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15 HR Metrics To Include

An annual HR report is a way to showcase to your stakeholders the value that HR brings to the business. It covers both accomplishments and challenges experienced in the year. Furthermore, it highlights how the HR department is contributing to the performance, OKRs, and strategic goals of your company. 

An essential part of developing an impactful annual HR report is including the right metrics to clearly quantify how HR is impacting strategic goals and organizational performance. 

Contents
What is an annual HR report
Metrics to include in an annual HR report 
How to prepare the annual HR report

What is an annual HR report?

Each year the executive committee, alongside the HR team, must carefully analyze the performance of the business and the performance of employees. To do this, they put together an annual HR report that offers a glimpse into the accomplishments and obstacles related to people matters. 

The annual HR report not only summarizes the results of the previous year’s people strategy efforts but also charts a course ahead. With this in mind, knowing what to include in an annual HR report is essential for anyone in the human resources team. Consider who you will be presenting to and what type of information will be the most impactful to them.

The purpose of the HR report

The purpose of the annual HR report is that it: 

  • Provides a complete overview of the employees and company trends and ensures that HR practices are aligned with the various KPIs or OKRs. Although HR professionals typically provide weekly or monthly reports, an annual report gives an essential overview to make long-term strategic decisions
  • Provides stakeholders with detailed insights into the organization that is not so obvious
  • Provides a review of the past year’s key initiatives and results 
  • Includes quantitative and qualitative information
  • Allows HR to measure and track key workforce metrics and successes or failures
  • Provides direction to set accurate, realistic goals for the following year
  • Provide a qualitative retrospective that enables stakeholders to develop a follow-up plan.

Metrics to include in an annual HR report 

There are 12 key functions of human resources, and your annual HR report could include metrics from all of those functions if necessary. However, gone are the days of a 150-page report. Decision makers need the right information at the right time, and so you should include your metrics based on the following: 

  • The stakeholders: Think of your annual HR report as a plug-and-play model, where the appropriate metrics can be presented based on who is looking at the report. Your HR team might need the entire report to assess their performance, whereas the CEO might only want to note the most burning issues. Your hiring managers might, for example, be more interested in metrics around retention metrics, whereas the internal team responsible for learning and development might be interested in L&D metrics. 
  • Your organization’s goals: Based on the business goals for that year, you should tailor your annual HR report accordingly. For example, if the key business decision was to grow the business through internal promotions, you should include metrics relevant to that. 

Here are 15 metrics to include under the subcategories of recruitment, retention, training, development, and engagement:

Recruitment metrics

The Former COO of General Electric, Lawrence Bossidy, once said: “Nothing we do is more important than hiring and developing people. At the end of the day, you bet on people, not on strategies.” 

Recruitment metrics are used to measure the success of your hiring process and optimize the process of hiring candidates for your business. They provide the data necessary to improve your recruitment process, which directly affects your business’s bottom line. 

Consider including the following recruitment metrics in your annual HR report: 

  1. Cost per hire – This is a measure of the efficiency and how cost-effective your entire recruitment process is. It consists of both internal costs (compliance, tooling, administrative costs, etc.) and external costs (background checks, sourcing expenses, travel, marketing, etc.). It provides insight into your recruitment spending and how you can optimize the money spent in the various recruitment stages.
  2. Time to productivity/performance – This measures how long it takes new hires to get up to speed and be productive. It is a measure of the time between the first day of hiring and the point where employees fully contribute to the organization. 
  3. Interview-to-hire ratio – This indicates the number of interviews a hiring manager had to conduct before making an offer. It’s a useful metric to include because it shows how many hours were spent on interviewing. It also indicates whether or not the correct sourcing methods are used, the clarity of the job advert, and alignment between the recruiter and hiring manager.
  4. New hire turnover – This is the percentage of employees that leave your company during a certain period, usually the first year. To calculate new hire turnover, divide the number of new hires who left by the total number of employees who left in that same period. This measures the quality of your onboarding program and how aligned your job is with the new hire. It’s also an indication of how healthy your organizational culture is because if you have too many people leaving in the first year, then you know something is wrong.

Retention metrics 

Recruiting the right people to your organization is important, and keeping them is of even more importance. That is why your employee retention metrics are a key part of an annual HR report. Retention metrics give a granular view of why employees stay and can be used to monitor at-risk employees and also to reduce attrition long-term. 

Consider including the following retention metrics in your annual HR report: 

  1.  Workforce headcount – The number of employees working at your company at a given moment. This includes full-time workers, contract workers, freelancers, etc. To make it insightful for an annual report, include a chart that shows headcount at different points in the year, or provide additional commentary if there are any significant changes in that period.
  2. Demographics and diversity – This indicates the number of employees you have per demographic and diversity categories. Based on your company’s goals in terms of demographics and diversity, be sure to report on metrics where the organization is strong and weak in. Note any positive or negative trends.
  3. Attrition rate – In simple terms, attrition is the rate employees leave. To get to this rate, divide the number of employees who left by the average headcount in that same period and express it as a percentage. An annual view of your attrition rate indicates how good or bad your company is at keeping talent, how attractive your brand is and how engaging your programs are. 
  4. The average cost of turnover – Also related to attrition rate, your average cost of turnover shows you just how costly it is to lose an employee. This is calculated by getting the average costing to fill a position plus onboarding and orientation costs.
  5. Exit drivers – After a year of work, it’s interesting to note what made people leave the organization. Is it due to salary? Career opportunities? Poor management? Your exit drivers are an effective way to review your HR efforts and priorities for the next year in terms of your HR strategy. Collect this information by what people indicate in their exit surveys as the reason for leaving. 

Training and development metrics

Training and development costs are one of the first costs that are cut when there is pressure on the budget. 

The famous quote by Peter Drucker rings true, “If you can’t measure it, you can’t improve it.” 

It’s for this reason that your annual HR report must include training and development metrics. Employees’ ability to upskill and relearn has increased in importance in the last couple of years, and therefore the more you can show how much has been spent and the outcome thereof, the better. 

Consider including the following training and development metrics in your annual HR report: 

  1. Training cost per employee – This is a straightforward metric that divides the total cost of training by the number of employees. This can be for a specific program or as a sum of all training done in a particular year. You can compare the training cost per employee to industry standards or as a year-on-year comparison as well. 
  1. Training ROI – Training ROI measures how much a company gains from investing in training. This financial metric expands on the benefits and business results relative to a training program. However, It is not a training satisfaction measure that indicates how happy the employees are with the training. 

Engagement metrics 

Engagement metrics are an indicator of how motivated and connected your employees are. An engaged employee is more productive and contributes at a higher level. 

Consider including the following engagement metrics in your annual HR report: 

  1. Employee satisfaction Index (ESI) – THE ESI is a set of three questions that measures the extent to which employees are happy with their jobs. The three questions are: 
  • How satisfied are you with your workplace?
  • How well does your workplace meet your expectations?
  • How close is your workplace to your ideal job?

Each question is answered by employees on a scale from 1 to 10. For your annual HR report, create charts based on the results split by departments, demographics, year-on-year comparison, and any other relevant metric.

  1. eNPS – Probably one of the most popular HR metrics is the Employee net promoter score (eNPS). This is a metric that is measured by the question “On a scale from 1-10, how likely are you to recommend this organization as a place to work?” or “Based on your experience, how likely are you to recommend our organization to a friend or colleague?” 

Most organizations ask this question, so it is a great idea to compare it to industry averages. 

Productivity and performance metrics 

Finally, it is important to report on productivity and performance metrics, which indicate how well employees are carrying out their jobs. 

Consider including the following productivity and performance metrics in your annual HR report: 

  1. Absenteeism rate – The absenteeism rate is a key measure of organizational health and well-being. Knowing the exact absence rate will help shape interventions.
  2. Human Capital ROI (HCROI) – This is a strategic HR metric that shows in financial terms the value that is added by the workforce as a result of the money spent on them (i.e., training and development, compensation, talent management, recruitment, etc.).

How to prepare the annual HR report

A non-impactful HR report is simply compiled stats collated in a PDF or Excel sheet, without much else added to it. Make your annual HR report impactful by using data and visualization in combination with stories and perspectives. Consider the following elements when preparing your annual HR report: 

How To Prepare the Annual HR Report

1. Include OKRs and KPIs 

  • Start by reflecting on the OKRs, KPIs, and the goals set by HR and the organization at the start of the year. 
  • Provide an executive summary of the progress made on each goal. 
  • Include 4 or 5 key conclusions that are a theme throughout the report. This might be a significant change in your people headcount or a successful year due to a leadership initiative, for example. 

2. Keep your stakeholders in mind

  • Consider who you will be presenting the annual HR report to and tailor the information to their needs and interest. Example: A CEO versus a Manager will want to see different metrics 

3. Tell a story with data 

  • Use visuals when reporting on your data. Consider utilizing a designer to make your data storytelling visuals even more exciting. For example, instead of reporting on eNPS per country in a table, you can plot the eNPS scores of all countries on a map and use different shading to display high or low-performing countries. 
  • Management and staff are probably tired of traditional reports and complex statistics. Instead, transform numbers into persuasive narratives to drive action.
  • Ensure that your stories, reports, and statistics are transparent and easily understood by all stakeholders.

For example:

Instead of presenting a stat about how employee productivity has increased, tell a story of an employee who has taken advantage of remote working and has increased productivity by X%. 

Include the impact. Explain that this employee has implemented improved systems and processes that have positively impacted other employees in their team.

Bring in the big picture by illustrating the many other success stories just like this employee’s

4. Define the goals for the next year

  • Towards the end of the report, reflect on the business objectives for the following year and highlight your thinking on how HR will set its goals accordingly.
  • Define what you will measure. Align with the other stakeholders in the organization before setting the goals for HR

5. Provide a dashboard overview 

  • Help stakeholders analyze, visualize data and make decisions with the help of an upfront dashboard in your report.
  • Preferably consolidated on one page/ screen – something that they can refer back to for easy reference. 

To conclude

When selecting the most impactful metrics for your annual reporting, consider who your stakeholders are and what value HR has brought to the company’s strategic goals and corporate growth. The HR annual report provides an opportunity to highlight contributions, risks the business may be facing in HR, and the total impact of human capital investments

 
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