HR indicators: your strategic compass for sustainable performance

Ah, HR indicators!

A fascinating and essential topic for effectively managing your human resources strategy. You are right to want to explore this area, because without reliable data, how can you know if your actions are bearing fruit and where to focus your efforts?

Today, many companies are flying blind due to a lack of relevant HR dashboards. So, to avoid being one of those companies, I suggest you take a few minutes to read this article, as we’re going to break down how to transform your HR operations into a performance machine using well-chosen and intelligently used indicators.

Too often perceived as an administrative constraint, the HR function is in fact a real driver of the company’s overall performance. But like any engine, it needs indicators to ensure that it runs smoothly and propels the organisation in the right direction.

This is where HR indicators come in.

But what is an indicator?

It is a numerical value that measures a specific activity or performance within your department. It helps you determine whether your processes are effective, identify weaknesses and, above all, set clear and measurable goals for progress. In other words, HR indicators are your GPS for navigating the vast ocean of human resources.

Imagine for a moment: you are launching a new recruitment initiative. Without tracking the average recruitment time, the cost per hire or the turnover rate of new recruits, how will you know if this initiative is a success or a financial and time drain? Impossible!

Metrics give you that essential visibility.

Why are HR metrics so important?

The use of HR indicators is not just a matter of vanity. It addresses major strategic issues for your company:

• Assessing the effectiveness of HR operations: Indicators give you a clear overview of what is working well and what needs to be adjusted within your various HR processes (recruitment, training, performance management, remuneration, etc.).
• Identifying opportunities for improvement: By pinpointing areas of underperformance, indicators help you identify levers for continuous improvement. For example, a high turnover rate may reveal engagement or management issues that need to be addressed as a priority.
• Setting SMART objectives: Specific, Measurable, Attainable, Realistic and Time-bound objectives are essential for driving any strategy. Indicators provide you with the factual basis for setting relevant objectives and tracking their progress.
• Justifying HR investments: When presenting to senior management, hard data on the impact of HR initiatives bolsters your credibility and makes it easier to secure budgets for important projects. A good ROI on training, for example, will speak louder than any lengthy speech.
• Aligning HR strategy with business objectives: HR indicators can be directly linked to the company’s strategic objectives. For example, a revenue growth objective can be correlated with sales performance or key skills development indicators.

Some HR indicators to leverage: from compensation to retention

Now that we have established the importance of indicators, let’s get to the heart of the matter: what are the key indicators to track?

Here is a non-exhaustive checklist of common indicators, classified by HR area, to give you an idea of the range of possibilities:

1. Remuneration and benefits

• Total labour cost per employee: Salaries + Social Security Contributions + Benefits / Total number of employees. Essential for controlling your expenses.
• Salary competitiveness ratio: Average salary in the company / Average market salary for a similar position. Essential for attracting and retaining talent.
• Average salary increase rate: Average percentage increase granted over a given period. Useful for budget monitoring and team motivation.
• Cost of employee benefits: Average amount spent on benefits (health insurance, pension, etc.) per employee. A factor in attracting and retaining talent.

Example: An SME in the technology sector finds that its salary competitiveness ratio for developers is below 90%. After analysing the high turnover rate in this department, it decides to adjust its remuneration policy to bring it closer to market standards. The result: a significant reduction in turnover and greater attractiveness for new talent.

2. Recruitment

• Average recruitment time: Number of days between the publication of the job offer and acceptance by the candidate. An indicator of the effectiveness of your recruitment process.
• Cost per hire: Total recruitment expenditure / Number of hires. Includes advertising costs, agency fees, internal team time, etc.
• Application conversion rate: Number of hires / Total number of applications. Reveals the attractiveness of your job offers and the effectiveness of your sourcing.
• Recruitment quality (trial period success rate): Number of recruits who passed their trial period / Total number of recruits. An indicator of the relevance of your selection process.
• Candidate satisfaction: Measured via post-interview surveys, this provides an overview of your employer brand.

Example: A medium-sized industrial company implements new application tracking software (ATS). By comparing the average recruitment time before and after implementation, it sees a 15% reduction, proving the effectiveness of its investment.

3. Training and Skills Development

• Training expenditure per employee: Total training budget / Total number of employees. Indicates the company’s investment in the development of its employees.
• Number of training hours per employee: Average amount of training provided per employee.
• Training participation rate: Number of employees who have completed at least one training course / Total number of employees. Measures employees’ commitment to developing their skills.
• Training participant satisfaction: Assessed via post-training questionnaires.
• Return on training investment (ROI): More complex to measure, this attempts to quantify the financial impact of training on company performance.

Example: An organisation undergoing digital transformation invests heavily in training its teams in new technologies. By measuring skills development through assessments and observing an improvement in the productivity of the trained teams, it can begin to quantify the ROI of its initiative.

4. Performance and Engagement

• Overall turnover rate: Number of departures over a period / Average headcount over the period ×100. A key indicator of talent retention.
• Voluntary turnover rate: Number of departures initiated by employees / Average headcount over the period ×100. Often more concerning as it can signal engagement or culture issues.
• Absenteeism rate: Number of days absent / Total number of theoretical days worked × 100. Impacts productivity and may reveal well-being issues.
• Employee engagement score (eNPS): Measured via a simple question (“On a scale of 0 to 10, how likely are you to recommend our company as a good place to work?”). Classifies employees as promoters, passives and detractors.
• Goal achievement rate: Percentage of individual or team goals achieved over a given period.

Example: A company notices a high voluntary turnover rate among its recent graduates. By conducting in-depth exit interviews and analysing engagement data, it identifies a lack of development opportunities and regular feedback. The implementation of mentoring programmes and more frequent performance reviews significantly reduces this rate.

5. Diversity, Equity and Inclusion (DEI)

• Percentage of representation of underrepresented groups: Within the overall workforce, management positions, etc.
• Gender pay gap: Average pay difference between men and women in equivalent positions.
• Diversity recruitment rate: Percentage of new hires from underrepresented groups.
• Inclusion perception index: Measured through anonymous employee surveys.

Example: A company is committed to improving the diversity of its management teams. By tracking the percentage of women and people with disabilities in these positions over several years, it can measure the impact of its DEI initiatives.

Maximising the value of your HR metrics: some key recommendations

To get the most out of your HR metrics, it is essential to:

• Compare current performance with previous periods: This temporal analysis will allow you to identify trends, measure the impact of your actions and detect weak signals. A steadily declining indicator should alert you.
• Segment the data: Analyse your indicators by department, position, HR function, seniority, etc. Significant disparities between teams can reveal problems specific to certain populations. For example, a high turnover rate in a particular department may indicate a local management problem.
• Combine hard indicators and soft indicators: Quantitative data is essential, but it does not tell the whole story. Subjective indicators, based on satisfaction surveys or interviews, provide valuable insight into employees’ experiences, their engagement and their perception of the corporate culture. These two types of indicators complement each other and offer a more holistic view.

Caution: Don’t just collect data for the sake of it. Each indicator must be linked to a strategic objective and must help you make informed decisions. An HR dashboard overloaded with irrelevant indicators will be counterproductive.

Conclusion: make HR indicators your strategic allies

HR indicators are not just cold, hard numbers. They are the vital signs of your organisation, indicators of its human health and its ability to achieve its objectives. By adopting a rigorous and strategic approach to HR measurement, you will transform your function into a true business partner, capable of demonstrating its value and actively contributing to the overall performance of the company.

So, are you ready to move beyond flying by the seat of your pants and give your HR strategy the measurement tools it deserves?

Feel free to contact me to discuss your specific needs and find out how to set up a relevant and actionable HR dashboard for your organisation. Together, let’s make HR data your greatest asset!

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