Ideas for measuring employee culture, compensation, performance, and more.
In the past decade, human resources (HR) and human capital have evolved from being solely service-oriented benefits management departments to more strategic organizational assets.
Managers seem to recognize that it is now (more than ever) vital to have the right team executing company strategy. Well-known organizations and enterprises from all over the world regularly discuss how important it is to hire and retain the right talent, and this ability is often regarded as one of the greatest predictors of organizational success. But how do you measure the success of the team?
While many organizations recognize this shift in thought, not all of them are correctly measuring success with updated HR key performance indicators (KPIs).
HR KPIs are strategic tools that can help you understand whether you’re accomplishing your HR objectives in a way that is in line with your strategy. In our opinion, managers need to be thinking about both traditional HR measures—like sick days, absenteeism, and employee satisfaction—alongside strategic human capital measures—like employee performance and the employee experience.
We've provided a quick summary of more than 50 human resources performance measure examples that you may want to consider implementing. Below the infographic, we've provided a detailed list with explanations of each KPI. Then, check out our tips below for making your HR metrics part of a Balanced Scorecard for your HR department.
Once your important metrics are defined, set targets for each. A target is a distinct number that represents what you’re trying to achieve; it acts as an indicator of performance. Aim high (but not so high as to be unrealistic) with your targets, and be sure to review them with your team to get feedback before putting them into action.
When setting these targets, it’s helpful to compare your HR KPI numbers to those of similar organizations—this is called benchmarking. Comparing your performance against that of best-in-class industry competitors is an excellent way to identify areas for improvement. By studying their approach and reevaluating your own, you can learn about best practices and how to implement them at your organization. Keep in mind that while benchmarking can be useful for target-setting, it should primarily be viewed as a tool to help you find ways to improve.
Once you’ve defined your human resources KPIs, it’s time to start implementing them by creating a Balanced Scorecard. A scorecard is a cluster of data that helps your leadership team critically analyze the effectiveness of your HR strategies in relation to developing a competitive advantage, improving skills, managing your culture, reducing costs, etc. It provides the means to monitor workforce indicators, analyze workforce statistics, diagnose issues, and calculate financial impacts.
Important note: You don’t need to use all of the above KPIs in your scorecard. Take time to identify which HR metrics will bring the most value to your organization and department.
Learn everything you need to know about Balanced Scorecards in this article.
An HR Balanced Scorecard is a tool to keep your staff focused on activities that not only support the department, but also the company’s overall goals.
Using one of the HR metric examples from above, minimizing employee turnover frequently appears on scorecards. When an HR department successfully lowers the turnover rate, it saves the company from the considerable expense of recruiting, interviewing, and training new employees. This clear outlining of KPIs in a scorecard makes it easy to see how short-term KPIs such as reducing turnover can “accrue” value, and are actually an important part of achieving the organization’s long-term financial goals.
The other primary benefit of a scorecard is that it demonstrates the strategic value of human resources to the leadership team. Since HR departments typically aren’t included in the strategic planning process, creating an HR scorecard is a way to expose the department’s contributions in concrete, clearly understood metrics at the executive level. Having an informed and invested leadership team has been proven to increase HR budgets and department support.
Once you’ve successfully aligned your human resources KPIs with the organization’s goals in a scorecard, you’ve still got work to do. Don’t forget to make these steps a routine part of your job:
Take time to consistently review your departmental scorecard to ensure it stays relevant and top of mind. My own ClearPoint team meets monthly to talk about where we might be underperforming; annually, we discuss possible metrics to change or remove. While it helps to have a set cadence for meetings, make sure your department’s lines of communication are always open. Things change, and HR team members—the ones who live those metrics every day—should be able to bring you feedback anytime.
Visuals are especially helpful for departmental meetings because they make it easy to see performance at a glance. Dashboards, for instance (like the one created below in ClearPoint), capture a wealth of KPI data and allow you to present it meaningfully to the group. Everyone can quickly see where they’re falling behind target, and you can focus the conversation primarily on the problem areas.
Make sure progress is aligned with the company’s strategic plan, and that it stays that way continuously. If ever organizational goals change, you may need to edit your own scorecard to maintain alignment.
It’s almost inevitable that your measures will change at some point, and it will benefit you to get ahead of this. KPIs should be reevaluated whenever you complete an objective, as well as when your initiatives change. You might also discover that another KPI is a better performance indicator than a metric you’re currently using, which should also trigger a switch.
The HR KPI dashboard would also be useful here, to help communicate your department’s contribution to the strategic goals. Don’t be afraid to share both positive and negative results with the group—your department’s efforts to be transparent will generate employee goodwill, even if outcomes are different than expected.
You now have more than 50 HR KPI examples and know how to put the metrics into play with a balanced scorecard. Your next step is to choose the KPIs that will bring the most value to your organization and create your scorecard.
At ClearPoint Strategy, we provide the tools you need to measure and enhance your HR performance. Our advanced KPI software allows you to seamlessly track, manage, and report on all your HR metrics.
Ready to transform your HR strategy? Book a demo with us today and discover how ClearPoint Strategy can help you implement and monitor effective HR KPIs.
KPIs are measures used to evaluate the success of an organization. KPIs can be quantitative or qualitative in nature. Qantitative KPIs include metrics such as sales revenue per employee, number of customers served by each call center agent, or revenue. Qualitative KPIs, on the other hand, may include customer satisfaction scores, quality ratings, or product reliability rates.
Organizations often use SMART criteria to create a good KPI. A SMART KPI is: Specific, Measurable, Attainable, Relevant, Time-bound.
KPIs are important because if you don't know how you're progressing in certain areasm you don't actually know where you're going as an organization. You have no insight into if you're making progress towards your strategic goals, or if you're headed in a direction you want. KPIs act as a 'pulse check' of your strategic plan.
What you include in your report depends heavily on your audience. There are, however, a few pieces of information every KPI report should include. It's important to show the linking goals of your KPIs, the KPI measure data and calculations, and visuals showcasing the data in an easy-to-digest format.
It's easy to convince yourself that you need to measure everything for your organization. Remember, though, that KPIs stand for key performance indicators. You want to only measure the most important and influential metrics. To bes identify the right KPIs, tie your measures back to your strategic goals. Make sure they relate to what you hope to achieve in your organization.
Tricia manages our implementation and onboarding team to ensure the success of ClearPoint customers.