As an HR leader, you are the trend master.
You know that businesses generate more data than ever. Because of this, they have developed an acute desire for metrics.
You know that even though the goals of businesses continue to be product- and output-centered, the way business happens has shifted.
And you’re right. According to a 2017 Deloitte survey of more than 10,000 HR and business leaders, “88 percent of companies believe they need to redesign their organization to succeed in the digital age.”
However, as a leader, it’s your job to understand what’s behind the buzz, figure out the best way to capitalize on what’s trending and provide cogent recommendations to a C-suite executive looking for answers.
Reports provide quick, coherent overviews from employee retention to hire quality; they help HR leaders dial into the metrics that matter. Although every business is unique and requires different measurements from HR, there are few metrics and reports that may place businesses ahead of the digital curve while still meeting and then exceeding senior leadership’s expectations. Here are four HR reports the C-suite really wants to see.
1. The Cost Per Hire report
As the saying goes, you’ve got to start somewhere. Understanding how much it costs your team to hire each employee is the bedrock from which other metrics originate. It’s surprising how many businesses neglect this metric, when according to Glassdoor, “It’s crucial to have a solid estimate of your cost per hire (CPH). Knowing this figure can help you make smarter investment decisions, define your referral bonuses and save your organization money in the long run.”
One helpful formula for calculating CPH is:
(Internal Costs) + (External Costs) / Total Number of Hires in a Time Period
Once you discover your company’s CPH, other metrics, such as employee ROI and quality of hire, can be built from this cost, which provides a clear picture for how that employee investment is really performing.
2. The Quality of Hire report
The real business MVP of 2017 is the employee. Consequently, understanding the effectiveness of your hiring process is crucial to the health of your business. That’s where a quality of hire report comes in. Quality of hire metrics can be tricky to identify and are continuously evolving, but one useful formula pulled from HR Daily Advisor is:
(Performance + Retention + Productivity) / N
For purposes of this formula:
- Performance equals the average new-hire performance rating
- Retention equals the percentage of new hires still employed after a year
- Productivity equals the percentage of the new hires achieving full productivity scores during a desired period
- N is the number of indicators used in the formula
Although some quality metrics are subjective, they are useful when consistently reviewed. Called the “holy grail of recruiting,” figuring out your business’s quality of hire numbers minimizes hiring problems and maximizes employee ROI.
3. The Turnover Rate report
According to a recent article in Fortune, “The biggest priority, and concern, for business leaders in 2017 will be retaining employees in a competitive talent marketplace.” With companies pulling out all the stops in hopes of keeping talent and enticing new candidates, today’s job market is fierce.
Turnover reports outline the number of employees who have left, and then dig into whether the number is higher or lower or than normal. High turnover rates exacerbate hiring costs and lower productivity and morale; therefore, a consistent report is a good way to gauge the health of a business. Monthly turnover metrics also inform upper management of any significant trends they may need to address.
4. The Revenue Per Employee report
“Senior executives make decisions based on facts, not feelings or opinions.” This quote from an article in HR Magazine articulates something HR leaders know better than most: Almost every company’s biggest expense is its employees.
Therefore, the most powerful measurement for the C-suite is the return (or lack thereof) on investment for those employees. There is a reason top tech companies excel with these numbers. Revenue per employee (RPE) is simple to calculate:
Total Revenue / Total Number of Employees
This metric determines how effectively HR is hiring and training their employees. As long as HR leaders ensure they compare their company’s RPE to similarly sized businesses from their industry, RPE can help senior leaders confidently make game-time decisions.
In summary, HR leaders can actively contribute to business decisions by presenting the C-suite with metrics that matter. In an interview for HR Magazine, compensation analyst Jennifer Triumph noted, “[HR leaders] need to present data that show our human capital strategy is effective and that we are acquiring, developing and deploying the proper talent.”
The data-driven desire of those in senior leadership isn’t going anywhere and HR needs to be aware of their business’s metrics in order to lead their workforce into a successful future.