The role of KPIs is to provide awareness of how you are progressing toward your organization’s short- and long-term goals. Likewise, if your human resource management strategy does not support your business goals, you may not achieve them. A proper HRM strategy is proactive and provides the tools, environment, structure, and resources your employees need to achieve enterprise goals.
With this end in mind, your strategy needs to help your business:
- Identifying and hiring the right people
- Managing and developing these employees in a good way
- Develop role to achieve your business strategy
- Building an organizational culture that supports the continuous satisfaction of the organization’s customers
But, how do you know if your strategy is working and affecting your organization’s goals? It would be great to start by identifying, measuring, and tracking the business outcomes affected by your HR practices. But it would be great if you first defined the HR KPIs for your organization.
What are the Key Performance Indicators (KPIs) for HR?
The KPIs you select should be directly linked to your overall goals, objectives, and strategies. HR KPIs measure all specific areas of your business using clear, measurable metrics. By consistently achieving and tracking these metrics, you can proactively measure whether your HR practices are having a positive impact on the profitability of your business.
For many organizations, the following examples are core HR KPIs:
- Required competency
- Alignment of leadership
- Measuring employee performance
- Acquisition of skills
- Employee stability
The essential indicators to you are those related to your HR strategy. Each HR team has different goals and priorities. Your current focus may be solving the employee retention crisis, and the other organization could be dealing with a mechanism increase. There may be an organization in need of promoting the employer’s brand. So it makes sense that different indicators would be more appropriate for other HR teams.
But there is no one set of metrics that fits every organization. So beware of long lists of HR KPIs as they will only encourage you to start the bad habit of measuring for the sake of measurement. Instead, you need three or four appropriate HR KPIs to determine success.
Key Performance Indicators (KPIs) for HR at Work
The most common drivers of organizational success are employee engagement and leadership alignment.
Several research studies have proven that employee engagement directly impacts profitability and revenue increase. It’s a straightforward equation: Engaged employees are more productive employees mean more revenue opportunities.
Additionally, it is critical that your leadership team continually move your organization in the same direction. If everyone who led your business had a different goal, they could mislead their employees and waste time and money on unnecessary projects.
Measurable Goals are a Must.
The difference between medium and high-performing organizations is often as simple as having measurable goals. Therefore, you must keep in mind that KPIs are a mechanism that allows an organization to monitor the effectiveness of its strategies. However, there must be a clear link between the purpose and the goals that must reach to achieve this end, the method to achieve those goals, and the metrics that demonstrate the effectiveness of your organization’s efforts toward achieving its primary purpose.
While creating a list of KPIs is difficult, collecting data can be an even more significant hindrance for many. First, you need to create a baseline measurement for each KPI. Next, you need to track and document any changes, or lack thereof, every month or quarter. At first, if it is difficult to obtain an accurate measurement, this is normal and acceptable.
People and talent are essential to business success, and the HR strategy creates a tool for finding, attracting, and retaining talent.
