The Ultimate Metrics Toolkit For Business Leaders Ultimate Metrics آ  gain the highest ROI

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  • The Ultimate Metrics Toolkit For Business Leaders

    www.hrboss.com

    http://hrboss.com http://hrboss.com www.hrboss.com

  • CONTENTS

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    05

    08

    10

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    Hiring Metrics You Cannot Afford To Ignore

    Retention Metrics To Improve Your Bottom-Line

    Top 3 Workforce Productivity Metrics

    5 Ways to Measure Employee Performance Like A Pro

    Best Practice Compensation Metrics

  • 2

    Hiring the right Talent is costly for businesses, and when you think about the amount of time and money spent just looking for that ‘perfect’ candidate, it’s imperative to keep tabs on expenditure, recruiting effectiveness and not hire blindly.

    How are you currently measuring your organisation’s recruitment efforts?

    (hint: if you’re like the majority of companies, you will be focussing on the 2 most common metrics)

    Source: Josh Bersin CEO & President, Bersin & Associates.

    “ ”

    Companies are spending an average of $3,500 for every new hire brought into the organization – about three times the amount spent on training per employee.

    Workforce Insights For Business Leaders

    Hiring Metrics You Cannot Afford To Ignore

    http://www.bersin.com/News/Content.aspx?id=14998

  • 3

    Workforce Insights For Business Leaders

    1. Time-to-fill?

    2. Cost-per-hire?

    A measurement of how long it takes an organisation

    A measurement of total cost incurred per hire. Costs include advertising fees, agency fees, employee referrals, travel expenses, relocation expenses and internal recruiter costs. Keeping track of cost-per-hire helps with budgets but it

    Efficiency of recruiting has always been dependent on these two commonly measured metrics, but as businesses operate and take a more results-based, data-driven approach to decision making, you need metrics that do more than just measure time and cost.

    Here are 5 other metrics you will need to track on top of time-to-fill & cost-per-hire in order to measure recruiting effectiveness:

    does not take into account of length of time to make a successful hire and the quality of the hire. What good is a very low cost-per-hire if revenue producing positions remain unfilled for long periods of time?

    3. Source of Hire Tracking source of hire helps the organisation better understand the quality of their sources and determine which channels is the most effective. This helps hiring managers identify which is the most effective sourcing channel(s) to recruit high quality Talent and justify sources they should no longer use.

    How to measure?

    Percentage of new hires from a particular source with highest performance and tenure rates.

    4. Quality of Hire In order to save money and improve productivity, you need to move beyond costs/time and into measuring the quality of new hires. Quality hires translate into higher performance which drives more revenue, and higher profits for the organisation.

    How to measure?

    There is no standard formula for defining quality of hire as every firm defines quality in its own unique way. You will need to sit down with the management to determine what makes a quality hire.

    Usually, data from performance appraisals is used but it’s crucial to keep in mind that such data is based on subjective feedback i.e manager’s satisfaction and feelings towards the candidate. Quality of hire can be based on performance- related factors like adaptability, consistency and

    to fill a vacant position.

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  • 4

    Workforce Insights For Business Leaders

    5. Workforce Productivity Though you might have a fast time-to-fill, hiring managers will soon realise that recruiting candidates who are slow to reach the expected performance level is the result of a poor hiring process.

    New employees typically show less productivity compared to experienced staff, but they should steadily increase their speed and performance over time.

    How to measure?

    The average number of days that it takes for a new hire to reach the minimum or expected output for the job role.

    involvement or result-focused like contribution to sales growth, increased value to share-holders or exceeding set targets and expectations.

    6. New Hire Termination A quick termination rate indicates a fail somewhere in the hiring process as it means increased expenses to make new hires and puts a negative impact on the organisation’s business performance.

    How to measure?

    New hire termination represents the number of new hires who were terminated within a year of joining. This can be measured by the ratio of new hires terminated within the first year compared to the total number of new hires made.

    7. Vacancy Rate Every extra day a critical position is vacant translates into a dip in business performance. There could be delays in important projects or missed opportunities because of these unfilled positions. Ideally, if your organisation is executing on effective hiring strategies, the vacancy rate should be close to zero or as low as possible.

    How to measure?

    The ratio of vacant job positions in the organisation compared to the total number of job positions.

    Really, your ultimate goal should be recruiting the best people to achieve business goals and gain the highest ROI possible for the organisation. HR and business leaders should look beyond basic metrics and start monitoring critical metrics related to business impact like quality of hire, performance, and tenure rates.

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  • 5

    Workforce Insights For Business Leaders

    Retention Metrics To Improve Your Bottom-Line

    Retention remains one of the key workforce issues for business leaders to keep a

    hawk-eye on, largely because of its huge impact on turnover and profitability. A high level

    of churn negatively affects employee morale, productivity and customer satisfaction…

    while reducing turnover can dramatically shrink accrued separation, hiring, training and

    overtime costs for your organisation.

    Stats that Shock Replacing staff costs businesses £4 Billion each year.

    The cost of losing an executive is astronomical – up to 213% of the employee’s salary

    Average employee turnover rates over the next 5 years are predicted to rise from 20.6% to 23.4%.

    – 2014,The Telegraph –

    – Center of American Progress (CAP) –

    – HayGroup –

    http://www.telegraph.co.uk/finance/jobs/10657008/Replacing-staff-costs-British-businesses-4bn-each-year.html http://www.cbsnews.com/news/how-much-does-it-cost-companies-to-lose-employees/ http://www.haygroup.com/ww/press/details.aspx?id=37373

  • 6

    Workforce Insights For Business Leaders

    Consistently tracking retention metrics over time is crucial for spotting trends and

    addressing them before they develop into business-threats. General metrics such as basic

    retention and turnover numbers are inadequate in today’s competitive economy and

    talent-centric business world. Needless to say, the parsing of a large list of specific metrics

    is both counter-productive and difficult to maintain. So which are the most important

    metrics that you, as business leaders, need to track?

    1. New Employee Attrition Rate Employee attrition happens when new employees leave the organisation for another when they get a ‘better’ offer.

    A high attrition rate is an indication of possible management issues within the department, job or salary dissatisfaction, etc. It could useful for HR team to conduct exit interviews to understand why new people are so quickly vacating their positions and rectify the problems before they escalate.

    When a high attrition rate goes unattended for a period of time, your organisation could be incurring extra costs overtime when it comes to hiring and training.

    How to measure?

    Number of new employees who left the company voluntarily divided by the number of employees employed by the company during a given time period.

    Here are the 5 retention metrics that are most relevant to your bottom-line:

    2. Promotion Rate / Promotion Wait Time

    A delayed promotion could result in a high level of dissatisfaction and may force an employee to leave the organisation in search of better opportunities. Promotions are highly desired because of it’s positive impact on pay, authority and the ability of the employee to influence the business.

    Timely promotion helps improve employee retention so make sure that you keep promotion wait times at an acceptable level. One good way is to set time parameters for evaluations and use reviews as a basis for career advancement.

    How to measure?

    The ratio of employees who were promoted, and the average time (in years) between promotions.

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  • 7

    Workforce Insights For Business Leaders

    3. High/Low Performer Retention Rate

    4. Engagement Index

    5. Retirement Rate

    You cannot afford to lose your best performers to another organisation, let alone to a competitor. Effective HR programs should improve retention for high performers while creating a positive turnover for low performers. A bad retention rate for high performers is an urgent call to work on ideas that foster engagement and retention of best performers. Likewise, i