KPI for HR manager and every detail you must know
“Defining the key result areas gives the clarity around what should be done so that one can focus, be highly productive, and make the most impact in his/her role.” – Rajesh Padmanabhan
HR department’s operations are becoming more and more vital for the future of the company. A massive part of a positive employee and staff experience is determined by Human Resources’ successful service. Therefore, how to measure HR effectiveness is being asked by more business owners nowadays. Keep on reading if you are a business owner facing difficulty in measuring your HR department’s effectiveness.
You need to understand some responsibilities of the HR department of your company and realize the vast responsibility it holds:
1. Determine the needs of new staff and the needed qualities of new employees.
2. Determining the needs of the company for temporary or full-time employees due to the needs.
3. Evaluating the work and the progress of each employee to motivate them.
The answer to the question of how to measure HR performance can be a bit tough. Mainly effectiveness of the human resources department is through measuring key performance indicators also known as HR KPIs. These indicators are HR metrics that are used to see how HR is contributing to the rest of the People & Organization plan and progress. This means that a KPI in HR measures how effective the HR department has been in following the organization’s HR strategy plan.
Key result areas also known as KRAs mainly define the job description for the employee and enable the staff to have better clarity of the role they play in the future of their company. It also helps employees to align their roles with the management plan. KRAs are vast topics on which the employee has to focus on. These strategies can then be absorbed into the organization’s long-term strategic plan with appropriate responsibilities and time frames assigned. This set of longer-term strategies must then be translated into a balanced set of operational objectives, which are foundational to building and implementing the near-term operating plan. If you are interested in this article, you can also read How to improve human resources department? article.
To increase HR’s efficiency, it is vital to use KRA and KPI indicators.
Sample KRA and KPI for HR manager
Good and effective KPIs for human resource managers must be:
Here is a list of human resources KPI examples to put on your HR checklist:
1. Absence rate: This rate is measured by dividing the number of working days that the employee was absent by their total number of working days.
2. Absence cost rate: This rate is usually measured by including employee pay, the cost of managing absence, and replacement cost.
This KPI indicator is especially suitable for EU countries with a strong high amount of employee protection.
3. Employee’s Benefit satisfaction rate: this rate is usually calculated using an employee engagement survey. These can be very helpful in decreasing the company’s employee turnover.
4. Employee productivity rate: can be hard to measure. To measure employee productivity, HR representatives should consider all the factors that can impact employees’ productive output.
5. Employee satisfaction index: it gets measured using employee engagement surveys. Dissatisfaction can be a common motive for employee turnover.
6. Turnover Rate: Turnover rate (%) = (Number of Leavers/Avg. Number of Employees) x 100
Turnover refers to the percentage of staff that have left the company over a certain period of time. Having a high turnover rate can affect a company’s culture and cause less motivated and productive staff. Although it is different for each business, the turnover rate should stay below 10% on average.
If the turnover rate in your company is higher than 10%, you should take some measures to make sure that you’re providing suitable compensation, a work environment, and a strong HR department.
7. duration in position rate: If they feel they won’t be promoted, many employees tend to look for new opportunities outside of the company. Therefore, the future of your company needs to let people know they can have dreams and they are not stuck at a dead-end job.
If the opportunity for promotions and growth is limited at your business, it is a good step to let the HR department know and come up with new and recreational solutions.
If the employees feel like they can’t get more out of the job, they will quit and the turnover rate of your company can increase significantly.
To sum up what has been told
It is impossible to achieve 100% productivity but you can maximize with a human resources improvement plan and come close by acquiring KPI and KRA indicators. Most HR responsibilities are very complicated and they need special knowledge. It’s better to consult with a professional or hire a consulting company. If you are a business owner, it is advised that you do not overlook the importance of this department and take the best measures to boost your productivity and maximize your company’s efficiency. You can check out our blog on “How to improve the human resources department?” to improve your knowledge.