How do you measure the effectiveness of your HR department and workforce? There are a variety of methods but the most effective way to do so is by means of measuring your HR analytics. They include a range of metrics that highlight employee performances, HR efficiency and the overall impact a company’s workforce has (whether it’s positive or negative).
HR analytics is also referred to as “people analytics”, “workforce analytics”, or “talent analytics”. The purpose of measuring this data is to help organizations analyze potential problems with its staff and to help generate solutions. It is becoming easier to measure these HR metrics thanks to technology and a greater understanding of their importance.
Yet still, there’s a lot of pressure on companies to make sense of the numbers. A deeper understanding of HR analytics can help organizations alleviate confusion.
The practice of using performance management metrics isn’t new. In fact, the first applications of HR analytics date back to the Industrial Revolution (which lasted from 1760-1913). That era ushered in unparalleled changes in the workplace and birthed a methodology that would facilitate the need to monitor the effectiveness of the workforce.
After WWII, there was an explosion in economic growth and corporate establishments, and companies began hiring full-time HR departments to keep up with the demand. The need to measure employee performance has become a priority ever since, and new technology involving AI, machine learning and data visualization tools have led to a wave of HR automation.
With that said, every HR manager at every organization needs to know how HR analytics fits into their business. More specifically, they need to know what metrics will reveal the data they need to make informed HR decisions, and how they should measure such data.
There are as many as 14 HR metrics that managers can look at, but for the purposes of this article, we will focus on five specific ones.
At the core of employee performance, is employee capability. In other words, for your employees to perform at expected levels, they must possess the baseline skills needed to complete their daily tasks. This is where employee capability metrics come into play. An analysis of capability metrics helps you identify the core competencies (skills and knowledge) that you want and need from your employees.
With the identification of these capabilities, you can then compare them with the abilities of your current talent to see if there are missing gaps. With that said, it’s important to keep in mind that capabilities go beyond hard skills and qualifications. They also include soft skills such as the ability to form relationships with others and possessing a high degree of emotional intelligence.
It’s important for managers to know how to acquire and manage talent as it is a key component for business growth. With that said, competency acquisition analytics is the process of assessing how well your business acquires the desired talent it needs.
This vital analysis begins by identifying the competencies your business needs for both the present and the future. Afterwards, the analysis requires an assessment of a company’s current available talent and gaps that may need to be filled. The competency acquisition analysis then continues with a look at how well managers are developing their competencies in-house. Conversely, this step may also entail monitoring how effective managers are at spotting recruiting candidates that possess the skills needed for everyday business functions.
You’re most likely familiar with employee churn – the overall turnover in a company’s staff as current employees leave and new ones arrive. An employee churn analysis involves the assessment of your organization’s turnover rate in an attempt to predict and reduce employee churn.
You can determine the overall churn rate in your organization through common KPIs such as employee satisfaction index, engagement levels and staff advocacy scores. Employee surveys, exit interviews and documented staff population versus new hires over time can give you a good indication of your employee churn rate.
Ultimately, what you want to look at the ratio of hired vs departing employees. It’s normal to have some employee turnover. However, when the ratio swings more to employees leaving your organization, then a serious issue needs your attention. With employee churn analytics, you can undercover patterns or problems that may lead to diminished employee satisfaction and performance.
One of the key metrics that comprise HR analytics is performance management metrics. Fortunately, they are some of the most measurable. With an employee performance analysis, the goal is to assess the performance of each individual employee. By uncovering data such as completion times, quality scores, customer reviews and other metrics, you will see which employees who perform well and who may need additional support.
The numbers behind performance management metrics can be compared to other KPIs measured above for various reasons. For example, you might have employees who present dichotomies in their performance – perhaps, strong in some aspects of their job, while struggling in others. If this is the case with several employees, this may indicate areas of opportunities for your organization to provide the necessary training.
Just because you train your employees, there’s no guarantee that they will perform to the best of their abilities. Differences in learning/working styles, the method of training and workplace environment can have varying effects on workers. Therefore, it is vital to test the efficacy of your training.
Measuring training effectiveness helps you uncover deficiencies in training well before those deficiencies appear in the form of employee underperformance. Ongoing feedback and coaching shortly after providing training can give hints on its effectiveness.
With the sheer amount of data your organization processes, it’s best to automate as much of it as possible. That’s why for the purpose of measuring people analytics, it’s helpful to resort to an HR automation tool that can streamline the analysis process.
For example, our SpriggHR software helps you keep track of procedures such as goal tracking and worker feedback, which, on their own, generate substantial amounts of data. It displays multiple data sets in one location, saving you time and effort when trying to understand the numbers behind your employee performance.
Such HR automation tools let you dedicate more resources towards the interventions and solutions needed to address dips in performance. Ultimately, this allows you to streamline your HR analytics process so that it doesn’t overshadow other vital business operations.