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hr metrics are measurements that helps to determine the effectiveness and the efficiency of the human resource function as a matter of fact they are indicators or what we call key performance indicators that helps to understand the contribution of human resources to the organization as a whole welcome to hr insight where i simplify human resource concepts today we'll be looking at seven key metrics that hr professionals should track now the key metrics that we're going to be looking at today uh would cover the employee lifestyle from the point of recruitment down to exit basically understanding what are the key parts of each of this process that is critical to track as an hr professional such that you can be able to demonstrate the efficiency and the effectiveness of the hr process efficiency tends to look at how efficient hr is how good hr is doing its work while effectiveness tends to look at how does the functions of hr affect the organization as a whole how does it affect the smooth running of the organization let's start off by looking at cost per hire now cost per ayah is related to recruitment and it is calculated by looking at the total cost of recruitment divided by the total numbers of irs now this particular metric shows how much it cost the company or the organization to hire new employees why would this be important now this is important because it tends to serve as an indicator of the efficiency of the recruitment process when we understand how much we spend should recruit one single employee it's critical for us to understand how much was spending in terms of recruitment advertisement in terms of the interviews itself in terms of the onboarding of these individuals because every single money spent on each employee is critical to understanding return on investment now now takes us to the next critical metric which has to do with the effectiveness of the recruitment source now depending on the source of recruitment there will be a cost that is associated with it so how do you get uh the effectiveness of recruitment sources this is calculated by looking at the number of successful applicants from a recruitment source divided by the total number of applicants from that source then we represent that as a percentage so when we look at different recruitment sources we're looking at uh maybe social media advertising whether linkedin whether facebook or all whatnot we're looking at a website a career page that's where we place the advertisement or we're looking at uh referral employee referral programs or referrals from colleagues or we're looking at a solution whereby you engage a recruitment agency now when you look at each of the applicant that came from all of the recruitment source when you look at how many of this applicants are successful depending on the source they are coming from divided by the total number of applicant that came from that source expresses as a percentage of hundred then that gives you an understanding of the effectiveness of the recruitment source why would this be important monitoring the recruitment sources will help to ensure the best return on investment for each recruitment source as a matter of fact the whole idea is that by tracking this you will be able to adopt the best strategy as regards recruitment source if you do not track this you don't know what gives you the best quality higher out of all the recruitment sources that you are exploring to get your employees and as a matter of fact each of the recruitment sources would have their different associated costs then is your job offer acceptance now the job of acceptance is calculated by looking at how many people or how many applicants would reject your offer divided by the total numbers of offers you have made now after looking at sending out job offer letters successful candidate you need to calculate and you need to check how effective in terms of the acceptance of your job offer is now why this is critical is that ideally we expect this number to be low meaning most of the offer letters that you sent out will be accepted by the potential employees now in cases where that is not so it means that you need to consider investigating if you are actually losing applicants to your competitors so if out of sending out 10 job offers and all nine of the applicants reject your offer something is likely gonna be wrong it's either you're not attracting the right candidate based on your proposition or your employer proposition all the salaries is not sufficient but if you are not tracking the job of acceptance rate it is very difficult for you to know whether you are competitive in the market or otherwise now you would agree with me that the first uh three key metrics that we've just uh looked at are related to recruitment talking about your cost for cost of higher uh the effectiveness of your equipment sources and the job offer acceptance rate then let's look up let's look at all other areas that talks about productivity in terms of how is the employee contributing to the bottom line of the organization in terms of productivity we're going to be looking at the revenue per employee now the revenue per employee uh tends to look at the total company revenue divided by the numbers of employees if an organization makes 100 billionaire how many employees were contributing to the organization making under a billion revenue we're not looking at whether it's profitable or not we're looking at revenue now why should we be concerned about this this metric shows the efficiency of the organization in terms of employee productivity the revenue by employee metric is an indicator of the quality of your hired employees if an organization makes 100 billion and makes that hundred billion by hundred employees compared to another organization that makes the same 100 billion with 1 000 employees you would agree with me that the organization that makes the same amount of money with less employee speaks to the quality of the hire it speaks to the productivity of the employees itself and as a matter of fact it can also speak to how profitable the organization is because we are not tracking the revenue per employee very critical then another interesting uh metric that is very critical when it comes to productivity of the employee is the average length of service the average length of service is an interesting metrics to track because it talks about how long each employee stays within the organization so when we calculate the total years of service for all employees within the organization divided by the total numbers of employees within the organization we will get an average length of service so if we come and we have an average length of service of one year what that tells us is that employees are not staying long within the organization but if you do that calculation and we have an average length of service of say seven years 20 years for 14 years it gives you an understanding of employee retention i actually did an earlier episode on how you can calculate some of these metrics in excel you can actually check that episode out on the card above about now so the average length of service is a metrics that reflect the level of employee retention because it helps you to by measuring this metric it can help you to see where you need greater investment that might be required to keep your employees longer so the challenge sometimes is that when employees don't stay longer within the organization it's a reflection of your employee retention strategy when they stay longer at the same time it can be a reflection of whether they enjoy staying with you maybe you have the right you have the right work environment the right compensation the right work life balance and everything is in place to keep them within that organization now by extension that now takes us to another interesting metrics which has to do with the employee turnover i i'm sure this you've been waiting for me to mention this already employee turnover is calculated by looking at the numbers of exits during a period divided by the numbers of employees at the beginning of that period present that as a percentage which is multiplying it by hundred now why is this critical the exit of the employee is critical to the organization why because it allows the organization to identify employee retention problems now the reason for the exit is something you should investigate is it a voluntary exit or an involuntary exit that's also critical at the beginning of that period that's also critical for you to understand why our employees live in the organization because as i turn over rate can present a significant financial burden to the organization because for every employee that leaves the organization there is a resulting effect in terms of financial remember there is a cost for hiring that employee so which means for every employee that leaves you will need to incur cost to bring to replace that role then you need to do severance packages for the employees so it's critical to track your employee turnover and to understand why are employees leaving the organization then employee satisfaction index remember we started off by looking at entry into the organization how long do they stay how often are they living then how satisfied are your employees this particular employee satisfaction index can only be arrived at after the conduct of an employee satisfaction survey this is a very critical hr metrics that help you to understand the effectiveness of the hr function how satisfied are your employees doing an employee engagement survey on employee satisfaction survey will help to give you an understanding of this because it measures the extent of which employees are satisfied with their job so here you have it are seven critical hr metrics that hr professionals should track and remember to drop your questions and smash the like button i'll see you in the next episode [Music] you