Strategic Human Resource Metrics: Production & Sales

Strategic Human Resource Metrics: Production & Sales
Coming up next: Strategic Human Resources Management: Assignment - HR Consultation

You're on a roll. Keep up the good work!

Take Quiz Watch Next Lesson
 Replay
Your next lesson will play in 10 seconds
  • 0:00 Definition of Human…
  • 0:37 HR Metrics: Production…
  • 5:30 Lesson Summary
Save Save Save

Want to watch this again later?

Log in or sign up to add this lesson to a Custom Course.

Log in or Sign up

Timeline
Autoplay
Autoplay
Speed
Lesson Transcript
Instructor: Noel Ransom

Noel has taught college Accounting and a host of other related topics and has a dual Master's Degree in Accounting/Finance. She is currently working on her Doctoral Degree.

This lesson includes the definition and specific examples of HR metrics, the formula used to calculate each metric and an assessment of why the metric is useful to production and sales.

Definition of Human Resource Metrics

Meet Courtney, a human resource reporting manager. Courtney is responsible for using human resource (HR) metrics to monitor and track the performance of the human resources department at her company. HR metrics are measurements used to determine the value of the HR department's performance and help leaders understand the effectiveness of HR programs.

The human resource department must show business leaders the value of their programs and initiatives and help leaders track the time spent on human resource management activities.

HR Metrics: Production and Sales

Courtney identifies five specific metrics she wants to focus on during her presentation to leadership. The five HR metrics most important to Courtney are the utilization percent, sales by tenure, units produced per employee and workforce productivity. During Courtney's presentation, she walks through a few scenarios based on the information she's gathered on each of these metrics.

Utilization Percent

The first scenario involves the utilization percent, which is a measure of the total number of employees using a particular benefit versus the total number of employees who are eligible for the benefit. The formula for the utilization percent is:

total number of employees using a benefit / total number of employees eligible for the benefit

The HR department implemented a new health and wellness benefit that allows employees to track the number of steps they take using a step counter. Employees can receive discounts on their health care premiums based on the number of steps they take during each quarter. The program seems to be a bit costly to the company, and Courtney needs to report to her leaders how many employees are actually using the benefit.

Courtney's company has 20,000 employees who are eligible for the health and wellness benefits, and of those 20,000, only 3,000 are taking advantage of the program. Since the utilization percent helps determine if the benefit is worth keeping by comparing those who use the benefit versus those that don't, Courtney can help her business leaders make decisions about the future of the program.

Courtney calculates the utilization percent by taking the 3,000 total employees using the benefit and dividing that figure by the 20,000 employees eligible for the benefit, to get a utilization percent of 15% (3,000 / 20,000). This indicates that only 15% of the organization's employees are using the new program. Leadership wants at least 60% of employees to use the new program.

A low utilization percent can reduce revenue or cash flow if the company spends too much money implementing programs that employees don't use. By tracking the utilization percent over the next six months, the leadership team can determine if they need to remove the program from the benefits package, or keep it as more people begin to use the program.

Sales by Tenure

The sales teams within Courtney's organization drives revenue growth, and without the sales team the company would not be able to maintain expenses or increase revenue each year. The HR department has done a great job retaining some of its top sales people. In fact, most of the salespeople have been in their positions for almost 15 years!

The sales by tenure metric is a measure that helps leadership determine the performance of sales staff as a result of the length of time the employee has been in the role. The formula for sales by tenure metric is:

dollar amount of sales / years of tenure

To unlock this lesson you must be a Study.com Member.
Create your account

Register to view this lesson

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use Study.com

Become a Study.com member and start learning now.
Become a Member  Back
What teachers are saying about Study.com
Try it risk-free for 30 days

Earning College Credit

Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it risk-free for 30 days!
Create an account
Support