As a majority of employees are expected to work remotely through 2021, Human resource (HR) departments are increasingly setting and tracking key performance indicators ( HR KPIs) to represent the performance of their department in relation to employee satisfaction.

In this article, we’ll discuss how key performance indicators can be used to help boost employee satisfaction, increase productivity, and maximize revenues.

We’ll also highlight the top 7 HR KPIs to track in 2021 to get the most of your HR department’s performance.

Understanding HR KPIs

Before we go any further, it is important to first understand what key performance indicators are.

Key performance indicators, or KPIs, are strategic metrics that you can measure in order to get insights about efficiencies, success rates, bottlenecks, etc. within different processes at an organization.

What is HR KPIs?

Human resource key performance indicators are metrics that are used to track and measure the performance of the human resource team and see how it is contributing to the rest of the organization.

HR KPIs measure how successful HR processes have been at managing the organization’s HR activities.

How can Human Resource KPIs be set?

The human resources team in the organization can define multiple KPIs to reach a specific business objective. And even those indicators can be broken down into smaller groups, so it’s easier to proceed and manage every detail of a bigger project.

HR KPIs need to be an important part of your wider human resource planning strategy. These are not standalone objectives, so you need to think strategically before setting your KPIs.

A very simple model is the SMART model, which can help you define your HR KPIs (and mostly all kinds of business-related goals too) and make your goals achievable. It stands for:

• Specific: Setting clear and specific goals and metrics, so it’s much easier to focus on them and be effective in reaching them.
• Measurable: Work with numbers to define objectives. Your progress can be analyzed better and it helps you set realistic goals.
• Achievable: Focus on metrics only that are realistically achievable. Consider your organization’s abilities and your resources when setting your objectives.
• Relevant: Every goal you set should be relevant to your company. It should support the overall objective of your business. Think about the reasons you include a metric into your HR strategy and also about its benefits for the whole company.
• Time-bound: Prioritize your goals and set a reasonable deadline for each of them, so you don’t get overloaded and keep progress.

Use this model for each of your KPIs separately to create an effective, working plan.

6 Characteristics of effective HR KPIs

 1. Focused and manageable

One of the most important things you need to consider when setting your HR KPIs is focusing on a manageable number of metrics that you are able to track and measure. Doing everything in the same is not profitable, as you will lose focus easily.

To set KPIs that are relevant to your organization and human resources team, identify the top 5 to 10 performance metrics that make the most sense for your company. Your organization’s current stage influences these decisions. For example, if you’re early in your HR management stages, training employees might not be on your list. Instead, you could focus more on hiring – so setting specific KPIs for costs and recruitment times might be more relevant and important for your business.

2. Easy to break them down

Good KPIs are drillable. When setting key performance indicators, the HR management team should be able to break them down into smaller steps. It helps to better understand the situation and improve your activities in the future.

3. Aligned with each other

KPIs should be defined considering not only the HR strategy of an organization but also the overall business goals. It should be consistent with every objective of the company. On the other hand, all the HR KPIs should be aligned with each other. They should help the department and succeed and improve, so setting metrics that are built on each other is essential.

4. Specific

Another important thing to keep in mind when defining your organizations’ HR KPIs is setting specific, simple metrics that are easy to understand and follow to each and every member who is involved in achieving them. It makes the goals understandable and much easier to focus on.

5. Assigned

The goal of HR KPIs is to help your business succeed and improve where it’s needed. Therefore, it’s important that you consider your performance indicators as small projects. Good KPIs can be assigned to different people who will oversee the tracking and reporting of your metrics. If your HR KPIs are specific and focused, you’ll have no problem assigning it to different people and making them responsible for achieving them.

6. Tracked effectively

Tracking human resource metrics and KPIs manually is a time-consuming activity. You would need to collect, organize, analyze and optimize data and the probability of entering inaccurate data is higher. Instead of managing it all manually, HR software is a great tool to collect and report all this data automatically to your human resources team. Visual analysis can be created and sent out, and the updates can be made easily as well.

Check out Oorwin and learn about the benefits it can give in human resources management.

Top 7 HR KPIs to Track in 2021

Now you understand the importance of HR KPIs and also know what to consider when setting them. In this section, we collect the human resource KPIs and metrics that will be most beneficial for your company in 2021.

1. Employee satisfaction

Tracking your employees’ satisfaction is a very important activity. It helps you retain your talent and guides you on how to keep your employees motivated and satisfied. Satisfying your team and making sure they feel happy and inspired in your company is something you should definitely work on in 2021. 

You can create employee satisfaction surveys that are built on your KPIs. If you ask them questions that are connected to your metrics, you’ll be able to analyze data and get important insights to improve your organization.

2. Absence

Measuring your employee’s absenteeism rate provides vital information about employee motivation. If not showing up is an issue at your organization, then you should do something with it. It’s not only bad for the person that called out sick but also has bad effects on the other team members who need to cover for their work.

Before you craft a strategy that focuses on minimizing absenteeism, create management and handbook for your absence policies and also make categories for absences. That way you can easily track and measure the absenteeism rate and come up with a solution for that.

3. Recruitment costs

Recruitment costs are another human resources KPI to consider. It examines how much money is invested to obtain the necessary resources for incorporating a new employee. It covers your recruitment costs such as a subscription to employment portals, advertising, and the subscription fees of an ATS software. But it also refers to the money you spent on education, training videos, and other materials. Focusing on the optimization of recruitment costs is therefore essential.

4. Time to hire

Not only the money you invest in recruitment, but also the time is important to consider. Tracking the time it takes to hire new team members will help you understand how long it takes to recruit the right people. This is important to keep time to hire down.

Using HR software helps your organization gain and analyze useful data you’ve collected on candidates during previous recruitment processes. It’s clever to use a system like that to more effectively track your KPI. Our Oorwin offers excellent opportunities to store and manage data to cut the time to hire new employees.

5. Benefits administration

The HR team should follow and track employee productivity. A well-designed benefit system makes your team even more motivated and effective. Make sure to track important tasks that contribute to the success of your organization. This is a KPI that shows whether your employees are satisfied with the benefits you offer as a company. You can easily get data by sending out satisfaction surveys and improving your benefits administration according to those results.

6. Talent retention

It costs more to hire new team members than retain existing talent. On the other hand, having great employees, who are skilled and motivated is a real gem for your organization – you really should make sure they don’t leave you. Talent retention helps you keep your employees and provide them with great offers instead of losing them.

This KPI can be measured and tracked by implementing a strategic talent management program. The right metrics provide important information about who’s leaving, when, and why. If you have this data available, you can optimize your engagement and improve your team’s performance.

7. 90-day failure date

This KPI measures the percentage of new recruits that stay in the company for less than 90 days. By analyzing and understanding this data, you can create an efficient recruitment process and set up a benefits plan that fits the needs of employees.

Give Oorwin a try

Oorwin Human Resource Management (HRM) is designed to deliver a superior experience to employees as well as HR administrators.

The HRMS provided by Oorwin simplifies employee lifecycle management with features like remote onboarding and exit management, digital signatures, timesheet, and attendance tracking, payroll and invoicing, OCR document scanning, etc.

Oorwin also gives centralized access to all employee information along with in-built capabilities to trigger reminders for document expiry and payroll integration.

Take a Oorwin product tour to learn more.