7 Workforce Metrics You Should Track With HR Software

We all know that HR runs on data, and those employee data points are even more valuable now that HR is going digital. AI, machine learning, chatbots, mobile apps—they all run on data. And even more importantly, the decisions we make about employees every day depend on having consistent, reliable data about our people.

That’s why your HR software needs to monitor and store information in an accessible, intuitive way. But data for data’s sake never made any company successful. So how do you take the raw numbers and turn them into valuable business information? By knowing what to track and using that information to drive change.

7 Key Metrics Your HR Software Should Monitor

There are several categories of data you should monitor on a regular basis including recruiting and retention, productivity, engagement, and cost efficiency. Of course, there are many metrics that contribute to the total picture for any one of these categories, but let’s look at some of the most important information you should track in your HRIS:

1. Turnover rate—You can drill down into this metric by tracking the various contributing factors to identify patterns. For example, track voluntary and involuntary turnover, turnover within the first year, turnover by manager, and turnover of high performers as compared with low performers.
   
   
2. Retention rate—This is the balancing metric to turnover rate. Take a look at your retention metrics by time of employment, manager, team, candidate source, and high performers vs. low performers.
   
   
3. Revenue per employee—As your company grows, revenue per employee can highlight whether you are under- or overstaffed. To calculate this metric, divide annual revenue by number of full-time employees.
   
   
4. Absence rate—Drill down into your absence rate to diagnose potential problems in your teams. For example, if the absence rate is higher for a particular manager or division, that may indicate an ineffective management style or an unevenly distributed workload.
   
   
5. Employee productivity index—Productivity is no longer solely measured by how many hours an employee puts in. It should also consider what that employee achieved during those hours. Performance metrics may vary based on your industry, but it’s important to compare those key indicators across employees and teams so you can identify gaps in productivity.
   
   
6. Employee engagement—Closely related to employee productivity—but not identical to it—is employee engagement. An employee may be very productive but unengaged (or vice versa). The X Model of engagement is an excellent way to determine which employees are fully engaged contributors, which ones need encouragement or coaching, and which ones present high flight risks.
   
   
7. HR cost per employee—How much does it cost per employee to maintain your HR team? This number (HR salary and benefits divided by number of employees) can help you determine whether you need more or fewer HR staff based on the size of your organization.

Including some or all of this information on your HR dashboard helps you keep a close eye on the metrics that matter most to your orgnaization. Most systems will also allow you to break down those metrics by a variety of data points such as demographics, team information, or date. But having the data isn’t enough. The next step is to translate that data into valuable contributions.

How to Turn Data Into Value

The ultimate goal, of course, isn’t to track as many metrics as possible, even if they’re important metrics. It’s to use that data strategically to drive better decision-making. But how do you make that leap? Here are three ways to translate your data into action:

• Ask the right questions. Analyzing data is sort of like playing Jeopardy. You’re looking at the answer, but you may not know the question. You can solve this conundrum by backing up a step and deciding which questions you need to answer in order to move your company in the right direction. Then collect the data you need to find the answers.
  
  
• Know how the data relates to business decisions. Don’t just show your executives a bunch of interesting graphs. Demonstrate to them why that information matters for business performance. If sales numbers are down, workforce metrics can help you pinpoint the causes and you can use that data to implement more effective processes or make personnel changes.
  
  
• Know how business decisions improve the bottom line. As HR becomes better at improving workforce conditions and performance, it also demonstrates its ability to add value to the business. But only if you know how to translate key metrics and workforce changes into dollars and cents.
  
  

The Bottom Line

Start with data. Use data to make better decisions. Generate revenue based on those new, more effective policies and processes. That’s how workforce metrics can turn HR into a value contributor. 

Which workforce metrics have you found to be most valuable to your organization?

Are you ready for HR software that can help you make better use of your data? Find your perfect software match with our HRIS Comparison Tool today!

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