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Analyzing HR Issues: Metrics & Reporting

Instructor: Nick Chandler
This lesson introduces common HR metrics that are useful for top management in developing strategy and analyzing HR issues, and it highlights what HR metrics can tell you about a company. Learn more about HR metrics and reporting now.

Checking Company Performance

In any organization, big or small, managers and owners ask themselves about performance and how it can be improved. This might mean considering ways to increase profits or turnover, lowering costs, building upon strengths, and dealing with weaknesses. The human resources (employees) of an organization are often the biggest costs in an organization's budget, with costs like salaries, overtime, training, recruitment, and staff benefits, such as company cars, insurance, and so on. These costs need to be checked and controlled.

Sophie is the HR manager of Luxuria, a maker of luxury handbags. Last year they set up two new factories so that the company now has four factories in total. This has doubled their workforce to 2,000 employees, and over half work on the factory floor. The remaining 1,000 are support staff from accounts, marketing, IT, production, and other departments. Top management want a report from Sophie on their employees so they can find out where there are inefficiencies and what needs to be focused on after this expansion. In this way, top management assess the organization and develop a business strategy.

Choosing Metrics

A metric refers to the measurement or assessment of something. Sophie has a list of HR metrics, which are used by many companies to assess the employees in organizations (i.e. that employees are working effectively, costs are kept reasonably low, and there is some measurable return for the costs spent). There are many metrics, and she knows management asked for a basic overview of employees. She meets with the chief financial officer (CFO) to discuss the ones that are most suitable and likely to be understood and considered strategic by top management. While they consider many metrics, the CFO and Sophie create a list of just ten on which to focus. This way her report will focus on the main issues, and she can give more details later, if needed.

The Most Common HR Metrics

She has decided to pick the most common HR metrics to give top management a picture of the employees at Luxuria. The first is cost per hire. Sophie uses this metric to tell her how much it costs Luxuria when she hires a new worker. She used this before the expansion and is going to use it to compare the cost of hiring staff before and after the expansion. The second is revenue per employee. This tells Sophie how much each one of Luxuria's employees earn for the company.

Employee Satisfaction and Motivation

HR

Sophie is also concerned with how motivated and satisfied the staff are after the expansion. When employees are unmotivated or dissatisfied in their jobs, there are some signs that Sophie might notice, such as people taking sick days more often, more employees quitting, employees leaving the organization after a short time, number of faulty products, or customer complaints. To check on these factors Sophie uses the following HR metrics:

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