As a responsible HR professional, it is crucial to understand the different methods for measuring HR productivity. This can be done by breaking it down into three main components: What, Why, and How. Firstly, it is important to understand what the HR productivity formulas are. These formulas are essentially calculations that are used to measure the effectiveness of HR practices and policies in a company. Secondly, we need to understand why it is necessary to have these formulas. HR productivity formulas help in identifying areas of improvement, measuring the progress of HR initiatives, and ensuring that the company is making the most of its human resources. Finally, we need to know how to use these formulas for improving employee performance. One of the key takeaways is that productivity is not just about doing more, but rather, creating more value. Managers need to take responsibility for increasing productivity, as it is not the sole responsibility of the workers. Furthermore, productivity is not an accident; it is the result of careful planning, preparation, and prevention. By keeping these factors in mind, HR professionals can improve the productivity of their company and ensure that they are making the most of their human resources.
HR PRODUCTIVITY FORMULAS
As an HR professional, it's essential to have a set of metrics and productivity formulas that can help you enhance your impact and reduce costs. Additionally, these formulas can also help you measure the performance of your employees and predict the future of your business.
Predicting the future means that you have a formula that can help you understand what your business will look like in the coming years. To do this, you need to measure the efficiency and effectiveness of the whole organization, especially the HR department.
One way to measure this is by tracking employee turnover, employee training, employee retention, human capital cost, cost of labor, and employee expenses per employee. By keeping tabs on these metrics, you can better understand how your HR department is performing and where you may need to make improvements.
To further enhance your HR department's impact, you can take the following steps:
- Quantify the HR values: By putting a value on your HR department's contributions, you can better understand how they impact the bottom line.
- Prepare a guide for the workforce: This can help your employees understand what is expected of them and how they can contribute to the success of the organization.
- Calculate Return on Investment (ROI) from HR: By understanding the ROI of your HR investments, you can make better decisions about where to allocate resources.
- Frame measurement standards: This can help you measure the success of your HR initiatives and ensure that everyone is working towards the same goals.
- Find HR contributions to business results: By understanding how HR impacts the business, you can better communicate their value to other departments.
- Uncover the strengths and weaknesses of the business: This can help you identify areas where your HR department can make improvements.
- Make better decisions with the help of data: By using data to drive your decisions, you can make more informed choices that are backed by evidence.
It's important to remember that employees engage with employers and brands when they are treated as humans. To treat your employees as humans, you need to use data and numbers to understand their needs and preferences. By doing this, you can create a workplace culture that is supportive, empathetic, and productive.
In decision, having a set of HR metrics and productivity formulas can help you enhance your impact, reduce costs, measure performance, and predict the future. By taking the steps outlined above, you can create a more effective HR department that supports the success of your organization.
REVENUE PER EMPLOYEE
To determine the revenue generated per employee of a company, you can employ a simple formula. First, obtain the total revenue generated by the company. Next, count the total number of employees working for the organization. Once you have these figures, divide the total revenue by the total number of employees.
For example, suppose the revenue of your company is $100,000 and the total number of employees is 100. To calculate the revenue generated per employee, divide $100,000 by 100, resulting in $1000 per revenue. If the company had 200 employees, the revenue generated per employee would be $500.
By using this formula, you can determine how much revenue each employee is generating for the company. This information can be useful for businesses to analyze their workforce's productivity and make informed decisions regarding future growth and development.
COST PER HIRE
The cost per hire is a crucial metric that reflects the total expenditure incurred by an organization on its HR and recruitment staff. To put this into perspective, let's consider an example. Suppose you have a team of 5 dedicated HR professionals who work tirelessly to identify and onboard new talent. The total cost of their collective salaries and benefits comes out to be $5000 per month. Additionally, let's say that in a given month, your organization hires 5 new employees. To calculate the cost per hire, we simply divide the total cost of HR salaries by the number of new hires made in that month. In this case, the cost per hire would be $1000. This means that your organization spent $5000 in total to bring on board 5 new employees, resulting in a cost of $1000 per hire.
The concept of overtime percentage refers to the payment made to employees for the extra hours they put in at work. This is a crucial aspect of employee compensation and helps ensure that workers are fairly compensated for their time and effort. To calculate the overtime percentage, a simple formula is used which involves dividing the overtime amount paid by the total salary of employees and then multiplying the result by 100. For instance, if the overtime amount paid is $10,000 and the total salary of employees is $100,000, the overtime percentage would be calculated as follows: Overtime percentage = $10,000/ $100,000 × 100 = 10%.
Incentive payout is another term for overtime percentage and can be calculated using a similar formula. To arrive at the incentive payout, the incentives paid are divided by the total salary cost of employees and then multiplied by 100. For example, if the incentives paid are $20,000 and the total salary of employees is $100,000, the incentive payout would be calculated as follows: Incentive payout = $20,000/ $100,000 × 100 = 20%.
Calculating the overtime percentage or incentive payout can be helpful in determining what standards to set for employee compensation. By having a clear idea of what percentage of total salary costs is being spent on overtime or incentives, employers can make informed decisions about how to allocate their resources and ensure that employees are being fairly compensated for their efforts.
One important aspect of employee performance that managers need to keep track of is absenteeism. By calculating the amount of unexcused absences an employee has, you can determine their absenteeism rate. This is done by dividing the number of unexcused absences by the total number of working days and multiplying by 100. For instance, if an employee has 10 unexcused absences out of 100 working days, their absenteeism rate would be 10%.
It's crucial to communicate to employees that reducing their absenteeism rate is essential to maintaining good work performance. In fact, it's best to aim for a low absenteeism rate of 2%, 3%, or 5%. This means that out of 100 working days, an employee should take only 2, 3, or 5 unexcused leaves. Taking 10 unexcused leaves, as in the previous example, is not an acceptable practice.
Remember, data is key when making decisions that can impact employee performance. By tracking absenteeism rates, managers can identify any issues and take action to improve employee attendance and overall performance.
JOB SATISFACTION RATE
Calculating the job satisfaction rate is an important aspect in measuring the contentment of employees within a company. The formula for this calculation is based on the number of satisfied employees divided by the total number of employees in the organization and then multiplied by 100. For instance, if a company has 100 employees and 80 of them report that they are satisfied while 20 are dissatisfied, the job satisfaction rate would be calculated as 80/100 × 100, which is equal to 80%.
To increase job satisfaction and create a rewarding employee experience, it is essential to understand the factors that matter most to your staff. One of the key elements to ensure that employees feel appreciated is to provide them with the recognition and rewards they deserve. By doing so, employers can foster a positive work environment and build a strong foundation for employee satisfaction and retention.
Achieving success in any organization requires careful planning and execution. As a manager, it is important to have a system in place to monitor progress and ensure that tasks are being completed efficiently. One way to do this is by calculating the execution rate, which is a measure of how well tasks are being completed in relation to how many tasks are assigned.
By using formulas to create management information systems (MIS), decision-making can be made easier for the CEO or owner of the company. With access to accurate data and information, they can make informed decisions that are in the best interest of the company. This means that the CEO or owner is not required to be present at the office all the time, which is especially important in the current climate where remote work has become the norm.
However, it is also important to ensure that employees are not being micro-monitored. Constant monitoring can lead to dissatisfaction and even resignations. Instead, it is better to use the execution rate formula to monitor progress. This formula is calculated by dividing the total number of tasks completed by the total number of tasks assigned and multiplying by 100. For example, if an employee was assigned 10 tasks and completed 5 of them, the execution rate would be 50%.
Using the execution rate formula, managers can identify areas of improvement and make necessary adjustments to ensure that tasks are being completed efficiently. This can lead to greater productivity and overall success for the company.
PROFIT PER EMPLOYEE
To determine the profit per employee for your business, you can use a simple formula. First, identify the total profit your business has earned. Next, count the number of employees that work for your company. To calculate the profit per employee, divide the total profit by the number of employees. This will give you an idea of how much profit your business is generating per employee.
For instance, let's say your business has 100 employees and earned a profit of $40,000. To calculate the profit per employee, you would divide the profit by the number of employees, resulting in $400 per employee. This information can be helpful in evaluating the financial health of your business and making informed decisions about your workforce.
TRAINING SPEND PER EMPLOYEE
When it comes to the growth and success of your company, one of the most important aspects to focus on is the training and development of your employees. This can be achieved through a simple formula known as the "training spend per employee". To calculate this, all you need to do is divide your total training cost by the number of employees in your organization.
For instance, if your total training cost is $1000 and you have 100 employees, the training spend per employee will be $10. This means that $10 will be invested in the training and development of each employee. By implementing this formula, you can ensure that your employees receive the necessary training and development to excel in their roles and contribute to the growth of your company. So, make sure to prioritize the training spend per employee and watch your organization thrive.
ABOVE AVERAGE PERFORMANCE MANAGEMENT RATIO
Calculating the above average performance management ratio can provide valuable insight into the overall performance of your workforce. To determine this ratio, you'll need to divide the number of above-average performers by the total number of employees. For instance, if your company has 100 employees, and 70 of them are considered above-average performers, then your above average performance management ratio would be 70%. This metric can be a useful tool for assessing the effectiveness of your company's management strategies and identifying areas for improvement.
TIME TO HIRE
When it comes to hiring new employees, it's important to keep track of the time it takes to complete the hiring process. Whether you're working with your HR team or a recruitment agency, there's a simple formula you can use to calculate the time to hire. This formula involves subtracting the date of the first interview from the date of hire.
For example, let's say an employee's first interview was on January 1st and they were hired on January 31st. Using the formula, we can see that it took 31 days to hire that employee.
Calculating the time to hire can help you set benchmarks for future hiring processes. By knowing how long it took to hire previous employees, you can determine if it's possible to shorten the hiring timeline for future candidates.
Keeping track of the time to hire can also help you identify any areas of the hiring process that may be causing delays. This information can be used to make adjustments and streamline the hiring process, resulting in a more efficient and effective process overall.
ANNUAL RECRUITMENT COST
When calculating the total cost of recruitment, it is important to consider all expenses that go into the process. This includes software costs, charges paid to job portals such as seek.com, advertisement expenses, and the cost of employees who are engaged in the recruitment task. By taking all of these factors into account, you can accurately determine the annual recruitment cost and make informed decisions about how to allocate your resources.
OFFER ACCEPTANCE RATIO
Calculating your offer acceptance ratio can provide valuable insight into the appeal and reputation of your company. To determine this ratio, simply divide the total number of people who have accepted your job offers by the total number of people who were offered positions. For instance, if you offered 100 people the opportunity to join your company and 50 of them accepted, your offer acceptance ratio would be 50%.
It's important to keep track of your offer acceptance ratio over time. If you notice that fewer people are accepting your offers, it could indicate that there is an issue with your company or its reputation. For example, negative comments on social media or a poor interview experience could be turning candidates away. In this case, it's important to investigate the root cause of the problem and take steps to address it, such as improving your branding or refining your recruitment process. By maintaining a high offer acceptance ratio, you can ensure that you're attracting the best talent to your organization.
PERCENTAGE OF NEW HIRE THAT LEAVE IN 90/365 DAYS
Calculating the percentage of new hires that leave within a certain timeframe is a crucial metric for any organization. It provides valuable insights into the company's recruitment and retention strategies and helps identify areas for improvement. To calculate the percentage of new hires that leave within 90 days, the formula is simple. You divide the number of new hires who quit within 90 days by the total number of new hires within 90 days and multiply the result by 100.
For instance, if you hired 10 people within 90 days and 3 of them quit within that same period, the percentage of new hires that leave within 90 days would be 30%. This means that 30% of employees hired within the first three months of employment left the company. Similarly, you can calculate the percentage of new hires that leave within a year by dividing the number of new hires who quit within one year by the total number of new hires within the same period and multiplying the result by 100.
For example, if you hired 50 people within a year and 10 of them quit within that year, the percentage of new hires that leave within 365 days would be 20%. This indicates that 20% of employees hired within one year left the company. Knowing this percentage is essential for employers to understand why people leave the organization, whether the number is high or low, and whether the company's work environment is comfortable for employees.
It is essential to note that having too few or too many employees leave the organization is not ideal. If too many people are leaving, it may indicate that something is amiss with the company's culture, compensation, or other work-related factors. On the other hand, if too few people leave, it may mean that the company's work environment is too comfortable, or the company is not growing. Therefore, understanding the percentage of new hires that leave within a specific period is essential for employers to make informed decisions about their recruitment and retention strategies.
TIME TO FILL
Calculating the time needed to fill a job opening can be done using a simple formula. Firstly, take note of the date when the position was first advertised or made available. Then, record the date when a candidate formally accepts the job offer. To get the number of days or months it took to fill the position, subtract the date of offer acceptance from the date the job was initially advertised or made available. For instance, if a job was announced on January 1st and the offer was accepted on February 28th, then it took 2 months to fill the job opening. By using this formula, you can accurately determine the time it takes to fill a vacancy and make informed decisions about the hiring process.
OVERALL TURNOVER RATE
As an employer, it is important to keep track of your overall turnover rate to determine the number of employees leaving your company in a given year. The formula to calculate this is by dividing the number of employees who have left in a year by the total number of employees in the same year, then multiplying the result by 100. This will give you a percentage of employees who left in a year. For instance, if you have 100 employees in a year and 25 of them leave, the overall turnover rate would be 25%.
It is important to note that this formula does not consider whether new hiring took place or not. It only takes into account the number of employees who have left in a given year. Conversely, you can also calculate employee retention rate by dividing the number of employees who stayed in a year by the total number of employees, then multiplying the result by 100. This will give you a percentage of employees who stayed in a year. For example, if you have 100 employees and 75 of them retained their position, the retention rate would be 75%.
It is essential to determine the reasons why employees leave the organization. Often, it is due to a lack of teamwork and a self-centered attitude. Therefore, it is crucial to cultivate a "we" attitude instead of an "I" attitude. The famous saying of Ratan Tata ji, "If you want to go fast, go alone, but if you want to go far, go together," highlights the importance of teamwork. When teamwork is emphasized and instilled in employees, they feel a sense of belonging and purpose, making it less likely for them to leave the organization.
In decision, talent may win games, but teamwork wins championships. Having a team mindset within the organization is vital for employee retention and overall success. By calculating both the attrition and retention rates, you can determine the effectiveness of your employee retention strategies and make adjustments as needed. Remember, when "I" is replaced by "we," even illness becomes wellness.
STAR PERFORMER’S RETENTION RATE
Ensuring the retention rate of star performers in your company is crucial for its success. While you may have a total of 100 employees, the star performers make up only 10 of them. Calculating the retention rate of these individuals requires a simple formula of dividing the number of star performers who stayed with the company by the total number of star performers and multiplying that quotient by 100.
For instance, let's say your company has a total of 10 star performers, out of which eight decided to continue working with you. In this case, the retention rate of your star performers would be 80%. It signifies that you have successfully retained 80% of your top-performing employees.
In order to ensure the continued growth and success of your company, it is essential to maintain a 100% retention rate for your star performers. If you have 10 such individuals, all of them should be retained by the end of the year. These individuals are the backbone of your company and play a crucial role in driving its success. By retaining your star performers, you ensure the continuity of your business's growth and success.
CANDIDATE EXPERIENCE METRICS
As a responsible employer, it is important to consider the candidate's experience during the hiring process. One way to evaluate this is to seek feedback from the candidate after the interview. Asking questions such as "How was your experience of the interview?" and "Would you recommend this company to other candidates?" can provide valuable insights into the candidate's impression of your company.
The feedback received from the candidate can help determine whether they are a promoter or detractor of your company. A promoter is someone who recommends your company, while a detractor is someone who has had a negative experience and is unlikely to recommend your company to others.
To ensure that your company receives positive feedback, it is important to create a positive experience for the candidate during the interview process. This can include offering them water upon arrival, welcoming them warmly, providing clear instructions on where to sit, and conducting all rounds of the interview timely and efficiently.
Candidates are more likely to give good marks for a positive experience, including a pleasant and welcoming environment, and a sense of excitement among employees. On the other hand, a bad experience can lead to negative feedback, with the candidate giving low scores and warning others not to join your company.
It is important to note that the candidate's experience score is a key factor in attracting new talent to your company. A positive score indicates that your company values its employees and takes care of them, while a negative score suggests that something is amiss and that the company may not be a good fit for potential candidates.
To track and improve candidate experience metrics, various software formulas can be used, such as workforce planning analytics, people analytics feedback, and HCM cloud. These formulas can help HR teams to assess the productivity of their organization and identify areas that require improvement.
In conclusion, taking the first step towards implementing these metrics is crucial to ensure that your company's hiring process is fair, safe and attractive to potential candidates. By prioritizing the candidate's experience, you can create a positive work environment that attracts top talent and promotes growth within your organization.