Score) / 100 (Max. score of KRA and KPIs)

Retirement Rate

Measure the retirement rate KPI compare with the totality headcount. The ratio is measured in percentage on yearly basis.

Retirement Rate = Numbers of retired employees / avg. employee’s

Training Effectiveness

To measure training effectiveness with the help of feedback score. Developed a structural system for the training feedback form and derive the percentage score of training effectiveness.

Acceptance rate

To measure the acceptance rate with the help of a total number of job offers accepted by candidates out of the total offers provided by the organization. This KPI gives an overall idea of how the recruitment process is effective.

Acceptance Rate = Total job offer accepted by candidate / total offer given by the organization.

Salary competitiveness ratio

To measure the salary competitiveness ratio with the help of the average salary of the organization to the average salary offered by competitors or the average salary of competitors.

Salary competitiveness ratio = Average salary of organization / Average salary of competitors.  

Gender diversification

Measure the numbers of men, women, and transgender working in your organization on yearly basis.

Suggestion per employee

To measure this KPI developed a structural system for collecting employees’ suggestions for improving the business process.

Suggestion per employee = Total suggestion received per year / total number of employees per year.

HR-to-FTE ratio

The HR-to-FTE ratio measures the number of HR employees versus the total number of employees in the organization. This KPI provides the percentage of employees’ contribution to the human resource department.

HR-to-FTE ratio = (number of HR employees/numbers of total employees) * 100.

Human resources Financial

Cost per hire

This KPI measures the average cost for organizations paid to hire new employees. The major cost includes the advertisement of the interview, the cost of an interview conducted in colleges and other areas for hiring candidates, the cost of hiring recruitment consultancies, and many more. This KPI not considering fixed costs for recruiting.

Cost per hire = Total cost of recruitment / total number of employees recruited.

Cost for employee satisfaction

Cost of employee satisfaction includes quarterly or yearly basis organization spend costs on employee enjoyment and also the cost of arranging family and other functions for building strong relationships. It includes workers as well as staff.

Revenue per employee

revenue per employee is calculated based on the ratio of total revenue generation to total employees over a certain period of time. Top management regularly monitors this KPI for measuring the organizational performance on a quarterly or yearly basis.

Revenue per employee = Total revenue generation per year / Total employee per year

Training and education cost per employee = Total training cost per year / total employees.

Percentage of Cost of Workforce

To calculate the percentage cost of the workforce based on the total cost of the organization. Very important to measure these metrics on a quarterly and yearly basis and visibility of the percentage contribution of human resources and its trend in past and upcoming years.

Percentage cost of workforce = cost of workforce / total expenses of the organization

Cost of hiring talent

This KPI includes the fixed and variable costs for recruitment or hiring talent. Fixed cost includes payment for access to web portals and other sources. Variable cost includes the cost of the recruitment process.

Percentage cost of increment

To measure this KPI with the help of each year or half yearly how much percentage of increase employees and worker’s salary with respect to total salary. To measure KPI individually workers as well as staff.

Percentage cost of increment = ((total cost of with increment salary of employees – total cost of without increment salary of employees) / total cost of with increment salary of employees)) * 100