10 Key Performance Indicators for Human Resources

While KPI’s are often abundant with transactional functions like procurement and manufacturing, applying measures to other areas of the business can sometimes be a struggle. Human Resources can be one of those troublesome areas but the benefits of utilizing KPI’s can usually outweigh the implementation struggles.

KPI’s are a vital tool in the weapon of continuous improvement
You can’t manage what you don’t know. KPI’s help companies measure their actual performance against their business objectives/targets.

KPI’s look at a measurable aspect of a process and calculate a performance level. This can not only be used for powering reviews (i.e. we achieve 40% against a target of 80%) but can be used in benchmarking, strategy setting, financial reviews etc.

Why Human Resources?

HR is usually one of the costliest areas within a business. Look at the costs of salary, recruitment costs, training as an example. The function drives significant expenditure which if unmeasured results in an inability to ascertain the return on investment.

Also, HR is not divorced from the requirement to prove that is performing both efficiently and effectively and needs to demonstrate that’s its achieving results that help meet the organizational goals.

10 example HR KPI’s

So given the importance described above what KPI’s should you choose?

As a starter for ten, you should consider your business goals and strategies and how your HR policies feed into them. While there are a plethora of measures out there it’s pointless measuring a business attribute that is not important to your business strategy.
Below are 10 examples of metrics that you could employ.

1/ Lead time to recruit
This measure looks at the length it takes to recruit an employee against a target lead time.

2/ Training hours per employee per year
This metric looks at the amount of training across the organization divided by headcount.

3/ Staff retention/% of leavers
This metric measures the staff retention rate.

4/ Cost of hire vs target cost of hire
Recruitment can be one of the key cost drivers within a business this measure looks at the total cost divided by the number of people recruited in a given period to drive a cost of hire.

5/ HR cost (insource vs outsource)
Human resources are one of the key areas within a business that is often supported by outsourced agencies. This metric looks at the cost of Human resources analyzing % of insource/outsource cost.

6/Quality of hire (often around quality of individual at 6 month stage)
This metric looks at the Quality of recruitment. Usually, there are standards that a company aspires for its employees to meet. This is often scored as part of a performance development review. These can be used to feedback performance on new starters to measure the quality of the recruitment process (i.e. did our new starters hit the standards we expected?)

7/ Lead time to develop competency
Aligned to number 6 is the Lead time it takes new starters to achieve the acceptable standards. Note this requires reviews to be established (so we can capture quantifiable data).

8/ Staff engagement
Measuring engagement can be challenging. It’s one of those more nefarious subjects. However, there are methods out there. Engagement is often a mix of things like Recognition, feedback, communication, job satisfaction. However engagement can be crucial, it can if left as underperforming contribute to poor staff retention.

9/ Workforce cost
Typically this metric will measure staff cost vs a budget but it could also include things like outsources costs vs internal cost, overtime vs standard hrs cost and various other related attributes.

10/ Return on Investment
Again, this metric may vary from one company to another however in measuring the return on investment can be a key identifier in reviewing if your HR function is delivery against its strategy.

So there is our 10 HR Metric examples. Have some thoughts on the above or want to contribute your own ideas? Feel free to use our comments section below.