Tracking HR metrics is a way to optimize an organization's human capital. These metrics can provide you with data-driven insights that will help to increase productivity, lower costs in hiring and turnover, and drive profitability by utilizing your best asset -- your workforce. Cost per hire and revenue per employee are two of the primary metrics that companies should be tracking.
What is the total cost to recruit and hire a new employee at your company? That's your "cost per hire." It's a figure that reflects the total expenses to advertise a job, screen candidates, interview them, and onboard them. The less money that an organization spends by streamlining its hiring process, the more it can direct toward sales, operations, and other business areas.
Your organization can reduce its cost per hire by leveraging newer technologies during the hiring process. For example, an Applicant Tracking System (ATS) can automate many of the steps in the recruitment process. Travel costs can be reduced by interviewing qualified candidates online. Setting up an internal employee referral program can also reduce costs and help produce more qualified hires.
Revenue per employee is a company-wide average, rather than a measure of individual employees. To calculate revenue per employee, simply divide your company's total revenue by the number of employees. This metric gives insight into how well you leverage your workforce to generate revenue. It allows you to benchmark your own organization's performance against industry averages.
HR departments can use these employee productivity metrics to identify areas for improvement. If you analyze revenue per employee in different departments, it can help identify training needs you were unaware of or areas where you can benefit from more process automation. This metric can also be used in performance reviews to inspire employees to improve their performance, particularly in sales.
Gallup polling has found that 59 percent of workers worldwide are now disengaged in the workplace. If most employees are just doing the bare minimum on the job, it goes without saying that this is impacting your bottom line. If your business objective is growth-oriented, HR analytics can be used to reduce hiring and onboarding times and to scale up training and development.
The HR and finance departments need to work together more closely to align HR strategies with business objectives. When you attract, develop, and retain top-performing talent, this in turn can boost sales, improve customer satisfaction, and drive revenues. It will take some strategic planning to integrate HR metrics with your financial goals. You also need to be willing to adapt your HR strategies when market conditions change.
Cost per hire and revenue per employee are just the baseline HR metrics. More advanced productivity metrics include time to hire, retention, turnover, and absenteeism rates. HR metrics can also give you insights into employee satisfaction and engagement. They can be used to determine your return on investment (ROI) for employee training and development.
The more data you receive from advanced HR metrics, the more it can influence your cost per hire and revenue per employee. For example, if you can reduce your time to hire by using an Applicant Tracking System, you'll reduce your cost per hire. Employee satisfaction and engagement metrics can be addressed to boost productivity, which will increase your revenue per employee over time.
Workforce PayHub has a Human Capital Management (HCM) system that can track your organization's HR metrics. Our cloud-based HCM system can provide you with a clear picture of ways to invest in your employees to optimize performance. When you've identified the key HR metrics you want to improve, the system helps you set achievable goals and provide a clear path for employees when it comes to their career development.
Our comprehensive set of HR tools comes in one convenient bundle that will let you begin tracking cost per hire and revenue per employee, and begin the task of integrating HR metrics with your business objectives.
HR metrics are directly connected to your company's revenue goals -- but only if you seek out the data necessary to begin tracking organizational performance. Reducing cost per hire and boosting revenue per employee are the primary metrics that you can start tracking with help from Workforce PayHub.
Discover how to optimize your HR metrics for better revenue outcomes – Contact Workforce PayHub for a personalized consultation today!