Understanding Basic HR Metrics

HR professionals and leaders need to understand the data they collect and how to make data-based decisions to drive productivity and success.  A key component of understanding data is visualizing and analyzing data through the use of metrics.  Using HR metrics quantify the impact and measure the successes of human resource processes and systems.  It is important that the data used is consistently collected, accurate, trustworthy, reliable, and cost-effective.  Human resource managers should use HR metrics to solve organizational problems, or to find and analyze organization issues.  In this article, we will look a few HR metrics every HR professional needs to look at to make better data-driven decisions. 

ROI: Return on Investment

ROI or return on investment is something HR professionals need to consider not just upper leadership.  The return of investment needs to be understood when launching new programs or making decisions on current programs.  Some returns of investment might not be obvious, or a bit intangible in terms of direct monetary gains.  Here is a basic formula for ROI:

However, there will be issues in assessing the current value of the investment in dollar amounts a better way to calculate this for HR professionals are in terms of “social impact”.  Here is a formula for Social Returns on Investment or SROI:

The key to understanding SROI is understanding how to quantify the Social Impact Value in monetary terms or time invested (also monetary terms).  This requires assigning monetary values to different activities vs normal costs of activities.  

Training and Development: Participation Rates

The training participation rate is a metric used to measure successful training initiatives and programs.  The participation rate is basically the percentage of employees who participated in a company paid training program.  Here is the basic formula:

This is a metric to monitor to determine improvements in training initiatives were effective or ineffective.  This can also be used, in part, to help determine the social impact value for SROI and ROI of training programs as well.  

Compensation and rewards: Compa-ratio

HR professionals need to monitor their competitiveness based on salaries for new hires and existing employees.  The compa-ratio helps to determine whether your company or an individual employee is being compensated fairly or competitively.  Here is the basic formula:

It is important to monitor this metric for every position at different experience levels. This will help ensure that employees are being fairly compensated and also ensure your company is competitive in attracting new talent and keeping current talent. 

Health and Safety: Accident Ratios

To understand the health and safety of workplace environments it is important to monitor accidents, this ratio will also later help determine if safety initiatives are effective or not.  Also, this helps to determine the risk of higher worker compensation costs and losses in productivity. Here is the basic formula:

The lower the number the better, if you have a higher ratio in one department over other departments, it would be an indicator that some improvement plan or safety training is necessary to improve the accident ratio.  This would also include cases involving COVID-19 and improving safety protocols, etc.

Employee Incidents

In HR, most employee incidents will come in the form of a written warning or some rule or routine violation.  Or this could be a result of an interpersonal communication issue (an argument) or something to that effect.  This can also serve as a measurement to understanding issues in culture, management, and employee satisfaction, or to pinpoint individuals that need special training or if they need to be let go.  However, overall employee incident ratios need to be monitored to determine if something systemic has a root cause.  Here is the basic formula:

It is important to be clear on what constitutes and incident, but in this case the lower the ratio the better for employers. 

From Metrics to Analytics 

Measuring via metrics will help lead to a company’s ability to perform analytics.  Understanding metrics is the first step to tease out patterns for analysis.  A metric alone is not analytics, metrics are the “what” of a “why” question.  Looking for the answer to “why” questions is analytics.  Analytics for HR is a critical analysis of data and workplace metrics that looks for patterns in data.  Analytics and metrics both require trustworthy and reliable data, that is both accurate and consistent.  If you currently are not storing or collecting data in a reliable and accurate fashion, your measurements and analytics will not be reliable either.  The first step is to ensure your data is correct. beepHR and beepShift are systems built on blockchain technology.  The data it collects is transparent, secured, trustworthy, reliable, and accurate.  It will help managers visualize metrics and help with performing analytics with a built-in and powerful AI.  Let beepNow help to ensure you are giving the best to your workforce and getting the best results.  

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