How to use people data to help make your company better.

May 31, 2023

Solo HR practitioners in small companies often have an abundance of people data that could help their organizations. But they may not know how to make sense of it all.

Experts advise focusing on key metrics that will help the organization achieve its business goals.

“It is not the best use of time or resources to track certain metrics just for the sake of tracking them or because you see other organizations doing the same,” says Lindsey Garito, SHRM-SCP, former director of human capital management and total rewards at Summit Health, a national health care organization with 13,000 employees based in Rye Brook, N.Y.

HR metrics are a specific set of figures that measure the performance of an organization’s HR function. Once produced, those metrics can be analyzed and compared against the organization’s historical performance or against the performances of other companies of a similar size and industry.

Here are five key metrics that every HR professional should track.

1. Employee Turnover Rate

Few HR metrics are better than turnover rate at showing whether a company is delivering a positive employee experience.

Looking at the historical pattern of employee turnover can also be helpful for resource planning, such as budgeting for hiring and training, says Kendra Davis-Roberts, a people insights strategist and founder of KDR Analytics in Philadelphia.

Calculate the rate by dividing the number of employees who departed by the total number of employees over the same time period, then multiply by 100 to get a percentage. A high turnover rate can signal potential issues, such as poor candidate selection, ineffective managers, low compensation or a lack of advancement opportunities.

To identify what underlying issues may be plaguing your company, you’ll need to determine who is heading for the exits and why. Obtaining this information is even more important than knowing how many people are leaving, because it provides an opportunity to pinpoint and fix problems to slow attrition. To gain insights, dig in to data such as demographics, salary history, performance reviews and exit survey responses. Many HR professionals already track this information, and grouping the data through a human capital management system or in spreadsheets can help reveal patterns.

“Maybe you notice that people are leaving from a certain demographic group or you’re losing certain people to a competitor,” says Chelsea Williams, founder and CEO of Reimagine Talent Co. in New York City. “That is going to help you not just with workforce planning in general, but also with making strategic hires and really starting to form that company culture.”

2. Time-to-Hire

Time-to-hire is the number of days from when a candidate applies for a job, or is contacted by a recruiter, to when the individual accepts an offer. This figure can be displayed as a per-person average. A ­longer-than-average time-to-hire might not be a problem for companies with high levels of employee retention and engagement. However, if an organization is frequently losing good candidates, it could be time to look for bottlenecks in the recruiting and hiring processes.

Davis-Roberts recommends asking questions such as:

• Are recruiters attracting enough suitable candidates?
• Are candidates being interviewed in a timely manner?
• Are hiring managers prepared to evaluate candidates?

To shorten time-to-hire, HR professionals also can quickly create a pool of potential candidates composed of people who have previously applied for roles, suggests Joseph DiCarlo, SHRM-SCP, chief people officer at Clarest Health, an 800-employee personalized medication management company based in Farmingdale, N.Y.

In addition, Williams recommends working with outside agencies to help hunt for candidates and sort through resumes.

3. Benefits Participation Rate

Tracking which benefits employees use the most can help ensure that employees’ needs are being met and money is being spent wisely.

To determine the rate, divide the number of employees enrolled by the number of employees eligible, then multiply by 100 to get a percentage.

“There’s a lot of spend that goes into trying to take care of your people,” Williams says. “And so, if you notice that employees aren’t contributing to a 401(k), for example, and you’re paying for something like that, it is something to note.”

Offering personalized benefits also can be effective in retaining current employees and attracting qualified candidates, she adds. For example, Williams’ first employees didn’t need health insurance, so she gave them extra time off.

4. Diversity

As companies strive to foster cultures that reflect a commitment to diversity, equity and inclusion, HR professionals will want to track their organizations’ progress in hiring and retaining a diverse workforce.

Gender and racial diversity can be measured as a percentage of the overall employee population, or it can be reported as a ratio comparing, say, males to females or white employees to nonwhite employees.

“It’s important to see if any employees are having different experiences in processes that should be equal, like hiring, promotions, average salary and more,” ­Davis-Roberts says.

In addition to collecting quantitative demographic data, it’s useful to capture qualitative diversity data around employee experiences through discussions and surveys.

“Small companies should consistently keep their ears and eyes open to the experiences of people—avoiding assumptions and instead asking questions,” Williams adds.

Tracking how talent finds open job positions is also a good way to help diversify the employee population at an organization, DiCarlo says.

5. Employee Satisfaction

Regularly assessing employee satisfaction—how happy employees are with the work they do and the organizations they work for—is something that should be done multiple times a year.

“You should be taking that snapshot and marrying it to turnover because 99 times out of 100, there’s going to be a direct correlation between the two,” DiCarlo says.

One tool for measuring employee satisfaction is the Employee Net Promoter Score. To calculate that number, first ask employees how likely they are, on a scale of 0 to 10, to recommend the organization as a good place to work. Then subtract the percentage of “detractors” (employees who choose 6 or below) from the percentage of “promoters” (employees who choose 9 or 10). A score between 30 and 50 is considered good, Davis-Roberts notes.

HR professionals can also use an employee satisfaction index (ESI), in which they ask employees to rank their satisfaction level on a scale of 1 to 10 in response to specific statements. The formula to calculate ESI is the sum of all employees’ scores divided by the maximum possible score, multiplied by 100.

ESI statements might include: You feel connected to your co-workers. Your job duties match your ideal role. Your supervisors effectively communicate company news.

However, don’t ask about issues that are unlikely to be addressed.

“It can do more harm than good to ask for employee feedback that is never responded to or acted on,” Garito says. “Focus on the metrics that are meaningful for your organization and relate to the key priorities.”

Kate Rockwood is a ­freelance writer based in Chicago.

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