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  • Writer's pictureKhurram Rana

Important HR Metrics for Analysis (2/2)

Continuing from the previous post. Over the years HR has become driven by numbers. While it may sound like it is taking us away from being people centric - however the truth is that all decision makers in any company speak one common language and it runs with numbers. Statistics and probability. How can HR show that the employees are engaged for instance. In theory it sound good - but how do we prove it. This is where statistics comes in. Workforce diversity and inclusion are sometimes thoughts to be either very simple or too complicated to calculate. Here I go over some easy metrics to maintain:

Workforce Diversity and Inclusion: Analyzing diversity metrics and inclusion initiatives can help organizations foster a more inclusive and diverse workforce, which has been shown to drive innovation and better decision-making. Some key elements to measure include:

Representation Metrics:

  • Workforce Composition: HR collects data on the demographic composition of the workforce, including gender, race, ethnicity, age, disability status, and other diversity dimensions. This data is often presented as percentages of different demographic groups within the organization.

  • Diversity Index: A diversity index is calculated to measure the overall diversity of the workforce. It considers the number of different demographic groups present in the organization and their respective representation.

Formula: Diversity Index = 1 - Σ(Pp)^2

where Pp represents the percentage proportion of each demographic group in the total workforce.

Hiring and Promotion Metrics

  • Hiring Diversity Ratio: This metric measures the representation of diverse candidates among new hires. It compares the percentage of diverse hires to the percentage of diverse applicants.

Formula: Hiring Diversity Ratio = (Number of Diverse Hires / Total Number of Hires) / (Number of Diverse Applicants / Total Number of Applicants)

  • Promotion Diversity Ratio: Similar to the hiring diversity ratio, this metric assesses the representation of diverse employees among those promoted to higher-level positions.

Formula: Promotion Diversity Ratio = (Number of Diverse Promotees / Total Number of Promotees) / (Number of Diverse Employees Eligible for Promotion / Total Number of Employees Eligible for Promotion)

Employee Satisfaction and Inclusion Surveys

HR conducts surveys to gather employee feedback on their perceptions of inclusion, belongingness, and the organizational culture. These surveys may include questions about whether employees feel valued, heard, and included in decision-making processes.

Turnover Analysis:

HR analyzes turnover data to understand if there are disparities in turnover rates among different demographic groups. High turnover rates for specific groups may indicate potential issues with inclusion and engagement. This forms a subgroup from the earlier attrition calculations.

Pay Equity Analysis:

HR conducts pay equity analyses to ensure that employees are paid fairly regardless of their demographic background. It involves comparing the compensation of employees in similar roles to identify any gender or race-based pay gaps.

Leadership Diversity:

HR tracks the diversity of the organization's leadership positions to assess the representation of diverse individuals in higher-ranking roles.

Employee Resource Group (ERG) Participation:

Tracking the participation and engagement levels in ERGs or affinity groups can indicate the level of inclusivity and support for diverse employees.

Training Participation:

HR measures the participation rates in diversity and inclusion training programs to gauge employees' interest and engagement in such initiatives.

Workforce Planning:

Predictive analytics can assist in forecasting future workforce needs, ensuring that the organization has the right talent in the right roles at the right time.

Some metrics are the same as already shared such as Headcount, attrition rate and hire or onboarding rates. Some additional metrics that are used include:

  • Retirement Rate:

This metric focuses specifically on the rate at which employees retire from the organization. It is important for succession planning and identifying potential skills gaps due to retirement.

Formula: Retirement Rate = (Number of Retirements / Average Total Number of Employees) x 100

  • Time-to-Fill:

This metric calculates the average time taken to fill a job vacancy from the moment it is posted until a suitable candidate is hired.

Formula: Time-to-Fill = (Total Days to Fill All Open Positions / Total Number of Open Positions)

  • Skills Gap Analysis:

This analysis identifies the gap between the skills required for future job roles and the skills possessed by the current workforce. It helps in determining training needs and potential talent shortages. You can read more details on this here.

  • Internal vs. External Hiring Ratio:

This metric compares the proportion of internal promotions or transfers to the number of external hires made. It indicates the organization's preference for internal talent development and mobility.

Formula: Internal Hiring Ratio = (Number of Internal Hires / Total Number of Hires) x 100

  • Turnover Cost:

Turnover cost calculates the financial impact of employee turnover, including recruitment, training, and lost productivity expenses.

  • Productivity Metrics:

Workforce planning may involve analyzing productivity metrics, such as revenue per employee, profit per employee, or output per employee, to assess workforce efficiency and performance.

  • Workforce Segmentation:

HR may segment the workforce based on criteria such as job roles, experience levels, skills, and demographics to better understand workforce dynamics and plan accordingly.

Absenteeism and Leave Management: Analyzing absenteeism and leave patterns can highlight potential issues affecting employee well-being and productivity.

Compensation and Benefits: Analytics can help determine the effectiveness of compensation and benefits packages in attracting and retaining talent, as well as identifying any pay disparities.

Succession Planning: Identifying and nurturing potential successors for key positions within the organization can be facilitated through HR analytics.

Performance Appraisals and Feedback: Analyzing performance appraisal data can offer insights into employee development needs and managerial effectiveness.

One of my favorites again:

Employee Satisfaction and Surveys: Regularly measuring employee satisfaction through surveys can provide valuable feedback on workplace culture and organizational climate.

Feel free to add more !

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