Ask any human resources or recruiting professional and they will tell you that their job is more than hiring and firing. Human resources touches every inch of an organization sometimes in very indirect ways, which is why it’s important for HR teams to build a strong HR metrics and scorecard system.
When selecting which HR analysis processes and equations to use to support how your department is impacting the organization, it’s important to start first with your senior leaders. An HR leader must ask either directly or indirectly of their senior leader, “What keeps you and your executive team up at night?”
Using this method instead of the traditional score card system allows for your HR team to remain in touch with corporate objectives and the hot buttons of the business. And once you have determined how these goals align with your own department’s missions and objectives, you can begin to develop a system in which to evaluate the effectiveness of your HR department.
But before you do that, here are some human resource and recruiting formula equations to get you started.
1. Monthly Turnover Rate = (number of separations during month / average number of employees during month) x 100).
2. Revenue per Employee = total revenue / total number of employees.
3. Yield Ratio = percentage of applicants for a recruitment source that make it to a determined stage of the application process.
4. Human Capital Cost = Pay + Benefits + Contingent Labor Cost / Full Time Equivalents.
5. HR to Staff Ratio = Employees / Human Resources Team Members.
6. Cost to Hire = Training + Advertising + Lost Productivity + Time / employee salary (ranges from 50-250%).
In addition to working directly with your senior executives to determine their HR Pain Points within the organization and how they align with company goals, it is equally important to talk to the employees themselves. A combined approach is best using employee surveys to develop a baseline for performance as well as holding regular meetings with staff at locations. Monthly “town halls” can help uncover not only what is important to your employee population, what isn’t, and their perceptions of the organization.
Jessica Miller-Merrell, SPHR is a HR consultant, new media strategist, and author who writes at Blogging4Jobs. Jessica is the host of Job Search Secrets, an internet television show for job seekers.
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