HR Metrics and Workforce Analysis

HR metrics and workforce analysis provide evidence-based data regarding the functioning of systems as opposed to relying on personal opinion or untested models or assumptions. It is also necessary for winning and maintaining commitment for change. Workforce analysis also assists with gap analysis and forecasting for future business goals and outcomes.

Measurement methods and infrastructure are rapidly evolving and have become more sophisticated with quantitative and qualitative analysis determined by particular organisational goals. The infrastructure of strong computer-based information systems are now advanced and allow greater access to larger amounts of data. However, even simple descriptive statistics can prove useful.

Consequently, organisations are able to produce more consistent and systematic reporting of HR metrics. However, HR metrics and workforce analysis are only useful if different and better decisions are made as a result of having that information.

Examples of HR metrics and systematic workforce analysis of organisational data may be conducted to gauge any of the following: 

Staff characteristics

  • Age structure/profile
  • Qualifications of staff
  • More attendance of education and training programs
  • More career development
  • Decrease in pay disparities

Business objectives

  • Revenue growth
  • Leadership accountability
  • Financial return on investment
  • Revenue per employee
  • Expense per employee
  • Benefit cost as a percentage of revenue
  • Benefit cost as a percentage of expense
  • Higher ranking of the organisation in terms of best places to work
  • Becoming an employer of choice
  • External awards and recognition from special interest and advocacy groups for diversity efforts

Recruitment and retention

  • Hires as a percentage of total employees
  • Cost of hire
  • Time to fill jobs
  • Time to start jobs
  • Ratio of offers made to acceptances
  • Better employee retention/ fewer attrition rates
  • Involuntary separation rates
  • Voluntary separation rates
  • More positive responses on exit interviews

Health and productivity

  • Employee’s health status and capacity for work
  • Workers’ compensation cost as a percentage of expense
  • Workers’ compensation cost per employee
  • Workers’ compensation cost per claim
  • Absence rate
  • Improved employee job satisfaction 
  • Improvements in productivity
  • More innovation and creativity (there are various metrics for this, such as patents granted per capita)
  • Improved labour relations

Diversity targets

  • Percentage of minorities, EEO targets
  • Increase in overall minority representation
  • Increased representation of minorities at different levels of the organisation
  • Fewer discrimination grievances and complains
  • ore diverse recruitment
  • Inclusion of diversity in corporate social responsibility efforts

Other tools

Below are some other tools to help with the analysis and communication of HR metrics and workforce analysis.

Reporting

Reporting incorporates decisions about:

  • What metrics will be reported
  • How these metrics will be presented
  • How, when and to whom they should be communicated

Measuring details about your workforce is conducted for the purpose of identifying problems that are worth solving or unrecognised opportunities in order to enhance the effectiveness of procedure and the performance of your organisation. It may be beneficial to initially focus on a limited number of potentially high-return opportunities rather than being overly ambitious to begin with (e.g. identifying areas of high attrition and implementing strategies to retain key staff).

Keep in mind that providing numbers to managers is unlikely to be useful if they cannot understand the meaning of the information for their particular situation. It is therefore important to provide an interpretation of what the data means and put it in context for your audience. 

Dashboards

The use of dashboards includes providing summary or at-a-glance visual information which is relevant to a particular objective. It also allows for further drilling down into key HR metrics. Two examples of dashboards are provided below.

 

To view a slide presentation on what a dashboard should be used for, the type of content it should consider and how it should look to be most effective, click here.

For tips to design and implement a HR metrics dashboard, click here.

Benchmarking

Benchmarking data determines standards against which processes, outcomes, and performances can be compared and improved. Insights may be ascertained into what is possible and allows for goal setting or forecasting potential remedial actions. It also allows for comparison and evaluation as to how far you’ve come pre and post implementation of your age management strategy.

Data mining

Data mining is a process of analysis that allows for patterns to be identified as well as causal factors. More sophisticated statistical methods can be used to identify relationships within large datasets. This depth of analysis may only be desirable for large organisations as most HR units will not have the capacity, experience, or infrastructure to conduct data mining analysis. However, outsourcing data mining may be an option. Some data analysis consultants include Data Analysis AustraliaAccenture and Data Runs Deep.

Forecasting

Forecasting or prediction involves the development of system models which can be used to calculate projected future outcomes and understand the consequences of introduced change. Again, there are a variety of options for undertaking forecasting, such as in-house analysis if the capacity exists or outsourcing to specialist consultants.

How do I gather the data for and conduct HR metrics?

Gathering data in order to conduct HR metrics may be achieved via: existing HR databases such as:

  • Length of tenure
  • Recruitment of new staff across departments or units
  • Designing and conducting surveys
  • Conducting interviews with new, existing, and exiting staff
  • Conducting focus groups with special interest staff

For a list of 20 common HR metrics and their formulas, click here.

You may outsource the data generating component or you may obtain the skills through short- courses on statistics, systematic reviews and research design. Research methodology short courses are often run by your local university business schools, for example at the University of Melbourne and Monash University.

For further resources on methodology in designing and conducting effective surveys go to Creating Research Systems.

Books on survey research

Rea, Louis M., and Parker, Richard A., Designing and conducting survey research: A comprehensive guide, 3rd Edition, Jossey-Bass, 2005.

Marsden, Peter V., and Wright, James D., Handbook of survey research, Emerald Group Publishing, 2010.

Sapsford, Roger, Survey research, Sage publications, 1999.

HR metrics calculators

The Society for Human Resource Management

HR - Business & Legal Resources

For a full list of overall resources for HR metrics and workforce analysis including: tools for audits, benchmarking, further information, checklists, cases of best practice, and the assessment, measurement and evaluation of diversity and policy effectiveness, click here.

Download the full toolkit here

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