People Analytics: Which HR Metrics Matter the Most?
A greater emphasis is now being placed on the HR function to gather and use data more effectively to benefit the organisation.
While you may want to harness the power of data for your organisation, you may feel unsure of where to begin and what to measure. Gathering data is time consuming, and you want to ensure that you reap the biggest reward for this investment.
We’re here to tell you all about the HR metrics you should be tracking to really gain insight into your people, and how to take this to the next level.
The Importance of People Analytics
Understanding your people takes the guesswork out of management and employee relations. You don’t need to trust your gut feeling on how changes would impact employees; you have hard data to help you to forecast their reaction.
Data can be supplied at every level, so first-line managers, departmental managers, the C-suite, and board members can all use the key insights that are relevant to their level.
This is one of the main differentiators between operational HR practices and strategic HR practices. HR can have a real influence on the decision-making process using this data, benefitting the organisation as a whole.
You can read more about the importance of these metrics in our Future of HR series.
Net Promoter Score (NPS) has long been used by businesses to understand whether their customers would promote them to others. This statistic is the reason why so many customer satisfaction surveys question whether you would recommend a company to a friend.
This is seen as a valuable metric, as it measures how happy you were with the organisation and whether you would advertise on their behalf. Personal recommendations are incredibly powerful, as we place more stock in our friends’ experiences than an ad campaign or promotions from a company directly.
Employers have now put their own spin on this, creating Employee Net Promoter Score (eNPS) to measure if their employees would recommend their organisation to a friend. This is a key indicator of happiness within your organisation and can indicate issues within the current culture.
Using regular polls will show you the proportion of employees that would recommend working in your organisation to a friend. It’s essential that these polls are anonymous to gain real results.
The question of whether or not an employee would recommend the organisation to a friend should be answered with a 10-point scale. Those that answer with a 9 or a 10 are your promoters, 7 or 8 are passive and 6 or below is counted as a detractor.
Disregard the number of employees that are passive, then subtract the percentage of detractors from promoters to get your eNPS. This will give you a score from -100 to 100 and the higher this number is, the better the outcome.
This metric will be calculated and presented differently, depending on the area of the business in question. HR should work with line managers to create productivity KPIs which are relevant to their department. These could include:
- Number of orders processed
- Number of customer queries handled
- Average customer wait time
- Overtime hours
- Sales growth
- Tickets resolved
Metrics like these show outcomes of employee’s work and will generally be higher among employees that are highly engaged. Create a baseline average for the metrics that you deem appropriate, then monitor times that this goes above or below the average.
Tying the metrics to a wider context will show patterns and create action points to improve upon. This can be as simple as hiring additional members of staff when a shortfall of resources impacts productivity.
Conversely, you can combine these metrics to show that productivity dips when a clique of staff members are assigned to the same task, which may require further monitoring and action.
This also allows you to highlight and praise those that go above the average expected for their position. By replicating conditions that lead to better performance, you can boost the bottom line of the organisation.
Absences and Lost Time
Any sick days or absences will also impact on the bottom line of a business. They’ll have a knock-on effect to productivity and morale, so it’s best to monitor this lost time wisely. Actively managing this can reduce this impact, as you bring in temporary resources and create succession plans where required.
Long term leave can usually be negotiated and prepared for, as you may be aware of upcoming parental leave and sabbaticals before they are due to begin. These will still have a wider ripple effect, but with the right preparation this can be effectively managed.
Many short-term absences can be correlated to work-related stress and mental health issues. High absence rates in a department can indicate a wider issue, by solving this you could boost productivity and happiness among employees. Burnout will cause higher absence rates too, so balance productivity well to ensure that your employees aren't overworking themselves.
A high staff turnover can really impact a business, as lost productivity and hiring costs can mount over time. This can be indicative of a bigger issue in the organisation or within a single area of the business.
Working to understand why staff are leaving can be time consuming, but in the long run it can save resources. Conducting exit interviews can give you a glimpse into what’s causing your turnover rate, then you can make recommendations to improve this.
Not all employees within the business will understand the real cost of a high staff turnover; it’s up to HR to show them where this can be improved. To calculate the costs of your high staff turnover, you can use agency and recruitment costs, combined with the amount of lost productivity anticipated. The higher the employee is within the organisation, the higher the cost will be.
This gives you a grounding to advocate for better conditions and pay for staff, as it makes fiscal sense to retain them.
Exit interviews can reveal that your organisation is paying below market rates for staff, which is causing them to seek employment elsewhere. However, the cost of replacing these staff members regularly is higher than the cost of nominal salary increases.
Creating diverse teams benefits the organisation, with many organisations now defining diversity targets. In the HR function, it’s important to measure diversity and also create initiatives to reach future goals.
To measure diversity accurately, you should rely on your employees to self-report their identity. They are best placed to report on which categories they fall into and how they would like their data to be recorded.
Be aware of diversity statistics on an organisation-wide level, as well as within certain job roles. Many companies with diversity initiatives are criticised for improving diversity at lower levels, while the boardroom remains homogeneous.
Initiatives can be created from this data, as you work to understand areas that your organisation could improve their diversity support. Diversity should be more than just a box to tick for your organisation; it should be a real target that you focus on to improve the business.
Learning and Development Outcomes
Setting learning and development KPIs will also allow you to gain a sense of how your colleagues are improving over time. Feeding these goals into your succession planning will also give updates as to the progress of each employee and their suitability to take on new roles.
These can be set and monitored through regular reviews with the employee’s line manager. With this data, you can easily see which employees are engaged in their training and ready to take the next step.
You can also use this information to stay on top of compulsory training. In professions in which it’s a legal requirement to undertake training at set times, monitoring learning outcomes can alert you to any gaps.
Number and Nature of HR Complaints
Throughout the year, HR receive complaints and must undertake investigation where appropriate. While some of these may amount to nothing concrete, you should still take note of the key features of the complaint.
By doing so, you can pinpoint problem employees and procedures. This allows you to act to retrain and revaluate, ensuring that employees are happy within their role. In catastrophic cases, an unwillingness to act upon complaints has led to legal action against employers.
It’s essential for HR to take complaint seriously and look for patterns that may prove telling. This proactive attitude can steer the company away from legal issues and help employees to become engaged again.
Taking the Next Step with People Analytics
While these statistics will help you to peek into the heart of your organisation, there’s still more that you can do. Once you have a handle on the basics, you can create spreadsheets and charts that illustrate your point.
AI can analyse this data further, with more clarity than you would be able to gain manually. When working with larger and more complicated data sets, this can be faster and more efficient. Integrating AI and an HRIS can do all of the quantitative research for you, freeing up your time to conduct the qualitative research.
When you’re accustomed to and regularly using people analytics, you can forecast upcoming issues based on trends.
IBM have this down to an art, as they can predict with 95% accuracy which workers are planning to quit their job. Their AI uses people analytics to flag employees at risk of leaving, so managers can work to retain them. This has saved an estimated $300 million in retention costs.
In a similar fashion, you want to get to a stage where your data creates a return on investment. This could be a reduction in recruitment costs, improved productivity or protection from expensive legal fees. Thinking strategically and presenting this information well shows the value of this data to those outside of the HR function.
Think about inventive and effective ways that you can use data to your advantage. Employees are the driving force behind any organisation; the more insight you have into their thinking the better.
While these people analytics are important, this list is by no means exhaustive. Use these insights to kick off your new analytics strategy, but tailor them to include the data that will really help your organisation.
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