A recent study by Prosci found that 88% of businesses with excellent change management programs met or exceeded their objectives, compared to only 13% of those with poor programs. This stark contrast underscores the impact of well-executed change management.

HR can add value by developing and implementing robust change management strategies. Using targeted metrics, you can measure the effectiveness of these initiatives and better align them to organizational goals. In doing so, HR not only supports successful change initiatives but also drives overall business success and adaptability.

Contents
What are change management metrics?
15 change management metrics to track
– Achievement metrics
– Completion metrics
– Acceptability metrics
Best practices for tracking change management metrics
Change management metrics dashboard tools and resources

What are change management metrics?

Change management involves developing and implementing a strategic plan to prepare employees for organizational shifts and changes. It also gives employees ongoing support to ensure successful adaptation. While change management differs from company to company, effective change management strategies always aim to minimize resistance and optimize adoption. 

These metrics also help track progress, identify areas for improvement, and ultimately, better align strategies with organizational goals and employee wellbeing. HR then communicates key metrics and their results to leadership and other key stakeholders.

Change management metrics measure the success of change efforts and facilitate understanding of the changes’ broader implications. HR can use outcomes and acceptance metrics to ensure change initiatives meet performance and compliance standards and are accepted by employees.

HR teams can also keep a close eye on how the company’s programs are functioning so they can recommend any necessary adjustments.

HR tip 

Conduct pilot tests for your change management initiatives. Involve small groups of employees before full-scale implementation. This helps you to make quick adjustments based on employee feedback, minimizing disruption.

15 change management metrics to track

Below are three main categories of change management metrics: achievement, completion, and acceptability. Each category contains useful metrics for measuring the success of your company’s change initiatives, the degree of their completion, and their acceptance.

Achievement metrics

1. Process compliance rating

This metric helps ensure your company’s implemented changes comply with legal and regulatory frameworks. Compliance requirements can vary by company, industry, and location. 

Here’s how to calculate this metric:

Process compliance rating (%) = (Number of compliant processes ÷ total number of processes) × 100

2. Employee engagement and morale

Changes in the workforce, both big and small, will inevitably affect employee engagement and morale. Track these metrics before, during, and after the company makes changes; this will provide valuable insights into how well the organization manages the impact of change on its employees.

3. Employee productivity and performance

Measuring changes in productivity and performance helps evaluate the impact of change initiatives on employees’ output. It also provides a tangible measure of whether the changes enhance, hinder, or have no impact on productivity. 

Here’s how to calculate the total employee productivity rate (EPR):

Total EPR = Total hours worked weekly ÷ total number of employees

Apply this formula to the period (e.g., one month) before the change initiatives’ implementation and the period after their completion to pinpoint any decline in employee productivity. This allows you to address and resolve the matter as quickly and efficiently as possible.

4. Number of non-compliance incidents

It’s essential to be proactive in identifying any red flags or instances of non-compliance early. This allows HR to address gaps and improve compliance processes quickly.

This helps prevent minor non-compliance from escalating into significant problems that could undermine the change initiative, disrupt operations, and negatively impact employee morale and productivity.

5. Cost savings and ROI

Evaluating change initiatives’ impact on the company’s bottom line helps justify investments and demonstrate related measurable benefits.

This could include sales figures, customer satisfaction scores, and other relevant business metrics. Preventing unnecessary expenditures helps streamline the available budget. 

Here’s how to calculate ROI:

ROI (%) = (Net benefit* ÷ cost of investment) × 100

*Net benefit = Total benefits − total costs

Completion metrics

6. Employee training completion rate

This metric measures the percentage of employees who have completed the required training associated with change initiatives. It indicates the workforce’s readiness to adopt new processes or systems. It can also assess the information retained post-training and identify any necessary revisions. 

Here’s how to calculate employee training completion rate:

Employee training completion rate (%) = (Number of employees who completed training ÷ total number of employees enrolled) × 100

7. Adoption rate

Tracking the percentage of employees actively using new systems or processes introduced through change initiatives provides insights into employee acceptance of these changes. It also measures how effectively employees apply their trained skills in real-world scenarios. 

Here’s how to calculate the adoption rate:

Adoption rate (%) = (Number of employees using the new process/tool ÷ total number of employees) × 100

8. Project milestones achievement

Evaluating the extent to which the company has achieved the key milestones of its change initiatives helps determine project management effectiveness and overall progress.

It also allows you to revisit these milestones to assess if they are unrealistic and need to be altered or eliminated.

9. Customer and stakeholder satisfaction

Changes can impact external customers and stakeholders. Monitor engagement by tracking their attendance and participation in key meetings or focus groups during and after the changes’ implementation. You can also use employee satisfaction and feedback surveys for this purpose.

One widely used method to determine customer satisfaction is the CSAT (customer satisfaction) score. Companies usually obtain this by asking customers to rate their satisfaction with the products/services on a scale of one to five (five being most satisfied). 

Here’s how to calculate your company’s CSAT score:

CSAT score (%) = (Sum of all scores ÷ total number of responses) × 100

HR tip 

Any satisfaction and feedback surveys you use to gather information should allow respondents to remain anonymous. This can help increase survey participation, which is critical for effective change management.

Acceptability metrics

10. Organizational alignment

Assessing how well change initiatives align with organizational objectives ensures the implementation of these initiatives doesn’t compromise strategic goals. It also helps the company and its workforce avoid spending extra time and effort fixing major discrepancies between change initiatives and organizational goals.

11. Change readiness

Measuring the organization’s readiness for change allows it to adjust strategies to improve its change readiness. SHRM recommends first determining the key roles for successful change (such as positions that will lead new business units and organizational structure). Next, assess their competency in the context of their individual positions.

Finally. use this formula to calculate your company’s change readiness:

Change readiness = (Vacant positions ÷ total positions) × (employees with desired competency rating ÷ total assessed) × 100

12. Speed of change

Monitoring the speed of change implementation and organizational adaptation provides insights into change management efficiency and agility. 

You can calculate the speed of change using the following simple formula:

Speed of change (%) = (Total change implementation time ÷ total planned implementation time​) ×100

13. Leadership effectiveness

HR must secure buy-in for change initiatives and remind leadership to lead by example, especially during change and transition.

Evaluating leadership’s role in guiding change processes and fostering employee adoption is critical to successful change implementation.

14. Employee feedback and satisfaction

Gather feedback from employees via a survey on their level of satisfaction with the change process, and address any concerns in real time. This helps maintain or increase morale and minimize resistance.

You can use the following formula to calculate your company’s employee satisfaction index (ESI):

ESI (%) = (Total number of employees who gave positive survey responses ÷ total number of employees who took the survey) × 100

15. Training effectiveness

Ensure employees have the skills and knowledge needed to reduce errors. You can use pre-and post-training assessments to score their skills and knowledge. You can also analyze the training’s broader impact on business outcomes, such as efficiency or financial performance, to ensure alignment with organizational goals.

Here’s how to calculate training effectiveness:

Training effectiveness (%) = [(Post-training score − pre-training score) ÷ pre-training score] × 100

Best practices for tracking change management metrics

Gartner found that the percentage of employees willing to support organizational change fell from 74% to 38% within a five-year period. This shows the importance of evaluating what’s working and what isn’t. Also, it’s essential to keep employees and stakeholders informed, regularly get their feedback, and act on it. This builds trust across the organization and boosts overall morale.

It’s important to understand the importance of analyzing change management metrics. This allows you to provide management with sound recommendations to improve the company’s change management strategy. Here are some best practices for you to consider when tracking change management metrics:

• Use agile change management practices: Encourage iterative and simple approaches that build flexibility and responsiveness to feedback and changing circumstances.
• Employ employee feedback tools: Engage employees at all levels by requesting their input and feedback so you can understand their concerns, opinions, and suggestions for change management initiatives. Employee surveys are an excellent tool for this purpose.
• Use software analytics: Use software analytics tools to obtain specific data and insights into the effectiveness and impact of the organization’s change initiatives. This promotes and supports data-driven decision-making.
• Integrate metrics into the business: Incorporate change management metrics into business and workforce evaluations, such as employee performance reviews, business plans, and industry benchmarking. This can help align business goals with organizational change objectives.
• Closely monitor and revise the metrics: Use the data you collect and analyze to help identify, address, communicate, and resolve any issues you notice. These metrics will also reveal what’s working well, so the company can continue to expand upon those initiatives.

Change management metrics dashboard tools and resources

The first step to creating a change management metrics dashboard is defining the company’s objectives and metrics. HR should identify key stakeholders, roles, and responsibilities involved in the change process. 

You can ask the following questions to help you decide on the right change management metrics to track:

1. What are the goals and benefits of the company’s change strategy? 
2. How will we measure its success and impact? 
3. Who needs access to the change management metrics dashboard?
4. How can the SMART (Specific, Measurable, Achievable, Relevant, and Time-bound) framework be used to define the change objectives and metrics clearly and realistically?
5. How can HR better align the company’s change objectives and metrics with its organizational strategy, vision, and values?

A change management metrics dashboard provides real-time access to key metrics. It is a centralized tool for monitoring, analyzing, and communicating the progress and impact of change initiatives. The dashboard will help you make informed, data-driven decisions and proactively manage change processes.

Your IT department can either build change management metrics dashboards in-house or hire an external vendor. In the case of an in-house dashboard, work with IT on the technical aspects of dashboard development, including reporting capability. 

HR tip 

Schedule demos of your change management metrics dashboard options to determine which one best suits your organization. Ask employees from various departments to participate in the demo process so you can get different perspectives.

Here are some external tools you (or your IT department) can consider using when building your change management metrics dashboard:

HR tip

Measuring, interpreting and presenting HR data are essential skills for HR professionals. Upskilling yourself on these skills will help you present valuable, data-driven insights to leaders. AIHR offers an HR Metrics & Dashboarding Certificate Program to help you upskill yourself and add value to your organization.

Final thoughts

As an HR professional, you benefit from understanding and tracking change management metrics. Tracking and analyzing these metrics will give you insights into the success and impact of your organization’s change initiatives.

You can also identify areas where employees might be struggling and offer targeted support, ensuring the workforce can welcome and sustain the company’s change efforts.  Additionally, you can use metrics like cost savings and ROI to demonstrate change initiatives’ tangible benefits to leadership, justifying investments in training and development programs.

Being adept at these metrics allows you to proactively address issues like low employee morale or adoption rates before they escalate. This not only leads to a smooth transition but also enhances employee satisfaction and productivity and ensures change initiatives align with organizational goals.

The post 15 Important Change Management Metrics To Track (In 2024) appeared first on AIHR.

According to an HR Acuity report, tracking employee relations metrics has multiple business benefits. 68% of companies use it to identify training needs, 54% to create better employee relations policies, and 41% to identify potential inclusion and equity issues. 

As an HR and employee relations professional, tracking these metrics can help you improve employee engagement, productivity, punctuality, and motivation.

Contents
What is employee relations?
What are employee relations metrics?
11 employee relations metrics: What to track and how
HR best practices for improving employee relations

What is employee relations?

Employee relations is the management of the relationship between employers and employees, both individually and collectively. It includes a company’s policies and the HR staff who focus on these relationships.

Typically, HR professionals or employee relations professionals manage this function. They are tasked with developing employee relations strategies to build strong connections between managers and their team members.

A positive company culture can help achieve this by maintaining a healthy work environment and addressing employee concerns. Effective employee relations can also ensure a productive workplace where employees feel valued and supported.

What are employee relations metrics?

Employee relations metrics track the state of employee relations in your company and assess the effectiveness of efforts to improve employee-employer relationships. They provide valuable insights into various aspects of the employer-employee relationship, such as employee engagement, satisfaction, and turnover rates.

These metrics are crucial for HR as they offer a clear view of the impact of their employee relations strategies. By analyzing them, you can identify areas for improvement and measure the success of initiatives to enhance employee relations. 

By focusing on HR metrics that matter, like employee feedback, grievance resolution rates, and retention rates, you can refine its approach to build a more supportive and inclusive work environment. This contributes to overall employee happiness and organizational success, leading to a more productive and motivated workforce.

HR tip

Measure employee engagement often. Regularly assess employee engagement through surveys and feedback tools. High engagement correlates with better productivity and lower turnover rates. Use tools like Gallup’s Q12 survey to get a pulse on your workforce’s engagement levels.

11 employee relations metrics: What to track and how

By tracking specific HR KPIs, you can gain insights into your workforce’s health and implement strategies to improve it.

1. New hire onboarding and training

Why it’s important: Effective onboarding and training are crucial for integrating new hires smoothly into the organization, reducing time to productivity, and enhancing employee engagement and retention.

2. Employee engagement scores

Why it’s important: Employee engagement scores measure employees’ commitment to their organization. High engagement levels indicate that employees are motivated and likely to stay with the company, contributing to its success. Conversely, low engagement can signal potential issues that might lead to increased turnover.

3. Absenteeism rate

Why it’s important: A company’s absenteeism rate reflects how often employees are absent from work. A high absenteeism rate can indicate low morale, health issues, or disengagement, all of which can impact productivity.

4. Turnover rate

Why it’s important: An organization’s turnover rate measures how frequently employees leave the organization. High turnover is not only costly and disruptive for businesses but also often affects employee morale.

5. Retention rate of top performers

Why it’s important: Retaining top performers is critical for maintaining a competitive edge and ensuring continued organizational success. Losing key talent can disrupt operations and diminish overall performance.

HR tip

Actively share your findings with C-suite executives through quarterly reporting. Use storytelling techniques to connect findings to the business strategy and illustrate the impact on organizational goals. 

6. DEIB index

Why it’s important: A diverse, inclusive, and equitable workplace fosters innovation, improves employee satisfaction, and enhances the company’s reputation. Tracking Diversity, Equity, Inclusion, and Belonging (DEIB) among employees also helps ensure the workplace is welcoming to people of diverse backgrounds.

7. Employee satisfaction rates

Why it’s important: High employee satisfaction is directly linked to greater productivity, higher retention rates, and an overall more positive work environment. Measuring employee satisfaction helps HR identify what the organization has been doing well and where it can improve to ensure a happy workforce.

8. Number of complaints, response times

Why it’s important: Tracking the number of complaints and how quickly they are resolved helps HR identify and address issues promptly, maintaining a healthy work environment.

9. Percentage of positive/negative comments on internal and external sites

Why it’s important: Monitoring comments on platforms like Glassdoor, Indeed, and internal forums can provide insights into employee sentiment and the company’s public reputation.

10. Employee attrition 

Why it’s important: Tracking employee attrition helps HR understand turnover rates and the underlying reasons for employees leaving. This insight is crucial for improving retention strategies, workforce planning, and maintaining organizational knowledge and stability.

11. Employee relations case closure

Why it’s important: Monitoring employee relations case closures ensures that employee issues are addressed promptly and fairly. This contributes to a positive work environment and legal compliance.

By tracking these HR KPIs, you can gain valuable insights into employee relations and implement targeted strategies to improve them. Regularly monitoring these metrics will help you enhance your effectiveness and contribute to higher employee satisfaction and organizational success.

Additionally, tracking employee relations metrics helps you understand your organization’s specific issues, which better equips HR professionals to make data-driven decisions that align with the organization’s goals. HR best practices for improving employee relations.

HR tip

Take active steps with leadership to develop employee relations initiatives based on the data findings. For example, insights can be used to: 

• Identify training needs
• Improve on employee relations policies
• Develop or improve existing DEIB initiatives
• Inform staffing considerations

HR best practices for improving employee relations

Establish open, transparent communication channels

Trust is key in developing employee relations. Develop a trust-based culture by encouraging transparency between HR, employees, and management. 

Encourage feedback and regular communication from management to employees via channels and platforms. This will encourage employees to speak up and assure them the company values their feedback, creating a culture of trust and honesty.

Create an aftercare process and determine your follow-up activities after surveys or investigations have been completed. 

Provide strong, consistent support

Whether you’re dealing with new or existing employees, ensure you provide sufficient information and support in different situations. There should be specific channels employees can use to approach someone for help or to voice their concerns, and receive follow-up from HR regarding these issues.

Implement employee recognition and reward programs

Programs designed to recognize and reward outstanding employee contributions will boost employee morale, make them feel invested in organizational success, and ensure they’re more likely to remain at the company. Such programs can also enhance the company’s employer brand and public reputation.

Conduct training and L&D programs

Give employees opportunities to further develop their skills and knowledge, as this shows the company is invested in their professional growth. You can do this through mentorship programs and L&D workshops for different teams and individuals based on their existing roles and key objectives.

Measure the participation and effectiveness of L&D programs. High participation rates in such programs are linked to greater job satisfaction and retention. Tools like LinkedIn Learning and internal tracking systems can help quantify the impact of these initiatives on employee performance.

Maintain work-life balance

Perpetuate a company culture that prioritizes work-life balance, so employees do not risk burnout and will be less likely to resign as a result. Managers and team leaders should minimize the need for any overtime and ensure their team members work together as efficiently and effectively as possible.

Adopt a forward-looking approach to technology

The organization should be tech-friendly, remaining up-to-date on the latest tech and how it might be incorporated into work processes. This will give employees a sense of confidence that their company is invested in continuous improvement to make their jobs easier and allow them to perform better at work.

Develop clear procedures and policies to report misconduct

Employees should have access to specific channels/platforms to report misconduct by colleagues or superiors, especially if they feel unsafe. Take these reports seriously and mediate objectively between parties who are in conflict with one another to try to reach an understanding and improve future relations.

Addressing these issues promptly and thoroughly will assure employees the organization prioritizes their welfare and safety.

To sum up

Employee relations metrics are quantitative and qualitative indicators essential for understanding and improving the relationship between employers and employees. These metrics cover aspects like employee satisfaction, engagement levels, turnover rates, grievance incidences, and the effectiveness of communication channels.

Tracking employee relations metrics is crucial for HR departments because it enables them to proactively manage workforce issues, foster a positive organizational culture, and enhance employee retention. Moreover, demonstrating a commitment to addressing employee concerns and continuously improving workplace conditions can boost employee trust and loyalty, leading to improved performance and better overall organizational outcomes.

FAQ

The post 11 Important Employee Relations Metrics To Track appeared first on AIHR.

Collecting and analyzing these numbers matters. Several surveys, including one from CareerArc of over 800 candidates, have found that over half of all job seekers have had a poor candidate experience. Understanding your candidates’ experiences through measuring their journey can help you pinpoint issues and improve your hiring process. 

Contents
What is candidate experience?
How to measure candidate experience
How to improve candidate experience
1. Application drop-off rate
2. Time to hire
3. Offer acceptance rate
4. Interview-to-offer ratio
5. Candidate Net Promoter Score (cNPS) / Candidate Satisfaction Score (CSS)
6. First-year attrition rate
Candidate experience best practices for HR

What is candidate experience? 

Candidate experience is job seekers’ overall impression after undergoing a potential employer’s recruitment process.

Every interaction between each candidate and the company, from application to onboarding, influences the candidate’s experience. The more relevant and efficient each phase of the recruitment process is, the more positive the candidate experience (and vice versa).

Why is candidate experience important?

Candidate experience is a reflection of an organization and its culture. It gives applicants a glimpse into how the company treats its employees and indicates whether it’s a desirable workplace. Let’s look at the stats on why candidate experience matters:

• The CareerArc survey found that 72% of job seekers were likely to share their negative candidate experiences with others, both online and verbally
• Additionally, 50% wouldn’t accept a job at a company with a poor reputation, even if it paid higher than their current or previous job
• 52% of job seeker participants in a CareerPlug survey indicated they had turned down job offers because of poor candidate experience.

On the other hand, a positive candidate experience can benefit your organization in the following ways:

• Attracting and retaining high-quality candidates
• Forming a pool of interested candidates for future job openings
• Building trust and connection with new hires
• This trust will help improve employee engagement and retention of new recruits
• Creating enthusiasm for the company by enhancing its reputation and employer brand.

How to measure candidate experience

Improving candidate experience clearly benefits HR and the organization. But to get the right insights into what’s working and what’s not, you’ll need to measure and analyze the right candidate experience metrics:

1. Application drop-off rate

This metric reveals the percentage of candidates who began but didn’t complete the application process. A high percentage can indicate a range of issues. Maybe the process is too long or cumbersome, is riddled with technical glitches, or doesn’t provide enough relevant information on the company’s job openings.

Calculating application drop-off rate:

Application drop-off rate percentage = (number of candidates who drop out of the application process ÷ number of candidates who begin the application process) x 100

Try this: Review each application step and consider ways to condense it. Ensure all questions are relevant and straightforward. Then measure whether the application drop-off rate improves.

HR tip

Every application system should have a “save and return” feature. If candidates can take breaks and pick up where they left off, they’ll be more inclined to follow the process through. 

2. Time to hire

Time to hire calculates the length of the entire hiring process, from when a candidate applies for a job until they accept an offer. An extended hiring process can negatively affect your organization’s candidate experience. Job seekers may get frustrated, lose interest, or receive another suitable job offer.

Calculating time to hire:

To calculate time to hire, select a set period (such as the previous six months) and add the number of days between each new hire’s job application and when they accepted the job offer. The average of these values is your organization’s time to hire.  

This breakdown should tell you where the bottlenecks are, allowing you to focus on how to speed up the slowest phases.

Try this: Sort the hiring process into stages and analyze how long each stage takes. For example:

• Application submission — 10 days
• Application review — 15 days
• Initial contact with qualified candidates — five days
• Interviews — eight days
• Interview evaluation and job offer — five days
• Job offer accepted — four days.

3. Offer acceptance rate

Offer acceptance rate refers to the percentage of your company’s job offers that candidates accept. It indicates the success of your efforts in sourcing and selecting suitable candidates. The higher your organization’s offer acceptance rate is, the more effective your recruitment process is. A lower rate can mean the right candidates aren’t getting through the system or that your company’s job offers are not competitive in the current market.

Calculating offer acceptance rate:

Offer acceptance rate = (number of job offers accepted ÷ total number of offers extended) x 100

Try this: Contact candidates who reject job offers and gather feedback on their reasons for doing so. Look for common themes such as candidates receiving better offers elsewhere, feeling overqualified, or having experienced poor communication throughout the recruitment process.

4. Interview-to-offer ratio

This ratio expresses how many interviews your company’s HR team conducts per candidate before extending a job offer. It shows whether the organization attracts qualified candidates and how much time it invests in the interview process.

Calculating interview-to-offer ratio:

Interview-to-offer ratio = number of offers extended ÷ number of applicants interviewed

Try this: Aim for an interview-to-offer ratio of 2:1, but bear in mind that external factors outside HR’s control can affect this ratio. For instance, steep competition in the labor market can trigger the need to interview more candidates, as more are likely to accept other offers.

5. Candidate Net Promoter Score (cNPS) / Candidate Satisfaction Score (CSS)

HR can use Candidate Net Promoter Score (cNPS) or Candidate Satisfaction Score (CSS) to measure the likelihood of candidates recommending a company to others based on their experience during the recruitment process. It provides insights into candidates’ overall satisfaction with the process and helps HR understand how candidates perceive their hiring experience.

cNPS categories:

• Promoters (9-10): Candidates who are highly likely to recommend your organization to others.
• Passives (7-8): Candidates who are neutral and probably won’t actively recommend your organization to others.
• Detractors (0-6): Candidates who are unlikely to recommend your organization to others and may even discourage them from applying.

Allowing candidates to provide honest feedback on their perception of the company and its recruitment process is a direct way to determine the quality of the candidate experience it offers.

Try this: Include a question in your candidate feedback survey that asks: “On a scale of 0 to 10, how likely are you to recommend our organization to other job seekers?” Arrange the responses into the three categories.

6. First-year attrition rate

Since candidate experience includes the onboarding process, it’s important to gather data on the percentage of new hires who leave the company within their first year of employment. High turnover within the first year can signify inconsistencies in talent acquisition techniques, while longer-term attrition rates tend to reflect issues that go beyond recruitment.

Calculating first-year attrition rate:

First-year attrition percentage = (number of employee departures after less than one year of service ÷ total number of departures) x 100

Try this: Calculate your organization’s first-year attrition rate yearly and use two or three years’ worth of data for a more comprehensive overview of new hire turnover.

How to improve candidate experience

Once you’ve measured and analyzed your candidate experience, it’s time to apply your findings to improving your process. Here are some general steps you can take to provide a better candidate experience. However, based on your specific findings, it’s important to improve the process where it matters most.

Simplify the application process

If your company’s job application process involves multiple time-consuming steps, candidates will likely wonder if it’s worth the effort and may give up completely. Try to streamline the process and make it as simple and straightforward as possible. 

Here are a few suggestions:

• Explain the role and requirements clearly: Every job listing should accurately describe the role’s responsibilities and requirements so candidates know exactly what to expect and whether they are qualified for it.
• Keep the application phase brief: Implement a résumé upload feature on your organization’s job application page and avoid time-consuming forms that ask for the same information that uploaded résumés would contain.
• Include clear, specific, and comprehensive instructions: This should apply to each application section to ensure candidates don’t have to deal with ambiguity and can complete the application process swiftly.
• Ask relevant questions: Not only must your questions be applicable, but they should come with sufficient choices/space for candidates’ answers.
• Use concise, easily understood language: Avoid using complex wording, industry jargon, or organization-specific terms applicants may not know about.
• Avoid technical glitches: Ensure your company’s job application system technology works properly and is user- and mobile-friendly.

HR tip

A Greenhouse candidate experience report showed that 70% of job seekers won’t bother submitting a job application if it takes more than 15 minutes to complete.

Maintain cordiality and transparency throughout the process

Candidates usually remember how HR treated them during an organization’s job application process. Interacting with HR personnel who come across as uninterested or aloof can negatively impact their candidate experience. Instead, be sincere and attentive to help them form a good impression of the company. Ways to create a warm, positive candidate experience include:

• Be transparent about the decision-making process and when candidates can expect updates
• Connect each candidate with a relevant contact person and provide them with timely feedback throughout the process
• Be flexible and willing to accommodate candidates’ needs when scheduling interviews or requesting supplemental materials from them
• Explain who will conduct their interviews and what the process entails
• Ensure interviewers are equipped to lead respectful, thorough, and personable interviews
• Don’t leave candidates hanging — follow up promptly and inform them if they are no longer being considered for the position they applied to.

HR tip

According to a Criteria candidate experience report, 54% of candidates have abandoned a potential job opportunity because of insufficient communication from the employer.

Candidate experience best practices for HR

When tracking candidate experience data, you must have a clear purpose and key objectives in mind to be able to use this data effectively. Here are some best practices for collecting, measuring, and analyzing candidate experience data: 

1. Predefine your goals and the relevant metrics: Determine what you want to learn from the data and which metrics to focus on. For example, if your company isn’t receiving the anticipated number of applications for its most crucial positions, analyzing the application drop-off rate could reveal whether it’s sourcing enough candidates. 
2. Send candidates timely surveys to complete: Offer short candidate experience surveys immediately after key touchpoints, but don’t inundate applicants. For instance, you can send survey invitations upon application submission, post-interview, and after extending an offer or rejection to a candidate.
3. Ensure candidate anonymity: Candidates are usually more willing to provide feedback if they are confident it won’t affect their application status. Assure them that the survey mechanism is anonymous, so they know they can be completely honest and upfront without fear of repercussion. 
4. Gather qualitative and quantitative data: Multiple-choice and rating scale questions provide fast-access data, but open-ended questions often offer deeper insights. Collecting quantitative and qualitative data will give you a more comprehensive view of your organization’s candidate experience. 
5. Analyze feedback frequently: Review applicant feedback on an ongoing basis. The sooner you can identify positive and negative patterns, the quicker you can act on them. Compare your company’s candidate experience survey results against industry benchmarks and historical internal data to uncover potential new issues. 
6. Involve stakeholders in reviewing and acting on candidate feedback: Collaborate with recruiters, hiring managers, and other stakeholders by sharing relevant data with them via a candidate experience report. Requesting stakeholder input will help shed further light on improving processes. For instance, hiring managers may identify potential biases in screening interview questions, and recruiters could highlight areas of improvement in job descriptions.
7. Put the data to work: Extrapolate conclusions from your gathered data and feedback to make informed decisions on implementing tangible improvements to the hiring process. For instance, the data might indicate that your company’s time to hire is too long, causing a drop-off in qualified candidates. You can then propose an AI screening tool to automate a large part of the process. 
8. Leverage HR software: The most efficient way to collect data and distribute candidate surveys is to incorporate these abilities into your organization’s automated application system. Recruiting software often has these functions built in. For example, advanced HR software platforms can automatically send out surveys at various stages of the hiring process. These tools also allow you to customize survey questions so you can capture specific insights relevant to your organization’s needs. 
9. Monitor social media: Visit Glassdoor, LinkedIn, and other online job platforms regularly to look for candidate reviews and comments. Keeping yourself updated on candidate experience dialogue on social media can also reveal candid sentiment and feedback you might not otherwise receive.

To sum up

Candidate experience is responsible for the first impression applicants get of an organization and, as such, affects employer’s brand and business reputation. A poor candidate experience is a barrier to attracting and acquiring high-quality talent.

With the help of candidate experience metrics, HR can identify pain points in the recruitment process, then allocate resources and make improvements. Investing time and effort into refining your organization’s hiring practices will pay off in the long run, both for candidates and the company.

The post Candidate Experience Metrics: How To Measure and Improve Candidate Experience appeared first on AIHR.

Recent research by Deloitte found that 83% of the 924 companies surveyed globally had low workforce analytics maturity. In contrast, higher-maturity organizations use consistent data definitions, embedded reporting and analytical tools, and data integration capabilities to understand employee behaviors.

Contents
What is workforce analytics?
Types of workforce analytics
The benefits of workforce analytics
Workforce analytics metrics to track
Workforce analytics examples and use cases
Workforce analytics software
Workforce planning and analytics: HR tips
Workforce analytics training for HR

What is workforce analytics?

Workforce analytics, also known as workforce planning analytics, is the systematic use of workforce data to inform and optimize HR decision-making.

It uses data-driven insights to enhance workforce efficiency, success, and strategic alignment. This helps organizations achieve their goals by ensuring the right people are in the right roles at the right time and proactively addressing workforce-related challenges.

Key elements of workforce analytics

Workforce analytics involves collecting HR data from various sources, including employee performance metrics, engagement surveys, attendance records, and demographic information. This data collection is essential for building a comprehensive understanding of the workforce.

The next step focuses on understanding the significance or implications of this data in relation to organizational goals. This entails analyzing trends, identifying patterns, and correlating workforce metrics and business outcomes. By interpreting this data, HR can gain insights into areas such as employee productivity, retention, and skills gaps.

As an HR professional, you can use this data to optimize the decision-making process. By integrating data-driven insights into HR strategies and operational plans, HR teams can make informed decisions about talent acquisition, development, and deployment. This optimized decision-making process helps create a more agile and responsive workforce, driving better business performance.

Types of workforce analytics

1. Descriptive workforce analytics

Descriptive workforce analytics involves analyzing past and current workforce data to understand the present state of the workforce.

Example metrics:

• Employee turnover rates
• Average tenure
• Absenteeism rates.

2. Diagnostic workforce analytics

Diagnostic workforce analytics goes a step further by examining the reasons behind the patterns that descriptive workforce analytics identifies.

Example metrics:

• Employee engagement scores
• Exit interview feedback
• Performance review data.

 3. Predictive workforce analytics

Predictive workforce analytics uses historical data to forecast future workforce trends and potential issues. It aims to predict outcomes and help organizations prepare for future scenarios.

Example metrics:

• Predictive turnover models
• Talent pipeline forecasts
• Workforce demand projections.

4. Prescriptive workforce analytics

Prescriptive workforce analytics builds on predictive workforce analytics by recommending specific actions to achieve desired outcomes. It uses advanced algorithms to suggest optimal solutions to workforce challenges.

Example metrics:

• Optimization models for staffing
• Scenario planning outputs
• Prescriptive talent management recommendations.

The link between different workforce analytics types

Descriptive workforce analytics provides a clear picture of current trends and happenings in the workforce, while diagnostic workforce analytics helps HR understand the reason behind them. Together, they offer a comprehensive understanding of the state of the workforce and its underlying causes.

On the other hand, predictive workforce analytics forecasts future trends based on historical data, while prescriptive workforce analytics suggests actionable steps to optimize outcomes based on these predictions. This combination helps HR proactively address future workforce challenges and opportunities.

Utilizing all four types of workforce analytics will allow you to gain a holistic view of your organization’s workforce, understand the factors driving current performance, anticipate future needs, and effectively implement strategies to achieve goals.​​

The benefits of workforce analytics

• Improved HR decision-making: Workforce management analytics provide HR professionals with valuable insights, leading to more informed and effective decision-making.
• Enhanced employee experience and retention: HR can identify factors influencing employee satisfaction and engagement by analyzing workforce data analytics. It can also improve onboarding processes and retention rates.
• More cost-effective business practices: Workforce analytics can highlight inefficiencies and areas for cost savings, allowing for more strategic resource allocation and reduced operational costs.
• Greater understanding of future workforce needs: Workforce planning metrics help anticipate future staffing requirements, ensuring the organization is prepared to meet its goals.
• Better alignment between HR and company goals: By leveraging workforce analytics, HR can ensure their strategies and actions align with overarching organizational goals.

Workforce analytics metrics to track 

1. Employee turnover rate: Measuring the rate at which employees leave an organization within a specific period (typically a month, quarter, or year) helps HR understand workforce stability and gauge its effective retention strategies. High employee turnover rates may indicate job satisfaction, compensation, or work environment issues, prompting a review of HR practices to improve employee experience and retention.
2. Average tenure: Calculating your organization’s average employment length provides insight into employee loyalty and the success of HR’s retention efforts. If the average employee tenure is short, it could signal problems with onboarding, culture fit, or career development opportunities.
3. Absenteeism rate: Tracking the frequency of unplanned employee absences — be it due to illness, stress, or other personal reasons — can help prompt initiatives to improve workplace wellness and support. High absenteeism rates can indicate, for instance, low employee engagement or health issues in the workplace.
4. Time to hire: Measuring the period between the posting of a new open position and a candidate accepting the job offer gives HR an indication of how efficient the recruitment process is. Prolonged time to hire can harm the candidate experience and lead to talent loss, necessitating a review and optimization of the recruitment and hiring process.
5. Cost per hire: Calculating the cost per hire, i.e., the average cost of hiring a new employee (including advertising, recruiter fees, and onboarding expenses), can help HR identify cost savings opportunities and optimize recruitment budgets.
6. Employee engagement rating: Gauging the level of employee engagement and satisfaction through surveys and feedback gives HR a good idea of how happy employees are. Engaged employees are typically more productive and less likely to leave the organization. On the other hand, low engagement scores should prompt HR to implement initiatives to improve workplace culture, communication, and employee recognition.
7. Revenue per employee: Assessing the average revenue generated per employee provides insight into overall workforce productivity and efficiency. Low revenue per employee may indicate inefficiencies or a need for better training and development programs to improve employee performance.
8. Early turnover rate: Tracking the percentage of employees who leave within their first year of employment can highlight issues with the hiring process, onboarding, or early employee experience. A high early turnover rate — also known as new hire turnover — warrants a review of recruitment practices and onboarding programs to ensure new hires are well-integrated and supported.
9. Employee net promoter score (eNPS): Determining eNPS through employee surveys indicates employee loyalty and their likelihood of recommending the company to others as a good place to work. A low eNPS score can signify employee dissatisfaction and potential turnover, prompting HR to investigate and address the underlying issues.
10. Training effectiveness: Evaluating the impact of training programs on employee performance and development helps HR assess and improve its employee experience strategies. This includes pre-and post-training assessments and feedback. A high degree of training effectiveness can enhance employee skills and productivity, while HR can redesign or replace ineffective programs to better meet both employee and organizational needs.

HR tip

Start small and scale up. Begin your workforce analytics journey with a few key metrics that align closely with your organizational goals. As you begin to see and act on results, you can fine-tune your approach and gradually expand the range of metrics you use for more comprehensive workforce analytics.

Workforce analytics examples and use cases

Example 1: Evaluating the impact of employee engagement initiative

An HR manager at a healthcare organization wants to understand if employee engagement initiatives positively influence retention rates. The goal is to determine which engagement activities are the most effective in retaining employees.

The HR manager collects and analyzes data on various initiatives, such as wellness programs, team-building activities, and professional development opportunities. By comparing retention rates before and after implementing these initiatives and correlating them with employee feedback and engagement scores, the HR manager can identify which activities significantly impact employee retention.

Example 2: Predicting a tech company’s future workforce needs

A tech company is experiencing rapid growth and needs the right talent to meet future demands. The HR team uses predictive workforce analytics to forecast staffing needs based on historical hiring data, project timelines, and market trends.

By analyzing past hiring patterns and upcoming project requirements, the HR team predicts the number of software developers, project managers, and support staff the company needs over the next year. This allows the company to proactively recruit and train employees, ensuring they have the necessary skills and capacity to support its growth.

Example 3: Optimizing the recruitment process through data analysis

A retail company wants to reduce the time and cost associated with its recruitment process while improving the quality of its hires. The HR department uses workforce analytics to evaluate the effectiveness of different recruitment channels and methods.

The team tracks metrics such as time to hire, cost per hire, and candidate quality (based on performance reviews and retention rates) for various recruitment sources, such as job boards, social media, and employee referrals. By identifying the most cost-effective and efficient channels that yield high-quality candidates, the HR department optimizes the recruitment strategy, reducing costs and time to hire while improving overall candidate quality.

Workforce analytics software

There are various companies offering workforce analytics tools and software. Some of these include:

Workforce planning and analytics: HR tips

HR can use workforce analytics in workforce planning. Some of the areas workforce analytics can help with planning include: 

1. Identify skills gaps: Use analytics to assess current employee skills and identify gaps to closed through training or hiring.
2. Forecast workforce needs: Use predictive analytics to forecast future staffing needs based on business growth projections, seasonal demands, and turnover rates.
3. Enhance succession planning: Identify high-potential employees using performance data and engagement metrics to ensure a robust pipeline for key roles.
4. Optimize talent acquisition: Analyze recruitment data to determine the most effective sources and methods for attracting top talent.
5. Improve employee retention: Use retention analytics to identify factors contributing to employee turnover, and develop strategies to improve job satisfaction and retention.
6. Align workforce with business goals: Ensure that workforce planning and analytics are aligned with overall business strategies and goals to drive organizational success.
7. Monitor and manage performance: Utilize performance analytics to track employee productivity and effectiveness. This helps HR identify areas for improvement, as well as recognize top performers.
8. Budget effectively: Use workforce analytics to inform budgeting decisions, ensuring financial resources are allocated as efficiently as possible to meet workforce needs.
9. Enhance employee engagement: Leverage engagement analytics to understand employee sentiment and develop initiatives that enhance employee engagement and morale.
10. Support diversity, equity, inclusion and belonging (DEIB): Use analytics to monitor diversity and inclusion metrics to ensure the organization progresses toward its DEIB goals.

Workforce analytics training for HR

As an HR professional, upskilling yourself in workforce analytics can help you make better data-driven decisions. This is where workforce analytics training comes in. Engaging in specialized training programs will improve your ability to analyze and interpret workforce data, leading to more strategic and effective HR practices.

AIHR analytics courses

AIHR offers various analytics certificate programs to help you develop your data analytics skills: 

• People Analytics Certificate Program: This comprehensive program covers essential topics in people analytics, including data collection, analysis, and interpretation. It equips HR professionals with the skills they need to implement and leverage analytics effectively in their organizations.
• People Analytics Foundations online course: This course provides a solid foundation in people analytics, focusing on key concepts and practical applications.  It’s ideal for HR professionals looking to build a strong understanding of using analytics to drive business decisions.
• HR Data Analyst online course: This course is designed to develop the skills necessary for analyzing HR data. It covers various analytical techniques and tools, helping HR professionals become proficient in data-driven decision-making.

To sum up

Incorporating workforce analytics into your HR practices provides a strategic advantage, enabling data-driven decision-making that aligns with organizational goals. By systematically collecting, analyzing, and interpreting data, you can address challenges proactively, optimize talent management, and improve overall business performance. This approach ensures the right people are in the right roles, enhancing organizational efficiency and effectiveness. 

The distinct types of workforce analytics (descriptive, diagnostic, predictive, and prescriptive) offer valuable insights at various stages of the HR process. From understanding current workforce trends to predicting future needs, these analytics tools empower HR teams to make informed decisions that drive success. As the business environment continues to evolve, workforce analytics will remain crucial for maintaining a competitive edge and achieving long-term organizational success.

The post What Is Workforce Analytics? Your 2024 A-Z Guide appeared first on AIHR.

But what is the difference between OKRs and KPIs? This article will explain the key differences, when to use each, and metrics to track when measuring each methodology.  

Contents
What is an OKR?
The benefits of setting OKRs
What is a KPI?
The benefits of setting KPIs
OKRs vs. KPIs: The main differences
Why use HR OKRs
Why use HR KPIs

What is an OKR?

• Objectives serve as ambitious, qualitative descriptions of what the organization aims to achieve
• Key Results are specific, measurable milestones indicating progress towards those objectives. 

This framework fosters alignment, accountability, and innovation within organizations, driving success across industries.

The benefits of setting OKRs

• Alignment: OKRs help align HR goals with the organization’s overall objectives, ensuring that HR initiatives contribute directly to the company’s success.
• Clarity: OKRs provide clarity on HR priorities and expectations, making it easier for you and your HR teams to understand what must be accomplished and how to measure success.
• Focus: By setting clear objectives and key results, OKRs help your HR teams prioritize tasks and initiatives, focusing efforts on the most impactful activities.
• Accountability: OKRs facilitate accountability within HR by establishing measurable outcomes and timelines for achieving them. This encourages you, the HR professional, to take ownership of your work and deliver results.
• Continuous improvement: OKRs promote a culture of constant improvement within HR by encouraging reflection and adjustment based on performance data. Your HR teams can use OKR results to identify areas for growth and refine their strategies over time.
• Employee engagement: When HR goals are aligned with the organization’s objectives, employees are more likely to feel engaged and motivated. OKRs provide a framework for communicating your HR priorities and creating a sense of purpose among employees.
• Transparency: OKRs promote transparency within HR and across the organization by clearly outlining goals and progress. This transparency builds trust and collaboration among team members and stakeholders.
• Adaptability: OKRs allow your HR teams to adapt quickly to changing business needs and market conditions. By regularly reviewing and adjusting objectives and key results, you can remain agile and responsive to new challenges and opportunities. 

HR tip

Sears implemented the OKR framework to boost performance. Initially, the company limited this to salaried employees, overlooking sales agents. After a year, with minimal OKR impact, it realized adjustments were necessary.

Sears achieved notable improvements by refocusing efforts on outbound call centers and emphasizing add-on sales metrics. Sales increased by 8.5% and hourly sales rose from $14.44 to $15.67.

What is a KPI?

A Key Performance Indicator (KPI) is a measurable value that gauges how effectively an organization is achieving its key objectives. 

• Key indicates the metric’s importance in relation to organizational goals.
• Performance emphasizes its role in assessing the effectiveness and execution of strategies
• Indicators highlight the measurable nature of these metrics, which provide valuable insights into progress.

KPIs are essential tools for decision-making, helping organizations (and HR teams) to track and optimize performance toward desired outcomes.

The benefits of setting KPIs

• Performance measurement: KPIs can provide you with quantifiable metrics to measure the effectiveness and efficiency of your HR initiatives, processes, and programs.
• Goal alignment: KPIs help align your HR activities with the goals and objectives of the organization.
  Data-driven decision-making: KPIs can provide you with actionable insights based on real-time data. This data will help you make informed decisions and prioritize initiatives that impact organizational performance most.
• Accountability: By setting clear KPIs, HR professionals and teams are held accountable for achieving specific outcomes. This builds a culture of responsibility and ownership within the department.
• Continuous improvement: KPIs serve as benchmarks for your performance. These benchmarks help you evaluate and refine your HR strategies and processes to improve your effectiveness over time.
• Resource optimization: KPIs help you to allocate resources more effectively by identifying areas of strength and weakness. This lets you focus resources where they are most needed to drive performance and results.
• Employee development: You can use KPIs to track and evaluate employee performance, identify areas for improvement, and establish individual and team development goals. This contributes to a culture of growth and development within the organization.
• Communication and transparency: Setting KPIs promotes transparency and open communication both within HR and across the organization by clearly defining expectations and goals. This creates collaboration and alignment toward common objectives.

OKRs vs. KPIs: The main differences

Why use HR OKRs

Here’s why implementing HR OKRs within the HR function is beneficial:

1. Aligns with organizational goals

OKRs help you align your HR objectives and initiatives with the company’s broader strategic goals. By setting clear objectives and defining key results contributing to these goals, you can focus your HR team’s efforts on activities that drive organizational success.

2. Provides focus and prioritization

OKRs provide you with a framework for prioritizing activities and allocating resources effectively. You can better direct your efforts toward the most critical initiatives by establishing ambitious yet achievable objectives and defining key results that measure progress.

3. Maintains accountability and measurement

OKRs create accountability within HR by establishing clear expectations and metrics for success. You can achieve your HR goals and optimize your HR team’s performance by regularly tracking progress against key results and holding individuals and teams accountable.

4. Encourages continuous improvement

OKRs promote a culture of continuous improvement within HR by encouraging reflection, learning, and adaptation. Regular reviews help you identify areas for improvement, refine strategies, and iterate approaches to achieve better results over time.

HR tip

Inject creativity into OKRs by encouraging cross-functional collaboration to spark innovation and develop a culture of collective ownership of shared goals.

How HR can use OKRs

There are many objectives that OKRs can help you to achieve. Some of these include: 

Improving recruitment and onboarding 

Setting clear OKRs for recruitment and onboarding helps your recruiters and talent acquisition team improve their work in these key areas. For instance, the goal might be to enhance the quality of new hires with specific targets like “boost candidate survey scores by 20%”, “raise new hire retention by 15% in the first year”, and “cut down the hiring process by 10 days”. 

This method focuses on attracting the best talent and making sure they settle in well, increasing their commitment and participation from the start. With OKRs, HR can use data and feedback to keep improving how they hire and welcome new employees.

Improving employee engagement and satisfaction

For instance, a goal could be “increase employee engagement and satisfaction,” with measurable outcomes like “boost employee engagement score by 25%”, “cut employee turnover by 20%”, and “start at least two workforce development programs.” 

By establishing these objectives, you can work towards fostering a positive culture that appreciates and rewards employees’ efforts. OKRs promote ongoing feedback, making employees feel valued and listened to, which boosts loyalty and productivity.

Developing Diversity, Inclusion, Equity and Belonging

Use OKRs to improve Diversity and Inclusion in the workplace. For example, an objective might be to “amplify diversity and inclusion in all departmental teams” with measurable outcomes such as “increase the representation of minority groups in management positions by 15%” and “achieve a 25% increase in employee perceptions of inclusivity”. 

By setting specific, actionable goals, HR can ensure that DEIB initiatives are not just token gestures but are integrated into the organization’s culture. 

6 examples of HR OKRs

Example 1:

• Objective: Improve employee engagement
• Key result 1: Increase employee engagement survey scores by 10%
• Key result 2: Reduce voluntary turnover rate by 5%
• Key result 3: Implement at least three employee recognition programs.

Example 2:

• Objective: Enhance diversity and inclusion
• Key result 1: Increase representation of underrepresented groups in leadership positions by 15%
• Key result 2: Achieve 100% participation in diversity and inclusion training programs
• Key Result 3: Implement unconscious bias training for all hiring managers.
  

Example 3:

• Objective: Strengthen talent acquisition
• Key result 1: Reduce time to fill vacant positions by 20%
• Key result 2: Improve candidate satisfaction scores by 15%
• Key result 3: Increase employee referral hires by 25%.
  

Example 4:

• Objective: Optimize performance management process
• Key result 1: Increase employee and organizational goal alignment by 20%
• Key result 2: Conduct quarterly performance check-ins with all employees
• Key result 3: Raise performance appraisal completion rates to 95%.
  

Example 5:

• Objective: Enhance employee development
• Key result 1: Increase participation in training and development programs by 30%
• Key result 2: Achieve 90% satisfaction rate in post-training surveys
• Key result 3: Implement a mentorship program for high-potential employees
  

Example 6:

• Objective: Improve HR operational efficiency
• Key result 1: Implement HR automation tools to reduce time spent on administrative tasks
• Key result 2: Streamline onboarding process to reduce onboarding time by 25%
• Key result 3: Increase self-service HR portal adoption rate to 80%.

HR tip

Learn to make data-driven decisions by upskilling yourself with an AIHR People Analytics Certificate Program. The self-paced program will teach you how to analyze HR data and build interactive HR dashboards and reports so you can measure and transform data into actionable insights. 

Why use HR KPs

KPIs can serve several purposes within HR:

1. Align with strategic objectives

KPIs help HR departments align initiatives and activities with the organization’s overall strategic objectives. By measuring specific metrics, such as talent acquisition, employee development, and retention, HR can ensure that its efforts contribute directly to achieving broader organizational goals.

2. Monitor key metrics

You can track critical workforce management and performance metrics with KPIs. These metrics may include employee engagement levels, turnover rates, diversity and inclusion metrics, training and development effectiveness, and HR operational efficiency. By measuring these key indicators, you can identify areas of strength and areas needing improvement. This enables you and the company to make informed decisions and take proactive measures to address issues as they arise.

3. Drive performance improvement

KPIs provide HR with insights into the performance and effectiveness of various HR programs, policies, and processes. By setting benchmarks and targets for key metrics, you can establish performance standards and identify opportunities for improvement. This enables HR to implement targeted interventions and strategies to enhance employee performance, engagement, and overall organizational effectiveness.

4. Improve decision-making 

KPIs serve as valuable tools for data-driven decision-making within HR. By analyzing KPI data, you can gain insights into trends, patterns, and areas of concern within the workforce. This enables HR to make informed decisions regarding talent management, resource allocation, strategic planning, and other critical HR initiatives, ultimately leading to better outcomes for the organization.

How HR can use KPIs

Measure performance

Use KPIs to measure the performance and effectiveness of your HR programs, initiatives, and processes. For example, KPIs related to recruitment and selection can help HR assess the efficiency of talent acquisition efforts. KPIs related to training and development can help gauge the impact of employee learning programs on skill development and performance improvement.

Set and monitor goals

Establish specific KPIs aligned with HR goals and objectives and use them to set performance targets and benchmarks. By monitoring KPIs regularly, you can track progress toward achieving these goals, identify areas of success and improvement, and adjust strategies and tactics to stay on track.

Identify trends and patterns

HR can analyze KPI data to identify trends, patterns, and insights related to workforce dynamics, employee behavior, and organizational performance. For example, KPIs related to employee engagement can help you identify drivers of engagement and areas of concern, helping you develop targeted interventions to improve morale and satisfaction.

Benchmarking and comparison

KPIs can be used to benchmark performance against industry standards and best practices or compare performance across different departments, teams, or time periods. This helps you identify areas of strength and areas needing improvement relative to peers or internal benchmarks.

Drive accountability and transparency

Promote accountability and transparency by establishing clear KPIs and communicating them to stakeholders. Employees and managers can then better understand expectations and performance standards, track progress toward goals, and take ownership of their contributions to success.

Assess the effectiveness of strategies and policies

KPIs help you to evaluate the effectiveness of existing HR strategies, programs, and policies. By measuring outcomes against predefined KPIs — such as recruitment effectiveness, training program success rates, and diversity and inclusion metrics — you can determine whether its initiatives are achieving the desired results. You can then identify what’s working and what requires improvement, leading to more targeted and effective interventions.

6 examples of HR KPIs

Example 1:

Employee turnover rate: Percentage of employees who leave the organization within a specific period, typically calculated annually.

Example 2:

Absenteeism rate: Percentage of scheduled work hours that employees are absent from work, often calculated monthly or quarterly.

Example 3:

Time to hire: Average number of days it takes to fill a vacant position from the time you post it until the organization hires a candidate.

Example 4:

Training program success rate: Percentage of employees who successfully complete training programs or courses within a given timeframe.

Example 5:

Employee engagement score: A composite measure of employee satisfaction, motivation, and commitment, often assessed through employee engagement surveys or other feedback mechanisms.

Example 6:

Diversity index: Measure of workforce diversity that considers factors such as gender, race, ethnicity, age, and other aspects of diversity, often expressed as a percentage or ratio.

To sum up

OKRs and KPIs are invaluable tools for driving organizational success. OKRs provide a structured methodology for defining clear objectives and measurable outcomes, guiding teams toward strategic goals. On the other hand, KPIs offer real-time insights into performance, enabling you to track progress and make data-driven decisions.

The post OKRs vs. KPIs: The Key Differences & Use (With Examples)  appeared first on AIHR.

In this article, we will explain what HR analytics is, its benefits, as well as how to get started and grow in your HR analytics capabilities.

Contents
What is HR analytics?
What is HR analytics used for?
Importance of HR analytics
HR analytics examples
Key HR metrics
Data analytics in HR: How to get started
How to transition from descriptive to predictive and prescriptive analytics in HR
HR analytics certification
FAQ

What is HR analytics?

HR analytics, also referred to as people analytics or workforce analytics, involves gathering, analyzing, and reporting HR data to drive business results. It enables your organization to better understand your workforce, make decisions based on data, and measure the impact of a range of HR metrics, ultimately improving overall business performance. In other words, HR analytics is a data-driven approach to Human Resources Management.

Although the term “HR analytics” is widely used, there is a growing trend of referencing “people analytics” as well. The two may often be used interchangeably, but technically there is a subtle difference. HR analytics originates from data housed within Human Resources and is aimed at optimizing HR functions. People analytics expands beyond HR to incorporate data from other sources within the organization, such as marketing, finance, and customer statistics, to address a wider scope of business issues. 

In the past century, Human Resource Management has made a dramatic shift from an operational discipline to a more strategic one. The popularity of using the phrase Strategic Human Resource Management exemplifies this. The data-driven approach that characterizes HR analytics is in line with this development.

Analytics enables HR professionals to make data-driven decisions instead of relying solely on instinct and opinions. Furthermore, analytics helps test the effectiveness of HR policies and interventions.

Types of HR analytics

Different data analysis methods provide insight and identify trends within data. Being familiar with these methods helps you understand how analytics can contribute to HR planning and decision-making. 

Here’s a brief overview of the four types of HR analytics:

• Descriptive HR analytics: Examines historical data to see what has occurred during a specific time. (Example: Annual employee turnover rate.)
• Diagnostic HR analytics: Investigates data to ascertain the causes of past occurrences and behaviors. (Example: Examining unplanned absence data to identify absenteeism drivers.)
• Predictive HR analytics: Explores current and historical data and uses statistical models and forecasts to predict future behaviors and events. (Example: Exploring recruitment data to discover the key attributes of an ideal candidate for a particular position.)
• Prescriptive HR analytics: Suggests potential future outcomes and scenarios and proposes recommendations for addressing them. (Example: Developing an algorithm that predicts what type of onboarding a new hire will need according to their experience and skill level.)

What is HR analytics used for?

Analyzing your HR data helps you draw conclusions, uncover insights, and make predictions. Data analytics in HR is used to improve HR functions in a variety of ways. 

Here are a few examples:

• Identifying patterns in voluntary and involuntary employee turnover
• Assessing the recruitment effort through candidate and process data
• Evaluating talent management effectiveness with metrics such as engagement and absenteeism rates
• Determining training and development needs from a skills inventory
• Optimizing compensation and benefits through analyzing market trends, internal equity, and effectiveness of current compensation packages
• Predicting future workforce needs by analyzing current workforce demographics, skill sets, and retirement projections.

We discuss more real-life examples below.

Importance of HR analytics

Leveraging data has become essential to expanding HR’s role within organizations by moving it from an operational function to a strategic partner. Knowing the impact of HR policies helps HR align its strategy with business goals and quantify the value it adds. Increasing what HR has to offer benefits employees and makes a positive impact on business results. 

Engaging in HR analytics enables HR to:

• Make better decisions that impact employees and the organization using the evidence data reveals
• Uncover and remedy inefficiencies to improve employee and organizational productivity and reduce costs
• Create a business case for HR interventions
• Evaluate the effectiveness of HR interventions and people policies
• Assess and strengthen DEIB efforts
• Be proactive in navigating change, disruption, and uncertainty.

At AIHR, we see HR analytics as identifying the people-related drivers of business performance. It takes the guesswork out of employee management and is, therefore, the future of HR. Or, to put it in the words of Edwards Deming: “Without data, you’re just another person with an opinion.”

HR analytics examples

To get an idea of how HR data analysis can make a difference in your organization, here are three companies that have successfully put HR analytics into practice:

1. HR analytics in recruitment at Google

Multinational technology company Google embraced predictive analytics in its recruitment efforts to reduce costs and shorten the hiring process. 

Google had previously required candidates to endure 15 to 25 rounds of interviews and testing. However, an analysis of the hiring process revealed that successful candidates could be predicted with 86% confidence from just four interviews. This reduced the number of hours and staff required to screen applicants effectively.

In addition, Google formulated an algorithm that analyzes resumes that had been rejected for one position to source potential candidates for another opening.

HR tip

If you’d like to read more about how data can change hiring practices, we recommend Laszlo Bock’s book ‘Work Rules’. Laszlo Bock was the senior VP of People Operations at Google and describes in more detail how hiring practices changed at Google after analyzing recruitment data.

2. HR analytics in employee attrition at Under Armour 

American athletic footwear and apparel company Under Armour wanted to reduce its employee attrition rate. They used an integrated workforce analytics tool to sort through data and detect the top causes of attrition. They were also able to forecast departures at Under Armor’s different locations and predicted that within the next six months, 500 out of the 5,000 employees would resign. 

With the attrition drivers identified, Under Armour was able to make improvements to its employee retention efforts with enhanced people strategies, including incentives and rewards. With these interventions, the employee attrition rate ended up being 50% lower than the initial prediction. 

3. HR analytics in absenteeism at E.ON

German electric utility provider E.ON needed to address an elevated absenteeism rate within its 78,000-person workforce. A team of analysts worked with the available data to find the main factors contributing to the increase in unscheduled absences. 

They discovered that absences were more frequent among employees who didn’t take their allotted vacation time. With this insight, E.ON made policy changes to support and accommodate employees in planning their time off. The company encourages employees to take at least one longer period of time off per year, as well as multiple shorter breaks. 

For more real-world HR analytics examples, you can refer to the case studies we published in the past. Here are links to three of them:

• Case Study 1: Key Drivers of Retail Sales Performance
• Case Study 2: Reducing Workplace Accidents Using People Analytics
• Case Study 3: How We Determined Optimal Staffing Levels

Key HR metrics

HR metrics are essential data points for tracking human capital and measuring the value of HR initiatives. There are numerous HR metrics used in HR analytics, but here is a brief overview of a few of the more common ones:

Data analytics in HR: How to get started

HR data analysis has several phases. You must understand the process to be able to apply HR analytics effectively. 

Here is a simplified overview of the five steps:

1. Asking a relevant business question

Your goal for using HR analytics should be to enable HR to impact business outcomes. For this reason, you need to start with the end goal in mind.

Clarify which area you’re focusing on and what you need the data to tell you and then put it in the form of a question. For example, if you want to optimize succession planning, the right question could be, “Which employees have the highest potential for progression and leadership?” 

2. Data selection

The second step is to identify which information you need to answer the question and where you will find it. Your HR tech stack or other internal data sources should house most of what you need. However, certain circumstances may require incorporating external benchmarking data. 

This stage will be cumbersome without a system that can sort and organize the data. Ideally, it should also be integrated with a reporting system.

3. Data cleaning

Once you’ve collected the right data, you’ll likely have some that are duplicated or incorrectly formatted. Without identifying and correcting this you may end up with a faulty analysis. 

The data cleaning process depends on the data set, but it typically involves removing or fixing duplicate, corrupted, incorrect, or incomplete data. You should also review it for any missing data and structural errors.

4. Data analysis

Next comes summarizing and analyzing the data to reveal trends, correlations, and patterns that help you draw conclusions. This can be done using various analysis techniques or tools such as Excel, ChatGPT, R, or Python. 

The results of your analysis will show what the data tells you about your original question.

5. Actionable insights

Now it’s time to interpret what the data is telling you and turn that into courses of action. Based on the findings, you can evaluate the impact of HR processes and policies and make decisions or recommendations for improving them.

How to transition from descriptive to predictive and prescriptive analytics in HR

With data now at the heart of business operations, organizations must learn to take full advantage of what it offers. It’s time to move beyond simple descriptive analytics and harness more advanced data analysis capabilities, yet the level of analytics maturity varies by company. (There are HR analytics maturity models that can assess your organization’s status in this area.)

An Oracle report that surveyed HR executives on trends in HR analytics showed the most sophisticated type of analytics being used by their organizations was as follows: 

• Novice = 6%
• Descriptive = 17%
• Diagnostic = 26%
• Predictive = 32%
• Prescriptive = 19%

Organizations can choose to put their data to work more effectively by making data analytics a priority and embracing the use of diagnostic, predictive, and prescriptive analytics.

Following are some ideas for developing your organization’s HR analytics maturity: 

• Develop analytical capabilities: Invest in training and development programs that will enhance the data literacy and statistical knowledge of HR employees and HR analysts. Incentivize staff to pursue external education and certification in HR data analytics.
• Assess data infrastructure: Ensure that your data infrastructure is capable of handling predictive and prescriptive analytics. It should be able to integrate data sources, clean data, create reports, and establish data governance protocols.
• Invest in the right tools: If necessary, invest money and effort in the tools it will take to ensure you can collect quality data and conduct predictive modeling. Examples include data visualization and analysis tools like Visier and Tableau, advanced HRIS, and statistical analysis tools like R and Python.
• Pilot projects and iterate: Start with small-scale pilot projects for testing predictive and prescriptive models. Gather feedback on the project and then iterate based on the insights and outcomes. Then you can scale up with initiatives that impact the entire organization.
• Establish a data-driven culture: Foster a culture that values the use of data in achieving success. Equip employees with the skill set required to use data while carrying out their responsibilities. Ensure everyone has access to data through transparency, collaboration, and experimentation across departments. Leaders should champion and set an example of data-driven decision-making.

Put simply, HR data analytics holds enormous value for an organization. By applying complex statistical analyses, HR can predict and change the future of the workforce and create real financial impact of Human Resource practices.

HR analytics certification

With HR Analytics Manager being one of the fastest growing jobs, becoming adept at HR and people analytics is a great way to expand your career opportunities. According to Global Market Insights, the worldwide HR data analytics market size was valued at $3.7 billion in 2023 and is projected to grow to $11.1 billion by 2032.

Upskilling yourself with an HR analytics certification gives you the knowledge and credentials you need to develop and succeed in this evolving HR field.

AIHR’s People Analytics Certificate Program delivers the core analytics comprehension, skills, and experience it takes to leverage HR data for improved talent decisions and initiatives that render strategic value.

Highlights of what this program equips learners with include: 

• An understanding and application of key statistical concepts and analyses
• The ability to capitalize on what HR data reveals to improve business outcomes
• How to create interactive HR dashboards and reports using Microsoft PowerBI
• How to assess an organization’s analytics maturity.  

This engaging, in-depth course is 100% online and self-paced. It includes competency assessments to apply what you’ve learned and case studies that bring HR analytics to life.

As an AIHR member, you’ll also have access to a community of worldwide HR professionals and our vast HR resource library of tools, templates, and playbooks.

In closing

The contemporary HR environment is both people-focused and data-oriented. HR data holds unbiased information and insights for crafting strategies and best practices that lead to more efficient and valuable HR services. This promotes higher employee engagement and productivity for better overall business achievement.

HR professionals who embrace the role of HR analytics and can decipher its insights help their organizations thrive and set themselves up for success in the future of HR. 

FAQ

The post What is HR Analytics? All You Need to Know to Get Started appeared first on AIHR.

Formal training, such as an HR analytics course, can help you build analytical skills that you need to play a more significant and strategic role within HR.

There are numerous Human Resources analytics courses available that range from basic statistical knowledge to HR data and metrics and more. To help narrow down the choices, we’ve listed 13 HR analytics courses to consider. Our list includes a selection of beginning and intermediate-level training opportunities. We hope you’ll find one that’s just right for you.

Contents
People Analytics Certificate Program by AIHR
People Analytics by University of Pennsylvania
HR Metrics & Dashboarding by AIHR
Essentials of HR Analytics by Cornell University 
Data Analysis for Improving Organizational Performance by HRCI
People Analytics Specialty Credential by SHRM
People Analytics Accredited Programme by CIPD
HR Analytics by Management Concepts
R Programming Fundamentals by PluralSight
R Programming by Johns Hopkins University
HR Data Science in R by AIHR
Data Mining with Weka by University of Waikato
Basic Statistics by University of Amsterdam

Please note that this list is compiled based on publicly available information. We have not tried the courses ourselves, with the exception of AIHR’s courses.

1. People Analytics Certificate Program – AIHR

Designed as an “all-in-one” course for (future) HR analytics professionals, this is the most comprehensive course on HR analytics out there. Its focus and approach are for practitioners who will participate in or manage HR analytics projects.

This HR analytics certification will teach you how to start using data to make fact-based people decisions that drive business value. The 15-module course will equip you with a full HR data analytics skill set to bring back to your organization. For example, you’ll learn how to:

• Transform, organize, clean, and analyze large HR data sets
• Create powerful HR dashboards in Power BI
• Apply statistical concepts to HR data and conduct statistical analysis in Excel

The course offerings include video lessons, interactive case studies, hands-on projects, and much more – all of which you can find in the course’s syllabus.

Upon completion of the course, you’ll receive a certificate from AIHR, the largest and most specialized institution in the field of online HR analytics courses in the world. You can add the HR analytics certificate to your performance review, include it on your resume, and share it on Linkedin.

2. People Analytics – University of Pennsylvania

This online Human Resource analytics resource is available through The Wharton School of the University of Pennsylvania. The Wharton People Analytics course is taught by three top professors and introduces you to the major areas of people analytics, including performance evaluation, staffing, compensation, collaboration, and talent management. All subjects are illustrated by real-life examples of how various organizations tap into HR analytics techniques to help them flourish.

While this course does present an overview of people analytics theory and some of its basics, it does not teach complex data analysis. What you will get is a good understanding of how HR can leverage data to take on a more strategic role and make better business decisions.

You can complete the course’s four modules in about eight hours of study time. You’ll be awarded a certificate once you complete the course.

You can access the course here.

3. HR Metrics & Dashboarding – AIHR Academy

This is the most hands-on of the people analytics courses listed here. It’s aimed at HR professionals who want to get into working with data.

AIHR’s HR Metrics & Dashboarding course will help you master powerful reporting skills and get the metrics right. You will finish the course as an HR Reporting Specialist with a broad skill set that covers the whole reporting process, from implementing essential HR metrics to automated reporting within intuitive HR dashboards. 

The course focuses on doing analytics using Excel, PowerBI, and Tableau. You will learn to:

• Leverage strategic workforce planning to make better decisions.
• Calculate the Return on Investment (ROI) of HR interventions and selection methods.
• Connect different data sets.
• Clean and structure data.
• Create interactive HR dashboards in Excel, PowerBI, and Tableau (see below)
• And much more.

All of this is offered in 28 hours of learning from 14 modules. You’ll also have the opportunity to apply your new knowledge with four hands-on projects. Want to know more? Check the course’s syllabus.

At the end of the course, you will have learned how to create an interactive dashboard that combines multiple separate datasets. A dashboard example is included below.

4. Essentials of HR Analytics – Cornell University

The Essentials of HR Analytics course is taught by a Professor of HR Studies at Cornell’s ILR School and prepares learners to begin their HR analytics journey. 

Using Excel and the datasets provided, this HR analytics training teaches the concepts, language, and tools you need to understand and leverage data to solve business problems.

At the end of the course, you will have the skills to:

• Pose questions and choose relevant data sources.
• Exercise essential HR data analyses.
• Interpret HR data.
• Discover insights and recommend actions.
• Use data visualization to present findings.

The format is instructor-led online over two weeks and requires 3-5 hours of effort per week.

5. Data Analysis for Improving Organizational Performance – HRCI

Drawing on data to improve employee and organizational performance is the whole point of people analytics. The Data Analysis for Improving Organizational Performance will show you how to bring HR data to life and make it work for you. This is an intermediate-level course that explains how to measure data.

It covers some necessary frameworks and tools for summarizing and delivering data, describes certain measurements, and clarifies the role of assessments in developing strategies. 

This training will help you understand:

• The use and validity of performance measures in different settings.
• The distinctions among a variety of performance measurements.
• The advantages and disadvantages of KPIs, Balanced Scorecard, and Net Promoter Score.
• The correlation between performance assessment and organizational strategies.

Once purchased, you’ll have on-demand access to this course for 180 days.

6. People Analytics Specialty Credential – SHRM

If you’re an HR professional who would like to acquire a recognized credential in people analytics, you can consider the Society for Human Resources Management (SHRM) program. Obtaining this credential will give you the know-how to make the most of your organization’s HR data, including articulating your findings and recommending solutions for addressing business issues. 

According to Nick Schacht, SHRM’s Chief Commercial Officer, this program “is designed to give HR practitioners a firm foundation in the principles and applications of metrics and technology that support HR practices and organizational objectives.”

You’ll be required to purchase an instruction package that includes an online 50-question knowledge assessment you must pass to earn the credential. 

The People Analytics Specialty Credential package includes the following learning:

• Foundations of Data Literacy (eLearning module)
• Taking Data-Driven Action (in-person or virtual seminar)
• The Metrics Behind People Analytics (eLearning course)
• Understanding Your People Data (eLearning course)

7. People Analytics Accredited Programme – CIPD

This people analytics curriculum offered by the Chartered Institute of Personnel and Development (CIPD) is for HR professionals with a foundational grasp of analytics who want to further develop their skills in this area.

The People Analytics Accredited Programme will give you practical skills and knowledge you can apply within the scope of your work to add value to the organization. 

The course’s potential outcomes include:

• Gaining a deeper understanding of people analytics to make a meaningful impact on your organization.
• Having the ability to oversee a productive people analytics project and successfully present it to stakeholders.
• Using people analytics for planning and improved decision-making and HR practices.
• Incorporating people analytics into organizational and HR strategies. 
• Differentiating between metrics, measures, and KPIs.
• Making effective use of statistical models. 

This online self-directed program takes 50-70 hours and must be completed within 12 months of registration. It requires the use of either Excel or Google Sheets. Other tools, such as R, SQL, Python, and machine learning are discussed but not necessary to access for participating in the course.

8. HR Analytics – Management Concepts

This HR Analytics training instructs you on how to apply the Analytics Process Model (APM) and use Excel to organize, analyze, and present your organization’s people data. It is geared toward HR professionals who want to leverage data to make informed decisions. Learners should have experience working in HR and a functional understanding of Excel.

The following topics are covered in this course:

• HR Analytics and the Analytics Process Model (APM)
• Excel quantitative techniques
• HR regulations and reporting requirements
• Effective presentation of HR data

Once you completed this training, you should be able to:

• Identify the phases of the APM and their purposes.
• Follow HR analytics best practices for data-driven decision-making.
• Identify relevant HR metrics and benchmarks for organizational goals.
• Use Excel to analyze people data to identify trends and other insights to take action on. 
• Conduct a brief presentation on data analysis results.

This two-day course is offered both in-person and virtually. It includes facilitated discussions, case studies, group and individual activities, and self-assessments.

9. R Programming Fundamentals

This is the first of three on our Human Resources analytics courses list that covers R.

You can do HR analytics in Excel; however, it has some major limitations. R is an open-source tool for statistics, visualization, and data modeling. The programming language for R is specially designed to work with data and to do statistical computing. It provides statistical techniques and visualization capabilities for large data sets, as commonly used in HR analytics.

R goes further than the traditional tools used for HR data benchmarking and analysis, such as Microsoft Excel, Access, and SPSS. It combines all of them into a programming language that can quickly import, edit, and visualize data. This does mean that R requires you to do some coding, making the learning curve steeper.

R is thus also harder to master compared to Excel. However, R does offer endless computational possibilities and enables you to do more advanced analytics compared to Excel.

We recommend the Programming with R course by Pluralsight to get started with R. This course teaches you the basic syntax for R coding and available data types and structures. It provides hands-on practice to get a feel for R and its functions.

10. R Programming – Johns Hopkins University

Johns Hopkins University offers a more advanced course in R called R Programming. This intermediate-level program requires some basic experience with R and will take you roughly 57 hours to complete.

The course starts off by teaching you the nuts and bolts of R, before diving into the more technical aspects. It’s taught in four modules that include practical skills such as programming in R, reading data into R, and writing R functions. 

At the end of the course, you’ll be able to understand programming concepts and run more advanced statistical techniques in R for productive data analysis. 

11. HR Data Science in R – AIHR Academy

Predictive modeling is one of the most transformative tools available within People Analytics and a highly coveted skill set to have. The HR Data Science in R course is your path to gaining these skills. The course starts with the basics, so no prior R or programming experience is required.

You will learn how to use R to create predictive HR analytics models for solving HR challenges. The course covers data management in R, data exploration and visualization in R, and three dynamic case studies focused on different aspects of analyzing data. Its six self-paced modules take about 16 hours to complete. 

12. Data Mining with Weka – University of Waikato

Weka is a data mining software. It has a visual and clickable interface which means you ‘drag and drop’ using your mouse instead of having to program as you would in R. 

This open-source software was developed at the University of Waikato in New Zealand.  It offers both a wide array of data mining algorithms and ways to visualize data. Examples of machine learning algorithms include decision trees, Bayes, simple rules, clustering, and meta-classifiers. 

The Data Mining with Weka course explains these algorithms and their statistical backgrounds. This will help you understand the workings of data mining in general and how it can be applied to different sets of (people) data.

The format of this free course is a series of practical videos that feature Professor Ian Witten explaining how Weka works. Within half an hour into this course, you will run your first data mining algorithms and create your first decision tree. 

This online Human Resources analytics course requires no prior programming knowledge. It is especially suitable for people who will not be analyzing data in their daily jobs but who wish to get a grasp of the fundamental techniques. Because of its user-friendly interface, Weka enables you to do various analyses in a short time.

13. Basic Statistics – University of Amsterdam

In R, you learn how to use statistics to run algorithms. However, doing statistics without really understanding it poses a risk. It is difficult to fully grasp the possibilities and pitfalls of HR analytics without a solid understanding of statistics. Therefore, whenever we talk about HR analytics training, a statistics course needs to be included. In the end, data science is all about statistics. 

The Basic Statistics course from the University of Amsterdam covers how to calculate and evaluate statistics. It explores methods of descriptive statistics, the basics of probability, and how to evaluate patterns in data. It also includes training on using statistical software to calculate and generate these statistics. All these concepts apply to data science and form a necessary foundation for anyone looking to start with any form of analytics.

The course requires about 26 self-paced hours to complete. Basic Statistics is part of a five-module specialization called Methods and Statistics in Social Sciences, which dives even deeper into quantitative research methods. The other courses in this specialization are relevant to people analytics as well.

A final word

Committing to a learning mindset can future-proof your HR career path as you gain new and expanded skills. HR analytics is an in-demand area of expertise that’s well worth the training investment. We hope this list of relevant courses will be a helpful resource as you delve into HR analytics. 

As informed and equipped HR professionals continue to drive the growth and value of HR’s role in the world of work, AIHR is here to support the effort. Our online HR courses and 13 HR certifications will help you diversify your range of abilities and take an active role in moving HR forward.

FAQ

The post 13 HR Analytics Courses Online To Check Out in 2024 appeared first on AIHR.

Let’s take a look at the commonly used HR metrics and how you can track and utilize them in your organization.

This list is by no means exhaustive. Rather, it is a core grounding in the most common metrics used in the field. We discuss this further in our HR Metrics & Dashboarding Certificate Program, where you will learn how to turn data into intuitive reports and compelling stories for decision-makers.

Contents
What are HR metrics?
Why are HR metrics important?
HR metrics examples in recruitment
HR metrics examples related to revenue
Other HR metrics examples
Soft HR metrics examples
FAQ

What are HR metrics?

HR metrics are quantitative measures used to track and assess the efficiency and effectiveness of human resource management practices within an organization.

These metrics cover a wide range of areas, including recruitment, retention, training, employee satisfaction, performance, and productivity. They provide valuable insights that help inform strategic decisions, optimize HR processes, and boost overall organizational performance.

Why are HR metrics important?

Making the HR function more data-informed has numerous benefits not only for the HR operations but also for the organization. Here are the key reasons why HR metrics are important:

• Strategically managing talent: HR metrics assist in identifying talent needs and gaps, guiding strategic decisions in talent acquisition, development, and retention. HR can leverage this information to create targeted talent management programs that address specific organizational needs, enhancing workforce capabilities.
• Optimizing costs: By analyzing recruitment, training, and turnover costs, HR metrics help in allocating budgets efficiently and identifying cost-saving opportunities. This allows HR to justify investments in employee development and retention strategies by demonstrating potential cost savings and ROI.
• Supporting strategic planning: HR metrics help uncover trends and make forecasts that are essential for informed strategic planning and organizational growth. HR can use these insights to align workforce planning with long-term business objectives and secure the right talent for the organization to meet future challenges.
• Improving decision-making: Data-driven insights from HR metrics empower HR professionals to make evidence-based workforce decisions. For example, by leveraging data on the impact of employee wellness programs on absenteeism rates, HR can make informed decisions about continuing, expanding, or modifying these programs to maximize their effectiveness.
• Highlighting the impact of HR initiatives on organizational performance: Tracking HR metrics and being able to show how they correlate with key business outcomes enables HR to showcase the tangible impact of its initiatives on organizational performance. This approach not only validates the strategic importance of HR efforts but also helps secure executive support and investment for future HR projects.

Put simply, HR metrics are essential tools for forecasting, planning, and optimizing the workforce for the future. Now, we’ll look at HR metrics examples across different areas of HR and the business.

HR metrics examples in recruitment and retention

1. Time to hire

Time to hire is one of the most widely used metrics for recruitment. It measures the number of days between a candidate applying for a job and them accepting a job offer. Time to hire gives insights into recruiting efficiency and candidate experience.

Here’s how to calculate your average time to hire:

Average time to hire = (1st candidate time to hire in days + 2nd candidate time to hire + nth candidate time to hire) / Total number of jobs

Recruitment efficiency measures the speed at which HR processes a candidate – assessment, interview, and role acceptance. If your organization has a long time to hire, it reflects that your processes are inefficient.

Having a long time to hire might negatively impact the candidate experience. Candidates may drop out of the recruitment process if it is too long, getting hired by a competitor instead.

Time to hire should not be confused with time to fill. This metric typically measures the days between the approval of a job requisition and the candidate accepting the job offer. This definition is in line with the Society for Human Resource Management (SHRM) and ISO 30414. 

2. Cost per hire

The cost per hire is a recruiting metric that shows how much it costs the company to hire new employees. This also serves as an indicator of the efficiency of the recruitment process.

Cost per hire can be time-consuming to work out, as you need to add together internal recruiting costs and external recruiting costs and divide the sum by the total number of hires. The costs and number of hires will both reflect a selected measurement period – such as monthly or annually.

Cost per hire = (Internal costs + External costs) / Total number of hires

Here are some examples of internal and external costs:

3. Quality of hire

Quality of hire measures the value a new employee brings to an organization. This metric assesses the effectiveness of the recruitment process and the long-term impact of new hires on company performance.

Quality of hire is typically evaluated based on several criteria, including the new employee’s job performance, their contribution to achieving team or organizational goals, how well they fit with the company culture, and their retention rate over time.

4. Early turnover

Early turnover – the percentage of recruits leaving in the first year – is arguably the most important metric to determine hiring success in a company. This early leaver metric indicates whether there is a mismatch between the person and the company or between the person and his/her position.

New hire turnover is also very expensive. It usually takes 6 to 12 months before employees have fully learned the ropes and reach their Optimum Productivity Level. The cost of replacing an employee can be as much as 1.5-2x the employee’s annual salary, especially for more senior roles.

You can calculate early turnover as follows:

Early turnover rate = (# of new hires who have left the organization during period / # of new hires who from that same period) x 100

5. Turnover

This metric, usually expressed as a percentage, shows how many workers leave the company in a given year. When combined with, for instance, a performance metric, the turnover metric can track the difference in departures of high and low performers.

Preferably, you would like to see low performers leave and high performers stay. This metric also provides HR professionals with a great amount of information about the departments and functions in which employees feel at home and where in the organization they do not want to work.

Turnover is very useful data to know when shaping recruitment strategies. Additionally, it could be a key metric in measuring a manager’s success.

Here’s how to calculate employee turnover rate:

Turnover rate = (# Terminations during period / # Employees at beginning of period) x 100

6. Time since last promotion

This rather straightforward metric is useful in explaining why your high potentials leave. It looks at the average time in months since the last internal promotion.

HR metrics examples related to revenue

7. Revenue per employee

The revenue per employee metric shows the efficiency of the organization as a whole. It is an indicator of the quality of the workforce.

The metric looks at the ratio of the organization’s total revenue divided by the current number of employees and is usually calculated on an annual basis:

Revenue per employee = Total revenue / Number of employees

It’s useful for comparing the year-on-year development of your revenue per employee, as well as comparing your organization to your competitors.

Another related metric is revenue per FTE.

8. Performance and potential

There are many qualitative and quantitative ways to measure employee performance. Metrics include Net Promoter Score, management by objectives, number of errors, 360-degree feedback, and forced ranking.

Another useful tool is the 9 box grid, which assists in measuring and mapping both an individual’s performance and potential in three levels. This model shows which employees are underperformers, reliable team players, high potentials, or exceptional talent:

This tool is great for differentiating between, for example, wanted and unwanted turnover.

9. Billable hours per employee

This is the most concrete example of a performance measure, and it is especially relevant in professional service firms (e.g., law and consultancy firms). Relating this kind of performance to employee engagement or other input metrics makes for an interesting analysis. Benchmarking this metric between different departments and managers/partners can also provide valuable insights.

This metric also relates to employee utilization rate, which refers to the amount of working time an employee is spending on billable tasks.

Other HR metrics examples

10. Cost of HR per employee

The cost of HR per employee is calculated by dividing the total cost of HR operations by the total number of employees in the organization. It is usually expressed in dollars and calculated per specific period, for example, on an annual basis.

Total HR costs refer to all expenses related to HR functions over a specific period. This includes salaries of HR staff, costs of HR systems and software, training and development expenses, recruitment costs, benefits administration, and any other HR-related expenditures.

Cost of HR per employee = Total HR costs / Total number of employees

11. HR to employee ratio

HR to employee ratio is another measure that shows HR’s efficiency. It indicates the number of HR professionals in an organization relative to the total number of employees.

Our State of HR research showed that the typical HR to employee ratio is around 1:50 or 2%, which means that there are 2 HR professionals for every 100 employees.

HR to employee ratio = Number of HR employees / Total number of employees

The ideal HR-to-employee ratio can vary significantly depending on the industry, the complexity of HR needs, the level of automation in HR processes, and the specific responsibilities handled by the HR department.

12. Ratio of HR business partners per employee

This metric is similar to the HR to employee ratio but looks specifically at HR business partners. This ratio is crucial for understanding how equipped the HR department is to provide strategic support and partnership to the business units it serves.

13. Effectiveness of HR software

The effectiveness of HR software is a more complex metric. The effectiveness of, for instance, learning and development software is measured in:

• The number of active users
• Average time on the platform
• Session length
• Total time on the platform per user per month
• Screen flow, and
• Software retention.

14. Absenteeism

Like turnover, absenteeism is also a strong indicator of dissatisfaction and a predictor of turnover. Absenteeism rate can give information to prevent this kind of leave, as long-term absence can be very costly.

Again, differences between individual managers and departments are very interesting indicators of (potential) problems and bottlenecks.

This is how you can calculate your absenteeism rate:

Absenteeism rate = (Number of absent days / Total working days) x 100

15. Training expenses per employee

Training expenses per employee is a metric that quantifies the average amount of money an organization spends on the training and development of each employee over a specific period, typically a year. This figure is key for understanding the investment an organization makes in enhancing the skills, knowledge, and competencies of its workforce.

You can calculate training expenses per employee as follows:

Training expenses per employee = Total training expenses / Total number of employees

16. Overtime expenses

Overtime expenses refer to the additional costs incurred by an organization when employees work beyond their regular working hours and are compensated at a higher rate, as mandated by labor laws or company policies.

These expenses are a form of direct labor cost and can significantly impact an organization’s payroll budget. That’s why it’s important to keep track of them.

Here’s an overtime expenses calculation formula:

Overtime expenses = Total overtime hours worked x Overtime pay rate

Soft HR metrics examples

Soft HR metrics refer to the qualitative aspects of HR management that focus on measuring intangible elements related to the workforce’s attitudes, behaviors, and perceptions.

Unlike hard HR metrics, which are quantitative and directly measurable (such as turnover rates or cost per hire), soft HR metrics delve into the subjective experiences of employees within an organization. These metrics typically assess employee satisfaction and engagement levels, leadership effectiveness, and the impact of training and development programs.

17. Engagement rating

An engaged workforce is a productive workforce. Engagement might be the most important ‘soft’ HR outcome. People who like their jobs and who are proud of their company are generally more engaged, even if the work environment is challenging and pressure can be high.

Engaged employees perform better and are more likely to perceive challenges as positive and interesting. Additionally, team engagement is an important metric for a team manager’s success.

Engagement rating is often expressed as employee net promoter score (eNPS). This measures how likely your employees are to recommend your organization to their friends or family as a good place to work on a scale of 1-10.

18. Employee satisfaction

Employee satisfaction metrics help you evaluate how happy and content employees are with their job roles, work environment, and the organization as a whole.

This soft HR metrics is often measured through surveys and questionnaires that ask about various aspects of the job and workplace, including work-life balance, management effectiveness, and job security.

19. Leadership effectiveness

The leadership effectiveness metric gauges the impact of leadership on employee performance, morale, and overall organizational climate.

It can be measured through 360-degree feedback surveys, where employees rate their leaders on a range of leadership competencies, such as communication, decision-making, empathy, and the ability to inspire and motivate.

Over to you

When starting to work with HR metrics, you need to evaluate which metrics are the most relevant for your organization. Selecting the right metrics for your organization depends on numerous factors, like the size of the company and the budget available.

Combining insights from multiple metrics is vital for making substantiated decisions with a proven impact on business success.

FAQ

The post 19 HR Metrics Examples: Making Data-Driven Decisions in 2024 appeared first on AIHR.

In this guide, we’ll explore what an eNPS is, types of employee net promoter score questions, and examples that you can include in your next survey.

Contents
What is an eNPS?
Types of eNPS questions to include
Employee net promoter score scale
19 employee net promoter score questions to include
FAQ

What is an eNPS? 

An eNPS is a metric employers use to measure employee engagement, satisfaction, and loyalty, and how likely your employees are to recommend the organization to their personal network as a good place to work. It is based on the net promoter system created by Bain & Company in 2003, which measures customer satisfaction and loyalty and helps companies determine how likely their customers are to recommend their products or services to their friends and family. 

Types of eNPS questions to include

There are different types of eNPS survey questions that you can ask employees and include in your eNPS survey. Let’s explore these below:

• Rating questions: These questions typically have an answering scale of 0-5 or 0-10 and help to gather quantitative data about your employee’s experience. For example, “On a scale of 1-10, how likely are you to recommend working at this organization to your friends and family?” Each number in the rating scale should be given an equivalent value, e.g., 0 = “not at all likely,” while 10 = “very likely.” Some rating questions avoid using numbers and will instead provide 3-5 options for the employee to select from, such as “strongly agree, agree, neither agree nor disagree, disagree, strongly disagree.”
• Open-ended questions: These questions don’t use a rating scale and allow employees to give a more detailed explanation, which provides rich and valuable qualitative data. Open-ended questions are often asked after a rating question so that a reason can be given for the previous response. 
• Yes/no questions: These questions give the respondent an option of answering yes or no and typically help an employer evaluate the employee experience. For example, “Are you happy with the recent training on sales and negotiation provided to all trainee buyers?” This provides quantitative data. An open-ended question can follow this to help you understand the reasoning behind the employee’s answer. 

Employee net promoter score scale

Based on the answers employees give to the eNPS survey questions, every employee has a score between 0-10, which puts them into one of three categories:

Category 1: Promotors (score of 9 or 10)

Promoters are the most loyal employees of your organization and, therefore, your brand ambassadors. They are happy, engaged, and motivated at work, keen to grow in the company and help drive the business forward. 

Category 2: Passives (score of 7 or 8)

These employees are neutral. Perhaps they have neither a positive nor negative experience with their employer. While they may be happy and content in their role, they are often open to new and exciting opportunities that arise elsewhere. 

Category 3: Detractors (score between 0-6)

Detractors are employees who are unhappy with their role and/or employer, often due to negative experiences at work. They tend not to have many positive things to say about their organization and are likely to express negative opinions to colleagues and within their broader personal network. Once all the responses from your survey have been collected, an employee net promoter score can be calculated. 

Calculating the eNPS score

The formula for calculating eNPS is:

eNPS = % promoters – % detractors

Your eNPS score can range from -100 to 100. Scores that range from 10-30 are deemed good, those from 50-70 are seen as excellent, and anything over 80 will likely place you in the top percentages of your industry. 

HR tip

Rather than getting caught up on the number of your eNPS score, strive for a consistent improvement in your eNPS score over time.

19 employee net promoter score questions to include

Asking the right questions in your employee net promoter score survey can help you uncover critical information relating to the strengths and weaknesses of your business. From here, you are in a solid position to address what’s not working and improve employee engagement, loyalty, and retention, all of which help you meet organizational goals. 

Here are some eNPS example questions and the purpose behind each one. 

1. On a scale of 0-10, how likely are you to recommend this organization as a good place to work to people in your personal network? 

This is the primary eNPS question that typically starts off any eNPS survey. Your eNPS score is calculated based on the results of this question. The answer to this question tells you whether your employee’s experience in the workplace is positive enough that they would recommend it to their family and friends. 

However, asking additional questions can be really helpful in gathering more details on the employee’s reasoning for their rating and give you valuable insight on how to do better.  

2. What is the primary reason for your score?

This is a great follow-up question to your primary eNPS question. It’s an open-ended question that allows employees to freely voice what they’re happy or dissatisfied with. It gives you more insight into their most notable experiences before giving them specific prompts that target certain aspects of the employee journey.

3. What would lead you to give our organization a higher score?

If you want to know what’s most pressing to your employees in terms of improvements and making your company a great place to work, this is a suitable question. Do your employees want more support from management, better compensation and benefits, or more flexible working arrangements? 

4. Would you recommend our company to a friend or colleague as a good place to work?

This is a yes/no question that can help you cement whether an employee has, on the whole, had a positive or negative experience with the company. This is especially helpful if you’re looking for quantitative data and a set of results that help you to easily evaluate the employee experience in your organization. 

5. Why would you recommend or not recommend our company to a friend or colleague as a good place to work?

This is another great follow-up question from the one above. It’s an open-ended question that helps you understand the specific parts of your organization that have contributed to a positive or negative experience for your employees and in turn, affected their desire to recommend you. 

6. What do you like most about working for (your company name)?

Ask this question if you want to know specifically what you’re doing well as an organization that is keeping your employees happy and motivated at work. 

7. What do you like least about working for (your company name)?

To get straight to the weaker areas of the experience you’re creating for your employees (consciously or unconsciously), include this question in your next eNPS survey. Knowing what’s leaving your employees most dissatisfied or disengaged at work may be tough to hear, but this knowledge allows you to take action and improve. 

8. Over the past 6 months, has your experience at our organization improved or worsened?

This is a great question if you’re constantly making improvements within the organization. It’s also a good question for organizations that have consistently had high eNPS scores and want to make sure that things are going in the right direction. 

9. What is the main factor that has contributed to this change in your experience?

This is a strong follow-up question to the previous one. It’s an open-ended question that helps you gather more detail on the recent positive or negative changes in your workplace and can help you pinpoint problems and address them before they worsen. 

10. Do you see yourself still working with our company in five years?

This can be a simple yes/no question with a follow-up for more information afterward, or you can add “Why or why not?” at the end and turn it into an open-ended question. If you’re looking for reasons why you’re losing your top performers or experiencing high turnover rates, ask this. 

11. Do you feel supported by your manager? Why or why not?

eNPS survey questions are designed to give you a glimpse into the minds of your employees and understand why they hold the views they do. If you have a low eNPS score, and a lot of employees report they don’t feel supported by management, this is a concern, and open discussions should be had with all your leaders. 

12. Do you think that our organization takes care of its employee’s health and wellbeing? Yes or no?

Do you want to know how your employees feel about the company’s approach to looking after employees’ physical, mental, and emotional health? This quantifiable question can help you see what percentage of your employees believe their wellbeing is a priority and what percentage don’t. 

13. On a scale of 0-10, how engaged are you at work? 

Employee engagement is directly linked to business performance, which is why knowing how engaged your employees are is critical. A good follow-up question would be to ask, “Why or why not?”

14. Why did you choose to work for this company?

This question helps you uncover common reasons why candidates are attracted to your organization and, potentially, what stands out about you against your competitors. It could be your generous compensation and benefits, your unlimited vacation policy, or the career progression you offer to all employees. 

15. Has this organization met the expectations you had of your role and what working here would be like? Yes or no?

Do your job descriptions, employee testimonials, and information on your company website and social channels align with the experiences that employees have once they set foot through the door and start working for you? If many employees don’t feel they have had their expectations met, it’s a sign that you’re not being transparent enough or communicating clearly from the outset. 

16. What would be the biggest driver in you accepting an opportunity to work with a different company? 

This open-ended question allows employees to share what they find most attractive in a job or workplace, gives you insight into what could lead your employees to jump ship, and helps you prevent it. 

17. Following the changes we made to our organization in the past 6 months, has your experience at work improved, worsened, or stayed the same?

Suppose you have made a specific change (or changes) in your workplace, for example, team restructuring, or gone in a different direction with your product or service offering. In that case, this question can help you see how this change has affected employees.

18. What would you most like to see improved at this organization?

A direct question that will help you see if there’s a common theme amongst employees regarding improvements they’d like to see in the workplace that would boost their experience and loyalty. 

19. On a scale of 0-10, how much does this organization prioritize the growth and development of its employees? 

Personal growth and career progression are critical factors for many employees when choosing an organization to work for, and they play a key role in how engaged and motivated they are at work.

HR tip

Select your eNPS questions based on specific challenges in your organization and what you most want to find out.

To sum up

Selecting the right eNPS questions for your next survey and regularly surveying employees will help you gauge how satisfied, motivated, and loyal your employees are to your company. Employees who demonstrate high levels of engagement and loyalty to the company will likely be ambassadors for your brand and help you attract and recruit more top talent. 

When you know what’s not working in your company, you can take action and make improvements that help you boost engagement, retention, and loyalty to your organization. 

FAQ

The post 19 eNPS Questions To Ask in Your Next eNPS Survey appeared first on AIHR.

This guide will detail how to calculate attrition rate, factors that impact attrition, and how to analyze your company’s attrition rate score. 

Contents
What is attrition rate?
Difference between attrition and turnover
Types of attrition
Factors impacting attrition
How to calculate employee attrition rate
Is a high attrition rate good?
How to conduct an employee attrition analysis
HR strategies for reducing attrition rate
FAQ

What is attrition rate?

The attrition rate is a measure of the rate at which employees leave an organization without being immediately replaced over a specific period of time. It is usually expressed as a percentage.

Attrition can adversely affect the company, so it’s essential to know your company’s attrition rate. Tracking attrition rate is helpful to monitor if the number of people leaving is growing or declining so HR teams can improve workforce planning and people management. The changes in attrition rate can signal the management to the root cause(s) of employee exodus. 

Difference between attrition and turnover

Employee attrition and turnover are two different concepts that describe the departure of staff from organizations, and they can have different impacts on the business. 

Attrition occurs when employees leave the workforce much quicker than the rate at which they can be replaced. Vacancies stay open for more extended periods. Sometimes, they are eliminated because skills are currently unavailable in the job market. It is also a long-term issue. A high attrition rate can have positive and negative impacts, depending on the circumstances. Addressing it requires business and HR strategies and interventions. 

Employee turnover refers to the rate at which new hires replace employees who leave their companies. This concept tends to reflect more short-term changes within the company. High turnover rates can negatively affect businesses as hiring and training new staff can be expensive. In addition, it can lead to a loss of institutional knowledge and experience, which also impacts creativity and innovation.

Here are some examples to illustrate the differences: 

Types of attrition

Voluntary vs. involuntary attrition

Voluntary attrition takes place when an employee decides to leave the organization. It’s important to assess who is leaving your company, as the departure of star employees can affect your productivity in the long run. For example, if you are a tech company and face a number of resignations from your software developers, this would be a high business risk. 

Meanwhile, involuntary attrition occurs when an organization lets go of an employee. Usually, this happens because of company restructuring, economic conditions, or trends in the industry or workforce. 

Functional vs. dysfunctional attrition

Dysfunctional attrition refers to the loss of valuable employees to the company because of reasons such as toxic work culture, mismanagement, and low employee morale. This type of attrition can impact an organization’s profitability, morale, and productivity, which results in the company losing experienced staff that’s difficult to replace.

Functional attrition is a term that describes the loss of employees due to incompetence. It could be due to an employee being unable to meet the job demands as they lack the essential skills or experience. Similarly, these employees may be unmotivated or disengaged, which could lead to them being laid off. 

Factors impacting attrition

Internal factors 

1. Compensation 

Compensation plays a factor in whether an employee remains or chooses to leave for a higher-paying job. Compensation also covers other financial incentives like bonuses, commissions, and annual increases. Most people will choose a company with higher compensation if both offer the same responsibilities and job titles.

2. Job satisfaction

Aside from compensation, job satisfaction also influences whether employees remain or choose to search for another job. People spend a significant amount of their lives at work, so it’s critical to feel fulfilled from performing their jobs.

If employers fail to recognize and reward their employees for good performance or when the work environment is too restrictive (not allowing flexible work schedules when it’s feasible), employees are more likely to look for other employers. 

3. Learning and development 

It’s human nature to desire growth and improvement. We want to work with companies that give us purpose and something to look forward to. If management doesn’t provide the right L&D programs to cultivate their employees, they will seek these opportunities with other companies. 

External factors 

1. Workforce demographics

A company with a large percentage of employees set to retire in a few years should take drastic steps to avoid high attrition in the coming years.  Employers can choose to redistribute the responsibilities to other team members. If the position is no longer relevant, they could wait for the senior employee to retire and eliminate the position rather than retrain other staff or pay severance. 

2. Industry shifts

Changes within the business landscape can change staffing requirements. For example, the decline in brick-and-mortar shops means you would need fewer retail employees. And the continuous growth of e-commerce and online services means hiring more individuals to perform online and logistic support. 

3. Economic conditions 

Companies can afford to hire more people during times of economic growth because business is booming. Likewise, they can also offer higher salaries and more work perks to retain top employees. In contrast, during the recession, people are not spending enough, affecting businesses. In such a scenario, companies are more likely to cut back on salaries and hiring people. 

How to calculate employee attrition rate

The attrition rate formula is: 

Attrition rate = (Number of employee departures) / (Average number of employees) x 100

To calculate the employee attrition rate: 

1. Start by calculating the average number of employees. Add the number of employees at the beginning and the end of the specified period divided by 2.
2. Then, divide the average number of employees who left the company over a specified period by the average number of employees in that period and then multiply by 100. 

Here are examples of calculating the attrition rate annually and quarterly: 

Example 1

Suppose an organization had 200 employees at the beginning of the year and 30 employees left during the year. Let’s have a look at how to calculate the attrition rate for the year.

Step 1: Calculate the average number of employees during the year

200 + (200-30) / 2 = 185

Step 2: Calculate the attrition rate

30 / 185 x 100 = 16.2%

Therefore, the attrition rate for the year is 16.2%.

Example 2

An organization had 150 employees at the beginning of the quarter and 10 employees left during the quarter.

Step 1: Calculate the average number of employees during the quarter

= (150 + (150-10)) / 2 = 145

Step 2: Calculate the attrition rate

10 / 145 x 100 = 6.89%

Therefore, the attrition rate for the quarter is 6.89%.

Example 3

Suppose an organization had 1,000 employees at the beginning of the year, hired 200 new employees during the year, and had 50 employees leave during the year. Calculate the attrition rate for the year.

Step 1: Calculate the average number of employees during the year.

(1,000 + (1000+200-50)) / 2 = 1,075

Step 2: Calculate the attrition rate.

50 / 1075 x 100 = 4.65%

Therefore, the attrition rate for the year is 4.65%.

Is a high attrition rate good?

In general, high attrition rates signify that employees are leaving the organization quicker than you can replace them. For example, your company may experience a high attrition rate if a large number of your employees simultaneously retire. This can potentially lead to:

• Increased costs and efforts: Replacing lost employees means you have to spend time and money completing the hiring process  (posting job ads, reviewing CVs, screening candidates, scheduling interviews, onboarding, and training). Moreover, there are also costs and paperwork associated with employees resigning. 
• Decreased productivity: There is a drop in productivity from the time employees leave until the new hires step in. According to People Sphere, it takes 43 days to recruit a software engineer, resulting in a productivity loss of almost a month and a half, which may cost up to $33,251. 
• Negative impact on employee morale: Constant staff changes can affect employee collaboration. It’s hard to build good relationships when employees come and go.

Experts say an attrition rate of more than 20% is considered high. In addition, if the rate of new hires leaving the company within the first six months of their employment is above 15%, it may indicate problems with your onboarding process.

However, there are some instances where attrition can actually be good for business for the following reasons: 

• Attrition can lead to reduced labor costs, as the organization may not immediately fill vacated positions, thereby saving on salaries and related expenses. This can be beneficial when the company needs to be conscious about its spending,
• When the company is restructuring to pursue a new direction and needs to reduce staff or eliminate certain roles. This enables the company to realign its workforce more efficiently according to changing business needs without resorting to layoffs.
• By not immediately replacing old positions, attrition can open opportunities for bringing in new talent with fresh ideas and skills, fostering innovation and keeping the company adaptable and competitive.

How to conduct an employee attrition analysis

1. Gather your headcount data and calculate the attrition rate

Gather detailed headcount data from your HRIS or personnel records. This includes specifics on employee departures, new hires, and current staff.

After that, apply the attrition rate formula discussed above to find out what the state of attrition is at your organization. If you want to make comparisons to previous time periods, you might need to collect historical data, too.

2. Look for signs of a high attrition rate

Once you have calculated your current attrition rate, compare it to industry benchmarks, past attrition rates, or internal targets to determine if the rate is unusually high.

It’s important to look for patterns or trends, such as a sudden increase in departures over a short period or consistently high attrition in certain departments or roles. Understanding these patterns can help pinpoint potential issues within the organization that may be contributing to the high attrition rate.

3. Identify risk factors for employee attrition

There are signs to help the HR team identify whether the company is at risk of high attrition that can potentially be detrimental to the business: 

• Declining employee engagement: Employee disengagement plays a huge role in employee attrition. When employees lose interest in their jobs, they become disconnected from their peers and managers and are less productive. Left unchecked, disengagement can motivate employees to search for alternative employment opportunities. 
• Increased absenteeism: If you have a lot of employees calling in sick all the time, they frequently show up late, leave work early, or take extra long breaks, your company may be experiencing employee disengagement, which could result in attrition. 
• High turnover in specific departments: High turnover in departments can be taxing for managers. They might have to find additional staff to cover shifts during vacancies or perform lower-level worker tasks to cope with understaffing. Critical incidents may also occur resulting from team members’ mistakes that tie up the manager’s time in remedying these situations.
• Difficulty in filling vacant roles: An increasing trend in roles remaining vacant for longer periods, especially critical positions, can signal an unattractive workplace or a lack of necessary skills among existing staff.
• Increased retirement rates: A surge in retirements can indicate an aging workforce, requiring strategies for knowledge transfer and succession planning.

4. Use additional metrics to track attrition

It is also helpful to track and analyze additional HR metrics in addition to the attrition rate. These include: 

1. Employee retention rate: This rate measures the percentage of employees the company has retained over a specified time. Low employee retention could mean your company has a high attrition rate. 
2. Employee performance metrics: This metric tracks and measures staff performance – the quantity, quality, and efficiency of work. Low employee performance indicates disengagement and demotivation and if organizations are not careful, they could face massive employee resignation
3. eNPS: Focus on detractors and passives to determine their sentiments about the company. Analyzing their feedback is crucial in minimizing employee attrition.
4. Exit interview and survey data: Encourage honest feedback to learn their reasons for leaving the company. Analyze your exit interview data and employee responses to detect potential issues that increase employee attrition.

5. Compile an attrition report and prepare a plan of action

Consolidate all the gathered data, analyses, and insights into a comprehensive report. The report should clearly outline the attrition rate, identify trends, and highlight any specific areas of concern, such as departments with unusually high turnover or roles that are consistently difficult to fill.

In this report, it’s crucial to present the findings in an accessible and actionable manner. Use visual aids like charts or graphs to illustrate key points and make the data more digestible. Include a section that interprets the data, offering explanations for why certain patterns may be occurring.

Develop a plan of action based on the insights gained in your attrition analysis. This plan should address the identified issues and aim to reduce harmful attrition. It could include strategies like improving employee engagement, revising hiring practices, enhancing training and development programs, or changing management approaches. We’ll look at some tips below.

The plan should be specific, with clear objectives, timelines, and assigned responsibilities to ensure effective implementation. This step is critical because it moves the process from analysis to action, enabling the organization to tackle attrition proactively and improve its overall workforce management.

HR strategies for reducing attrition rate

Here are tips and actionable advice on how your HR can reduce your organization’s attrition rate: 

• Focus on employee wellbeing: Employee wellbeing is becoming a significant factor in a healthy workplace. Employees give their best when they feel their best. They are productive, engaged, and more likely to stay loyal to their employers. 
• Boost learning and development: Offering different learning and training programs makes employees feel that the company is interested in their development and potential. That makes them think twice about leaving their employers because they could see themselves growing and advancing with the company.
• Implement cross-training programs: Cross-training is about equipping your employees with the skills to perform multiple roles. This approach not only improves workforce flexibility but also ensures that if a role becomes unfilled, other employees can step in to cover the responsibilities temporarily. Cross-training helps in maintaining operational continuity and reduces the immediate pressure to fill vacancies urgently, allowing for a more thoughtful recruitment process.
• Developing succession plans: Anticipating and planning for retirements and, in general, for employees leaving your company is crucial in reducing attrition impacts. Succession planning involves identifying potential retirees in advance and preparing other employees to take over these roles. This proactive approach minimizes disruption and retains critical institutional knowledge within the company.
• Offer competitive compensation and benefits package: Salary is a significant factor in the worker-employer relationship, according to a survey conducted by Workable. It’s also vital in providing a good employee experience. So if you don’t want to lose your prized employees to another company, compensate them well. 
• Work-life balance: A healthy work-life balance lets employees enjoy their professional and personal lives. They are happier and more satisfied at work and are unlikely to apply for another job.

A final word

Understanding and managing the attrition rate is a critical aspect of effective human resource management. A balanced attrition rate can signal a healthy workforce, but excessively high rates can indicate underlying issues that need addressing. Through careful attrition analysis and strategic planning, organizations can identify the root causes of attrition and implement tailored solutions to mitigate its negative impacts.

FAQ

The post Attrition Rate: How To Calculate and Analyze the Key HR Metric appeared first on AIHR.