How To Measure Productivity Of The HR Department?

How To Measure Productivity Of The HR Department?

RahulAugust 21st, 20214 min read

Recruiters play a crucial role in achieving the strategic organization goals by finding, attracting, and retaining the right talent. But sometimes, it becomes challenging to measure the productivity of the HR department.

If productivity isn’t measured, the performance of the existing employees can’t be improved. However, measuring performance can be difficult as every employee has different roles and diversity in the workflow.

Every HR team has different goals and priorities. Measuring productivity may vary depending on the organization's goals. For instance, some organizations focus on solving a staff retention crisis, while others may need to develop a positive employer brand.

Hence, it makes sense that different indicators are more suitable for HR teams.

Why Does It Matter To Measure Productivity?

Measuring the productivity of the HR department is essential than some companies take it to be. One bad hire can cost a company a lot and can affect the company’s reputation and employer brand.

For every organization, it is crucial to measure the productivity of the HR team to enhance performance. According to Gallup, engaged employees are 27% more likely to give “exceptional” performance.

9 Ways To Measure Productivity Of HR Department

Employee Productivity Rate

As the world has shifted toward remote workforces, you should track the employee productivity rate as a benefit to that of a requirement. It is essential to track performance to determine whether the work from the home facility is working perfectly for employees or not.

If you find that productivity has been affected, there’s a high probability that employees may be overburdened or going through some other issues. Measuring employee productivity is essential in remote working to track how much time an employee needs to be productive a day or week.

Recruitment Process

Focusing on a candidate-driven approach can help recruiters streamline the recruiting process and develop a positive employer brand. When measuring productivity, you must spend time focusing specifically on new employees about their experience with the HR department throughout the hiring process.

Some metrics to track include:

  • How much time is taken to fill a vacant position?
  • The average performance of new hires
  • Turnover within the first year of employment
  • Manager satisfaction with new hires as opposed to last year’s satisfaction counts
  • The overall impact of a bad hire

Think Outside The KPI Box

The modern tools and technologies offer exciting ways to measure HR productivity. For example, long and costly annual staff surveys are constantly being replaced by short “pulse” surveys that frequently ask employees a quick question. This allows recruiters to present a clear picture of staff sentiment and respond to what data tells them.

Cost Per Hire

Most companies, especially startups, don’t have a budget, resources, and time to designate towards making a hire. This metric is associated with a recruiting budget rather than one-off recruitment.

For example, your company plans to hire 20 employees in a financial year, and the budget is $2,500. Instead, the company should set a budget of around $50,000. This would cover the costs of recruiting, conducting pre-employment assessments, hiring, and onboarding the new candidate.

Hence, it’s crucial to include all direct and indirect costs involved in hiring. It includes recruitment ads, background checks, training costs, and a proportional cost of your Applicant Tracking System (ATS) if your company has one.

Retention And Turnover

Simply looking at turnover metrics doesn’t give you a clear picture of HR effectiveness. Instead, leverage the retention strategies to get a deep insight into what is and isn’t working.

Some metrics to measure here include:

  • Performance turnover in different roles
  • Preventable turnover in different roles
  • The overall cost of employee turnover in senior positions
  • Managerial satisfaction with HR’s retention efforts and the result they have on productivity

Pay Equity

Pay equity means excluding gender and race discrimination in the employee compensation process from your hiring process. It helps you employ a fair and equitable employee compensation process.

You can calculate equity standards based on different variables. This can include employee performance, education qualification, expertise, and management levels to ensure that employees in the HR department are paid equally regardless of gender and race.

Monitor Work Quality

If the HR department completes their work on time, it’s a good sign of their productivity level.

However, meeting deadlines isn’t the only metric you should measure. What is the standard of their completed task? Are they going above and beyond and giving the best outcomes?

Regular assessment of employees is imperative in every organization, no matter what the size is. It will give you a deep insight into an employee’s weak points. This will help you determine if more or better training is required or not.

Absenteeism and presenteeism are two common factors that affect the employee’s overall productivity.

If an employee is sick and still comes to work, surely productivity will be negatively impacted. Additionally, it puts other employees’ health at risk.

On the other hand, if an employee takes too many leaves due to sickness, it intimates high-stress levels. Keeping track of unnecessary absences will help you identify these trends and discuss them before it affects productivity.

Training Spend Per Employee

Training is given to those employees who are not performing well in their day-to-day tasks. Training is not free – it involves both direct and indirect costs. And assessing training spends per employee is essential.

You need to determine the cost of your company’s overall employee training, along with all the costs involved, such as travel costs, course fees, and the cost of your learning management system (LMS).

Summing Up

Regular monitoring of the HR department is crucial for every business's success.

The metrics mentioned above will help you provide the essential and hidden data it needs to define whether or not the company is spending its resources in the best way possible.

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