Strategic Business Intelligence for HR: 6 HR Metrics No HR Executive Should Be Without

Workforce Management, October 19, 2009 | Go to article overview

Strategic Business Intelligence for HR: 6 HR Metrics No HR Executive Should Be Without


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In an economic climate characterized by cost-cutting and increased regulatory requirements, HR faces growing demands to communicate the value it creates in ways that CEOs can better appreciate. That means moving away from soft measurements such as "improvements" and adopting quantifiable metrics similar to those executives use to monitor the overall business. Meaningful HR metrics can include things such as recruitment costs, employee retention rates, and employee satisfaction metrics.

By analyzing and reporting on the full range of human capital management (HCM) data, business intelligence (Bi) uncovers the insights executives need for smarter staffing, planning, and budgeting decisions. BI enables HR to proactively improve performance, analyze critical HR data, and explore different workforce metrics. Here are some of the most valuable strategic metrics that BI tools can deliver to HR:

Turnover Analysis: Keeping Your Best and Brightest

Employee turnover costs can range from six to 36 months of salary and benefits. To increase retention rates, companies must proactively identify factors leading to turnover. BI can consolidate and monitor factors such as location, department, seniority, gender, supervisor, salary, promotions, and skills and analyze their impact on turnover. These analytics help companies create a profile of at-risk employees and prevent attrition.

Level-Setting Compensation

Top organizations know performance-based compensation is highly effective in attracting and retaining outstanding employees. BI helps HR design benefits and policies by correlating compensation with performance targets, skills, seniority, and other factors. For example, an HR executive can analyze compensation across a variety of dimensions (e.g., department, location, gender, or seniority) to determine if it is competitive. The result: lower turnover and recruitment costs.

Reducing Unnecessary Overtime Expenses

In many industries, overtime can be a major component of operating expenses. But BI can significantly reduce OT by identifying potentially inefficient or duplicate scheduling as well as seasonal spikes. BI tools for human capital management enable HR to analyze and minimize overtime hours and costs by department, Organization, job, location, supervisor, month, or other factors and determine where scheduling adjustments and staffing/shift changes could decrease overtime costs.

Cost-Effective Benefits Analysis

Employer-paid or subsidized benefits are a major cost center for most companies. To ensure an organization offers the most costeffective plans, it must have a complete picture of the true and full costs to the business as well as employee participation levels by location, benefit plan, organization level, and other criteria. …

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