Off the back of our discussion on how to turn HR professionals into strategic partners, I figured it'd be useful to dive a bit deeper into the world of HCM analytics. Thrilling, I know. But understanding what to track (and how it fits into the bigger picture) can be a huge value add when talking with upper management. Executives are all about actionability, evidence-based solutions, and business outcomes. So before you pitch a retention initiative or try to sell your C-suite on a recruitment push, it's important to have all the employee data you need to make a compelling case.
Getting to know the ins and outs of your workforce isn't always straightforward, especially if you don't have the right tools in place. Even with an HCM platform at your disposal, it can be difficult to tell which metrics speak to your employees' performance, engagement, retention, and so on. Of course, this type of information isn't just useful in the planning and strategic development stages; it's also crucial for assessing the overall impact of your improvement efforts and demonstrating your ROI. That said, manually organizing a mountain of data can be a real time sink, which is why automating your administrative HR functions is usually the way to go. While predictive analytics are still relatively new in the HR space, there's a lot you can learn from historical workforce data and trends. With that in mind, let's take a closer look at the top 10 HR metrics that can help you showcase the success of your HCM strategies:
1. Applicant conversion rates
Streamlining your recruitment practices starts with a close examination of each stage of your hiring process, from application to job offer. By tracking candidate-to-screening, screening-to-interview, and interview-to-offer conversion rates, you can root out inefficiencies in your workflow that may make it harder to fill open positions. After all, addressing flaws in your hiring process could help increase your offer acceptance rate, which looks great to executives trying to grow the company.
2. Time-to-hire trends
Generally speaking, the longer open positions remain unfilled, the less productive your workforce will be. But that's not all – as pointed out by the Society for Human Resource Management, the time it takes to onboard a new employee is typically linked to a company's overall cost-per-hire. Considering the average price tag for bringing on a new recruit falls around $4,425 for most companies, it makes sense to closely monitor your time-to-hire trends. Keeping your recruitment window below the 36-day average can really showcase the success of your hiring strategies, especially if they've had a positive impact on your overhead expenses.
3. New hire performance
When it comes to training and development, new hires can be a valuable source of feedback (whether or not they know it). While each employee will likely have their own learning curve, tracking performance across their first 30 days can yield some useful insights about your onboarding process. Any changes you make will likely be reflected in future candidate performance, allowing you to compare results, make adjustments, and advocate for the resources your employees need to get the job done.
4. First-year retention
The current candidate-driven labor market has put employers at a bit of a disadvantage, as there are plenty of employment opportunities out there for high-quality workers. Keep in mind, companies can spend as much as 33% of an employee's annual salary to replace them, according to the Work Institute, so tracking first-year retention can be your canary in the coal mine. While this metric might not always tell you what the problems are, it can at least tell you that there is a problem. Finding out the root causes of high employee turnover, however, is a whole different ball game, though a unified HCM system can also help you here.
5. Employee engagement and satisfaction
This might come as a bit of a shock, but only 15% of employees worldwide feel engaged and motivated in their work, according to a recent Gallup poll. And, maybe not as shocking, this disconnection can have serious repercussions for you company's bottom line. Many employers have started sending out employee engagement and satisfaction surveys to better understand why their workforce is habitually "checked out," but aggregating thousands of responses can be a real pain. Using an HCM platform, you can collect, analyze, and present your findings to executives without all the guesswork and generalizations.
6. Pay equity and diversity trends
Currently, close to 78% of companies are prioritizing diversity to improve workplace culture, support inclusive business practices and increase financial performance, according to a 2018 LinkedIn study. But to make any headway, HR professionals must be able to monitor hiring trends, salary data, and promotion rates (more on this in a bit). While it can be hard to bring diversity and pay equity issues to the table, having detailed analytics on your side can help communicate the urgency and potential impact with key executive decision-makers.
7. Internal promotion rates
When higher-level positions open up, many of your employees will likely see these vacancies as a perfect opportunity to advance their careers. Choosing to hire a candidate from outside your organization can be a contentious decision, and may lead to low morale, high employee turnover, and interpersonal conflict. This may account for why 79% of executives believe that redesigning their performance management systems and practices are a top priority, according to Deloitte. By keeping track of this HCM metric, you can proactively roll out new feedback and goal-setting mechanisms that may streamline the path to promotion for your top performers.
8. Scheduling vacancies
Staying on top of PTO, vacations, and unplanned absences can feel like a full-time job, especially if you work for a large company with thousands of employees. Luckily, HCM platforms can give you a bird's-eye view on scheduling conflicts that may leave key departments understaffed and can even include self-service elements so employees can take open shifts or swap with other qualified employees. Better yet, incorporating predictive analytics into the process can keep you one step ahead of call-out season, which usually falls around major holidays and in the heat of summer.
9. Payroll error rates
Let's face it, a good portion of your employees don't come to work every day to help the company succeed – they come in for the paycheck (sorry to be so blunt). Persistent payroll errors can be the last straw for a dissatisfied worker, so it's important to address these issues as soon as possible. Bringing the C-suite into the fold can certainly speed up the process, but first you need to demonstrate how these back-end problems impact your company's business objectives - pairing payroll error rates with employee turnover statistics or a decline in job satisfaction may just seal the deal.
10. Compliance violations
Despite the significant financial and reputational damage compliance scandals can cause, only 40% of companies say they are fully prepared for a compliance audit, per research from Brandon Hall Group. Avoiding legal and regulatory headaches requires a good deal of planning, oversight, and rapid response, which are all hard to cultivate without accurate workforce data. An HCM platform can help you monitor compliance risks in real time, which may be the difference between a hefty fine and a firm handshake from top executives.
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