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4 KPIs Every HR Team Must Have

As the hustle and bustle of your work environment bring you from week to week, it can be difficult to oversee the impact your day to day has on the bigger picture. That’s why KPI’s are the foundation of company knowledge. For something that is all about metrics and tracking; however, when it comes to the world of key performance indicators, it’s a jungle out there. There is an abundance to choose from and monitor depending on how specific you wish you get and what you want to get out of them.

You can apply cultural KPIs like the number of your people that understand your company’s culture or the track the amount of holiday days used. For example, compensation KPI’s could include the cost of health care per person. Employment KPI’s might look at retirement rate and the performance KPIs could consist of the payroll process cycle time. We took some time to pick out four KPI’s we believe should be in every HR action plan.

1. People Productivity

This is an excellent indicator of not just the productivity levels of your people, but it gives an insight into engagement levels. In turn, this gives you a better look at how satisfied your people are in their work. The most common way to track this is to divide the company’s total revenue, by the number of people with the higher the ratio, the better. It’s also worth noting the elements that impact productivity for further analysis and understanding — for example, looking at the amount of time your people spend working and the quality of the product or service. There are significant benefits to be found in tracking the effectiveness of your people and factors hindering their progress.

2. The Rate of Absenteeism

Engagement levels are vital to keep track of and maintain. One of the ways to monitor this is by measuring the absenteeism rate, which can come in many forms from sick to unprecedented leave. The formula for this is to take the number of days absent divide it by the time period it’s over, multiply it by 100, and you will get the percentage over that timeframe. Sometimes there can unexpectedly be a high number of people absent for genuine reasons as life is life, and sometimes it’s like that. If you find it relates to a specific department or a particular person, it might suggest conflict or grievances that need addressing. For example, someone might require extra support in their role. Any kind of pattern that would suggest something isn’t right, that’s what this KPI is for — keeping your people engaged and ensuring your efforts are consistent in doing so.

3. Pay Parity

Diversity, equality and inclusion have a crucial role in company discourse and action plans. To assess how your company aligns with pay parity, you must examine whether people at the same levels are earning the same. But it’s not just wages; you must then evaluate whether people are receiving equally compensation, rewards and promotions in line with one another. This is about spotting whether bias exists in your company and intervening if this is the case. There is no question that you should be providing equal opportunities for all of your people, and in turn, this will create a culture of transparency, trust and confidence.

4. Average Turnover Rate

Your people will inevitably leave your company even if it’s not until retirement. But obviously, you want to keep the right people in your company for as long as possible. A great way to oversee the effectiveness of your company’s retention efforts is by calculating the average turnover rate. To calculate this, divide the number of people who left by the average number in a specific timeframe. Multiply this by 100, and you have the average number of people who left in that period. Understandably, we want to see a low figure in this area. Keeping track of this helps you better prepare for the expected retention time of your people. It also helps identify if there are issues with your retention methods so you can take action to rectify them. Another way to approach this is by looking at the number of stay interviews conducted giving you knowledge about what’s going well and why people stay with your company.

Deciding on your HR KPI’s is one thing, but implementing them is another. Selecting the right metrics for your business and your people is vital. KPI’s deepen your knowledge of your people’s engagement and productivity levels, which is invaluable. Not only that, they should change as your company does. They must always align with your business mission and values. KPI’s put you in a better position to provide the right support for your people keeping everyone contributing to your company’s community.


If you would like to know how Frankli can help you with your HR KPI’s, get in touch with us today.


(Cover image extract by Unitonevector – Freepik.com)

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