WHAT ARE THE PEOPLE METRICS THAT MATTER?
Insight provided by Bill O’Malley powered by the MRINetwork.
Identifying employee metrics and people analytics that matter
If you want to build (and keep) a successful and productive team, it’s imperative that your organization keep metrics and track data on employees. But even though the use of people analytics has become more common, many companies don’t really have a clear grasp of the specific metrics that affect performance in their organizations.
“It can also be overwhelming to figure out just what data you should be tracking and relying on to enhance your company’s performance,” says Nancy Halverson, MRINetwork Senior Vice President, Global Operations. “Today there are more than enough ways to track people analytics and it can be detrimental to use the wrong ones to build a business.” Everything from new hire performance to job absence rates are typically kept on hand by a human resources team. But not everything is entirely valuable to focus on for your organization.
“Once organizations focus in on the metrics that work for their businesses, the next step is the acknowledgment that the value of metrics increases exponentially when measured over time,” according to Forbes. “Unless certain metrics immediately point to a major issue, it is perhaps shortsighted to take significant action based on one or even two years’ data.”
Halverson points to three employee metrics that actually matter (and why):
First, it’s important to keep tabs on employee turnover and time to fill, especially the costs associated with these aspects of hiring and retention. “In today’s labor market, CEOs and senior leaders are focused on the time that it is taking to fill open positions, placing huge burdens on any organization’s talent acquisition function,” according to Forbes.
“These are critical metrics to follow because high turnover rates, for example, can greatly impact your company’s productivity,” says Halverson. “Instead, you want to keep your top employees with your organization for years so that you don’t need to waste time filling - and then refilling - a position repeatedly.”
Bill’s O’Malley’s Insight:
Most companies don’t track days to Hire or Time to Fill. Below is a simple formula that the HR team or your hiring authority can use to determine how quickly positions are being filled.
Time Days to Hire – this is # of days the opening or requisition is approved to the time an offer is accepted or signed.
Time Days to Fill – This is the date the opening occurs or is approved to the start date.
From my point of view if you’re a small to medium size business with a small HR footprint the Days to Fill number is the most important number to focus on. I believe that is your money number since every day an opening is left unfilled there is lost productivity and sales.
If it takes 26 days to fill each job opening in Sales that could be significant lost productivity. If your turnover rate is higher than industry norms the lost potential sales can be staggering.
Next, you should keep track of the other key people metric which is TURNOVER RATE.
Here is simple calculation to use to provide a turnover formula:
Turnover rate is calculated by taking the number of separations during a month divided by the average number of employees, multiplied by 100:
Turnover Rate = # of Separations / Avg. # of Employees x 100
So why is tracking turnover so important, take a look at this chart below to see the gravity of the turnover. Some analysts are predicting that turnover in the retail sector will continue to run as high as 60% by 2020.
An estimated 41 million people voluntarily quit their jobs last year, up 8 percent from 2017, according to the Work Institute, a Franklin, Tenn.-based consulting firm. By 2020, that number will jump to 47 million, or roughly 1 in 3 workers, the firm predicts.
Source: U.S. Bureau of Labor Statistics; Work Institute. 2018 figure is estimated; 2019 and 2020 figures are projected.
Finally, job engagement is a critical people analytics metric that you should keep a close eye on as you consider what to follow. Although this can be trickier to measure objectively, meaningful data can be collected via surveys and during performance review conversations. “Basically, you want to keep employees happy in their roles so that they continue to grow and develop at work,” advises Halverson, “and tracking engagement illustrates just how good of a job leadership is doing to accomplish this.”
According to Forbes, “A natural link exists between engagement and absence rates. Unless there are community or job-based factors that raise the absence rate, these two metrics very often move together but in opposite directions.”
In sum, there are many people metrics that a company should consider when helping their organization succeed. Employee turnover rates, time to fill, performance goals met and job engagement are just some of the most important. By tracking this information and using it to inform how the company is run you’ll be able to identify patterns that predict performance - and have happier employees who are more productive.
Blog Post by Bill O’Malley
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About Bill O'Malley: Bill O’Malley is the owner and co-founder of Connector Team Recruiting, a specialized search firm working with Furniture | Mattress | Electronics Owners, Presidents and HR executives. Since 2012 he has connected Furniture Enterprises with top talent. Connector Team is an affiliate office of MRINetwork, recently ranked as a Top Recruitment Firm by Forbes Magazine. Connector Team is headquartered in Charlottesville, Virginia.