The HR department is an all-encompassing function that covers both processes and people and spans the entire spectrum of the company’s operations. It is an integral part of any organization carrying out vital duties and tasks. While we have heard the use of KPIs majorly in marketing and sales, the HR department is also now leveraging the effectiveness of KPIs and performance management to monitor and manage tasks.
Human resources KPIs are common HR functions that you can track and measure over a period of time to get actionable insights. They correctly reflect the company’s overall performance, department, and individual performance, viz-a-viz their goals and targets. KPIs should be part of your ongoing and future strategies and not just standalone metrics that have no relation to larger organizational goals. Without knowing or setting specific KPIs, work is generally directionless, and methods that are not aligned with the organization’s purpose often end up meaningless.
KPIs should have 4 defining characteristics:
- Should be concrete and have specific goals.
- It should be measurable.
- Goals should be reachable and realistic.
- KPIs should be relevant to organizational and individual goals.
Establishing solid HR KPIs is essential to the company’s growth and management and is also indispensable to meeting the key objectives of the HR department. While the KPIs will depend based on your larger organizational goals, there are a few metrics that remain constant for any HR department to thrive.
- Retaining top talent
Attrition is a very tricky subject and is especially difficult when it comes to the top talent of the organization. It is also more costly to hire new talent than it is to retain existing employees. It can be disastrous if your top talent walks out armed with the right knowledge and skills and starts working for your competitor. An index of high staff turnover implies high costs for the employer. Tracking and improving the employee turnover rate is highly important before your best talent starts slipping out. It takes a lot of time and effort to train employees in a particular job role, align them with company values, and leveraging their skills to generate profits for the organization. If a trained and experienced employee leaves the organization, it reflects poorly upon the company.
- Recruitment
Recruitment is one of the key functions of the HR department. The average time taken between upskilling existing staff or recruiting new workers is important to measure. Talent acquisition and recruitment are costly affairs, so it’s important to keep the time to hire down. To make the process effective, it is important to streamline the entire candidate pipeline, uncomplicate the process and identify the bottlenecks. If the time to hire is more, potential and skilled employees will likely slip by and go ahead with other employers.
- Employee productivity
To run your business successfully, your employees must perform optimally to the best of their abilities. HR plays a pivotal role to track and manage employee productivity and performance. It analyzes how long it takes for the employee to accomplish set tasks according to their roles and functions. It is a crucial tool to understand the productivity standards of each employee basis of which appraisal process can be set up. It refers to the time spent on accomplishing target tasks, quality of the task, and overall performance. The process is also effective in identifying bottlenecks that hinder growth and improvement. Set specific, measurable, attainable, realistic, and timely goals to improve the company and individual performance.
- Employee satisfaction
Poor employee satisfaction will lead to unproductive and dissatisfied individuals, finally affecting the bottom line. Employee satisfaction is much more than just financial benefits and perks. It’s about providing a healthy work-life balance, facilities, and benefits, valuing employee feedback, giving them a chance to grow and expand their skills, aiding in skill development, providing flexible working options, among many other auxiliary factors. HR should carry out employee satisfaction surveys, to be conducted regularly to ensure all employee needs are fulfilled and any issues or concerns they have are duly addressed.
- Absenteeism
Regular absenteeism without any valid reason can have a significant impact on the operations of your organization. While other people need to cover for the work of the absentee, it might lead to missed deadlines and grumpy employees. Efficient workforce planning can reduce disruption and ensure a cohesively running workforce. Depending on the average value of the worked hours, the impact of absenteeism on the company’s costs can be quantified. Create a solid absence tracking and attendance management policy to specify things like the number of vacation days and work-from-home days each employee has access to, informing managers of staff absence, etc. Also, categorize different types of absence to get a clear picture of employee’s activity.
- Training
Employee training is for boosting productivity and developing skills that are essential for the job role of an employee. It is designed to increase employee knowledge, keep them updated with modern technologies and practices, that in turn profits the organization. A skilled and trained employee is a key asset to any organization. Providing learning and development opportunities increases staff morale, plugs skill gaps, and keeps the organization competitive and knowledge-driven. Identifying and providing the right training to the right employee is essential to ensure maximum efficiency. To gauge the effectiveness of training programs, ask for feedback from those who attended or participated in the program. This will help in designing more relevant training sessions.
The HR department is a key functioning component of any thriving organization. The department has myriad responsibilities that directly affect the functioning of the company. The KPIs have to be decided along with the relevant departments and will differ from one organization to the other. But the fact stands that these metrics govern the performance of the HR team and how it contributes to the larger scheme of things.
About Paylite HRMS
Paylite® Human Resource Management Software is an end-to-end HRMS system to meet the ever-growing needs of modern-day workplaces. It has helped companies worldwide in increasing productivity by replacing age-old legacy systems. To adopt Paylite HR management software for your business, Book a Demo here: https://www.paylitehr.com/request-demo.html