Suggested Metrics for Compensation and HR

Metrics for Compensation Programs

• Compensation costs per dollar of profit
• Compensation costs per dollar of revenue
• Analysis of performance and production levels of employees paid in the top 30 percent of their salary range
• Total compensation costs as a percent of total company operating costs
• Analysis of compensation levels to the marketplace and key competitors
• Forecast of compensation needs based on future plans
• Compensation mix, meaning fixed salaries versus performance-driven compensation

Metrics for the Recruiting Function

• Time to fill a vacancy
• Quantity and quality of applications based on recruiting source
• HR cost per hire
• Voluntary/involuntary turnover rate of new hires during first year of employment
• Quality and retention rates of new hires by recruiting source
• Diversity ratios of new hires

Metrics for the Employee Relations Function

• Number of complaints filed by employees
• Percent of complaints that proceed to a state agency, court, or other external dispute resolution
• Amount of time taken to resolve an internal complaint
• Percent of cases resolved with no money paid out by the company
• Percent of cases in which large financial settlements or awards were made
• Percent of cases in which documentation was inadequate
• Dollars spent on attorney’s fees

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Metrics for Training Programs

Training is another area that can be difficult to quantify. However, it may be helpful to look at metrics that target the type of training and what it was intended to accomplish. For instance:

• Cost of sales training as a percent of total sales
• Increase in hours of sales training compared with increases in sales
• Changes in performance levels of employees who received training
• Percentage of employees who cite lack of training or advancement as a reason for leaving

Practical Tips for Using HR Metrics

Metrics should:

• Give the whole picture, including quantity, quality, time, cost, and effectiveness.
• Focus on key areas where change is necessary.
• Develop a benchmark to use for evaluating progress toward goals.
• Set goals and establish metrics for measuring progress.
• If possible, be compared to metrics with similar measures from key competitors.
• Use the language of the business leaders, including ratios and measurements they know.

Finally, don’t be afraid of data or of measuring results. Metrics can add to your professional credibility and garner support for your programs

Metrics, an important tool, but one more thing to add to the list of compensation challenges. “Maintain internal equity and external competitiveness and control turnover, but still meet management’s demands for lowered costs.” Heard that one before?  Many of the professionals we serve find helpful answers to all their compensation questions at Compensation.BLR.com, BLR’s comprehensive compensation website.

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