As is true of every other functional leader, HR must know their business to advise the organization on its talent and keep its finger on the pulse of the business.  In order to do so, there are some key HR Metrics that are must haves to understand what is happening in the business.  Here’s my list of the top five:

1. Headcount

Yes, this one is very surprising but you wouldn’t believe how many companies don’t actually know how many people they employ and in what capacity. Even more shocking, if you asked the Finance leader I would bet that number would be different! It is critical that both areas define the metric the same way as this key number is used as the baseline for many other metrics in the organization both within and outside of human resources.  Should contract employees be included?  Those on maternity leave?  What to do with an employee on leave?  There may even be a requirement for different figures depending on what the number is being used for.  I once worked for a highly-regulated organization that required the exclusion of one department for their reporting. One thing is a must, come to an agreement and be very clear about how it is measured.  Every organization is different so this may differ across organizations.

2. Vacancies

Regardless of whether HR is responsible for all the line hiring, this is a critical metric to maintain and share with senior management.  Having a clear view of what the recruiting requirements are, time to fill, and determining “hard to fill” roles are all critical elements of this metric. This measure also allows us to determine when to start the recruiting process, prepare for onboarding, determine the resources the company needs to fill the roles and advise on whether certain projects will be at risk if too many resource requirements go unfilled.

3. Demographics

To make key HR decisions, it is important to understand the make-up of your workforce.  Demographics will come into play when making critical decisions regarding benefit plans, training, hiring, policy decisions…etc.  The list goes on.

4. Investment in People

Depending on the industry, salaries/wages/benefits/training often make up one of the largest costs on the income statement.  Knowing how much you invest in these areas impacts future hiring decisions and is often used as a base to track other key metrics e.g. wages as a percentage of revenue.

5. Employee Turnover

Turnover is inevitable and I truly believe that there is a ‘healthy’ level of turnover for every organization.  The number varies by organization and industry and can change depending on economic conditions.  Very early in my career, I had dinner with the then CEO of the company and he asked me what the turnover rate was in my branch.   At the time, it was upwards of 20 per cent.  He was shocked and asked me why?  I explained why it was a ‘good’ rate at that point in time.  You see, I had just been moved to a branch location where the previous manager had made some very questionable hiring decisions.  During the first year, I had to make a lot of change in order to turn the performance of the branch around.

Tracking turnover allows us to determine what that ‘healthy’ level is for the organization, identify whether there are problems in a particular area of the business and monitor the who and why of turnover for the organization.  Over time, it becomes easy to identify when action needs to be taken.

The good news is whether you have HR systems in place or are still tracking some of this information manually, this is generally basic information that should be easy to pull together.  The key is to ensure that it is being tracked consistently, everyone understands the calculation and most importantly, everyone understands why these metrics are imperative to managing the business.