Are Your HR Metrics Outdated? Try These Four
When it comes to getting a full, clear view of a modern workplace and the people in it, standard HR metrics—productivity, costs, and turnover—just don’t cut it anymore. The more business-minded HR of the past has always used these numbers to track results, whereas today’s strategic HR leaders need to take shifting employee values into account and dig deeper down into causes. Better metrics make managers react proactively—rather than reactively—to changes in workplace culture and employee engagement.
That’s not to say that tracking standard metrics is no longer necessary. Take turnover rate, for example. Employees are acting more like free agents than in the past, and this means voluntary exits are important to keep an eye on. The problem is that merely tracking turnover rates doesn’t tell companies much about the root causes of why people are leaving. More often than not, growing turnover and shrinking productivity suggest a suboptimal work culture and a lack of employee engagement, which indicate a need for change in the workplace.
That’s where the following metrics come into play. With greater accessibility to better HR technology, HR managers can begin to use these metrics to predictively manage culture to spot and correct issues that negatively affect the business at large—before it’s too late.
Mobility = (# of promotions, lateral moves, and transfers) / (# total employees)
As Josh Bersin explains, organizational structures are evolving rapidly in response to generational shifts in the workforce. Rather than being a part of a “traditional functional hierarchy,” employees are now transitioning to what he calls a “network of teams.” Positions and titles are losing importance as roles become ever more fluid, so it’s crucial for HR managers to begin tracking organizational shifts.
Employees are no longer bound to single roles or positions—instead, they are constantly moving between positions with ever-changing roles. A healthy level of such movement, especially as it relates to an employee’s desire to explore and learn new domains, can be a positive indicator of engagement. Providing such opportunities for movement is important, as younger workers increasingly value freedom, autonomy, and contribution over more extrinsic factors like compensation and material perks.
Reading the Metric: Though the fluidity of roles and positions is a hallmark of the modern workplace, the mobility metric will vary from business to business. However, any significant drop may point to lowered levels of engagement—and an increased risk of future employee turnover. It’s important to work with managers to avoid team stagnation, encourage employee mobility, and facilitate career development.
Average PTO = (# total PTO days taken by all employees) / (# total employees)
A recent Namely and #HRWins survey revealed that one of the core factors that contributes to employee engagement is core benefits—PTO and health insurance. Both benefits are central to creating a work culture that values both people’s work and personal lives, and as such, contribute significantly to employee engagement.
By tracking average PTO, an HR manager can get a better sense of how employees are balancing the professional with the personal and whether PTO is being underutilized. Too few PTO days taken suggests that HR managers must work to create policies and a culture that encourage employees to maintain a healthy and balanced lifestyle.
Reading the Metric: Compare average PTO to individual employee usage to spot cases where burnout may be an issue. Use the data to monitor whether employees feel stress or pressure towards taking PTO—and how you can combat those feelings in your culture.
Diversity Benchmarks = Employee breakdown by ethnicity
According to Brookings, 44.2% of American millennials and nearly half of those 18 and under are minorities. The difference is even more stark when you consider that only a quarter of those aged 55 and above are minorities.
The trend is clear: As younger generations begin to enter the workforce, the workplace will only grow more diverse, and businesses must respond and evolve by investing more in creating and supporting diversity in their employees. It’s not only good for society—it’s good for business as well. According to McKinsey, improved diversity correlates positively with a company’s financial performance. Tracking this metric will help guide a business’s shift to a modern, diverse workforce.
Reading the Metric: For the typical American company, diversity metrics will likely reflect lots of room for improvement, especially as you begin moving up the management ranks. In fact, according to the McKinsey study, 97% of American companies have management teams that don’t reflect the racial makeup of the country.
Not only does increased diversity improve overall business performance, but it can also go a long way in improving talent attraction and employee satisfaction. Thoughtful recruitment practices and targeted programs are good ways to attract and hire a more diverse workforce, but it’s just as important to have a diverse management team to serve as a model.
Employee Net Promoter Score (eNPS) = (% Promoters) - (% Detractors)
Rounding out the metrics is the Employee Net Promoter Score (eNPS), which can be a great way to evaluate the effectiveness of workplace culture and employee engagement initiatives. eNPS can be used as a high-level check on whether improvements to Metrics 1, 2, and 3 are contributing to overall culture and engagement. The metric also allows HR managers to adjust policies and initiatives along the way, rather than waiting for a significant drop in performance or productivity before responding.
Measuring the Metric: Originally conceived as a way to measure customer satisfaction, NPS can be used internally at companies as well by asking employees to rank from 0 to 10 the likelihood that they would recommend the company as a place to work. Employees who respond with a 9 or a 10 are promoters, whereas those who answer 0-6 are detractors. eNPS is calculated by subtracting the percentage of employees who are detractors from the percentage who are promoters.
What makes eNPS particularly effective is that it only asks a single question, which means employees are much more willing to provide their feedback. Furthermore, eNPS can be measured on a team or department level in order to identify potential pain points of various functions within a company.
Reading the Metric: eNPS can range from the worst case of -100%, where every employee is a detractor, to the ideal case of +100%, where everyone is a promoter—loyal, satisfied employees who are likely to stay for the long term. Too many detractors point to a heightened risk of voluntary exits, as detractors are easily lured away by more attractive opportunities. So HR managers should aim to keep eNPS in positive territory to maintain a satisfied, sustainable workforce.
Gone are the days of treating your company’s workforce as a machine measured by cold, hard metrics like productivity and turnover rates. Instead, the real factors that contribute to an effective workforce are far less tangible and straightforward. A business must now have a culture that engages employees in order to be successful. Tracking and responding effectively to these four metrics will serve as a solid first step toward the goal of evolving into a modern workplace. While watching productivity increase, you will also see employees enjoying a more fluid, inclusive culture.
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