HR Metrics
More and more organizations are collecting data about employees and analyzing the data in hopes to make better employee-related decisions.
HR metrics and the use of balanced scorecards and other performance measurement systems provide the decision-making capacity to influence business strategy, which in turn transforms HR into strategic partners with the business.
The Society for Human Resource Management (SHRM) has identified key human capital measurements that are critical to evaluating HR performance:
Revenue Factor:
Revenue/Total Full-Time Employees
Human Capital Value Added:
(Revenue– Operating Expense – Compensation & Benefit Cost)/
Compensation & Benefit Cost
Total Compensation Revenue Ratio:
Compensation & Benefit Cost/Revenue
Labor Cost Revenue Ratio:
(Compensation & Benefit Cost + Other Personnel Cost)/Revenue
Training Investment Factor:
Total Training Cost/Headcount
Cost per Hire:
(Advertising + Agency Fees + Recruiter’s Salary/Benefits + Relocation + Other Expenses)/
Operating Expenses
Health Care Costs per Employee:
Total Health Care Costs/Total Employees
Turnover Costs:
Termination Costs + Hiring Costs + Training Costs + Other Costs
These measurements then can be compared to the same organization’s past performance as well as to the performance of other companies.
HR professionals sometimes also track:
• How satisfied are employees with their jobs?
• How satisfied are employees with their supervisors?
• What is the time to fill job openings? (the period from job requisition approval to new hire start date)
• What is the length of employment (by job title, department)? (from employment start date to employment end date)
• What is the number of days the positions were vacant (vacant period)?
• What is the new hire performance level? (average performance appraisal of new hires, compared to previous period)
• What is the manager satisfaction level (survey of hiring managers, compared to previous period)
• What is the turnover rate of new hires (during a specified period)?
• What is the financial impact of bad hires? (comparing turnover cost and cost per hire)
• What is the preventable turnover? (the reasons the employee left and what measures may be taken to prevent it)
• What Is the diversity turnover? (turnover rate in professional, managerial, and technical positions)
• Learning and Growing Opportunities (percentage of employees who are satisfied with the learning and growth opportunities in the organization)
• On-the job learning (percentage of employees who are satisfied with on-the-job learning, projects assignments for growth and development and job rotation)
The above metrics will help managers make better decisions concerning:
• types of training, for which segments of the workforce, will yield the best results
• actions to take to help reduce absenteeism
• actions to take to reduce turnover and what retention efforts to implement
• optimal mix of reward programs to boost employee engagement to help drive stronger financial performance
• Opportunities for New Hires (percentage of employees who report training opportunities among the top three reasons they accepted the job)

Assignment
Discuss the top five metrics you think are the most critical to an organization’s HR function and defend why you have selected them. Present an example of each (applying numbers and explaining what they represent. Explain what value each metric is to HR and provide examples of decisions that might be made based on the analysis. Be sure to include some graphics in your presentation (charts, tables, etc.). Your assignment may be either a written paper (3 pages).