Wednesday, March 11, 2009

Ideas for Human Resource Metrics for Small Organizations

By Steven J Smith, PHR

Having worked with a few small organizations in the past (8-3000 employees), the one thing that I have learned over the years is that CEOs for small companies are very focused on one thing: Revenue. As a result, oftentimes the Human Resource Department is seen more as a cost center or an expense to the organization instead of as a strategic partner to help contribute to the bottom-line. This is why understanding what metrics to measure and what to present to your boss is vital to the success of the impact your department can have on the company and truly proving the value of what you are doing for the company. This is even more critical right now where a lot of companies are cutting back, but still have high expectations for your department.

Working with iApplicants and communicating with small business HR departments every day, one of the most common questions that I get revolves around is that of HR metrics and what to track. This question is brought up most often when I discuss how we provide different customized reports for each organization so that they can pull these reports up automatically and track what is most important to them. Some of these reports we already offer because they are the most common and are currently used in our software. Since they are also important metrics, I want to discuss these briefly first and then address other reports that you may want to make a part of your organization:

  • Ad Source Reports: This tracks how applicants have heard about your organization. This data can be critical, especially if you have recently used a new source of advertising and you want to see if this produced the results you were looking for. Another example is that of a new ERP (Employee Referral Program) and you want to see if this has increased the amount of hires you are getting from employees.
  • HR Data Reports: This report covers 4 main areas: Candidates Interviewed; Candidates Hired; Candidates Terminated; and those who are eligible for rehire. These are great metrics to look at.
  • EEOC Reports: I think this may speak for itself as it allows you to run a report for a period of time, a particular position, and hired or non-hired individuals. This allows you to show in “good faith” that you are compliant with current laws surrounding these topics of diversity. This will also allow you to see that if you notice a lack of diversity in this process, you may want to go to that diversity career fair or place that ad in a particular paper to attract a more diverse pool of candidates just to be safe.
  • Traffic Reports: This is unique to iApplicants than any other applicant tracking software that I have seen. We assign a username and password for you through Google analytics that allows you to see the traffic reports for visits to your careers website, as well as where people are coming from and the top 5 keywords candidates are typing in the search engines to find your open jobs.
  • Screening Questions Reports: This is the last report available in our software that allows you to ask key questions up front about each one of your positions and becomes a powerful screening tool so that as candidates apply, you can sift through them quickly and decide whether or not you want to consider them in the interview process from the get go, saving you a lot of time

So before I go into the other list of metrics that smaller firms should consider using, keep in mind that not all of these metrics will apply to your organization. The best thing to do is think about how your organization works and decide what metrics would work best to be that strategic partner you are looking to be for your boss. Or better yet, ask your boss or CFO directly what metrics are important to him/her and implement those in your process.

Word of Caution

The biggest mistake I have made in my career when it comes to metrics was creating so many metrics that it was not feasible to maintain some of them, or use them as relevant data to help in making correct decisions moving forward. The key here is to make sure that the metrics you decide to use are those that will truly have a business impact on your organization, otherwise it will be a waste of your time to track the data and run the reports. I found that the best person to work with in this matter is the CFO, or Controller (since they are involved in the finances of the company). They will know better than anyone the impact your metrics will have on the bottom line, and having them on your side will eliminate roadblocks in the future with your boss.

My only other word of caution is that some of these metrics you will not want integrated in your iApplicants software. Not because they are not relevant, but because the data may not be there since some of these metrics only apply to your company after folks are hired. iApplicants specifically focuses on the hiring process (or recruiting process), so the metrics that pertain to hiring/recruiting would best be utilized with our software. So I have separated these metrics into main categories to help in understanding where these metrics would work best.

List of Human Resource Metrics

Productivity/Employee Relations

This is mostly based on employee surveys. One of the biggest mistakes most small companies face with surveys is to make a biased survey based on what they want to hear (by wording the question a certain way, etc) rather than what they really need to hear from their employees. So do not attempt any employee surveys unless you are ready to do two specific things:

  1. Be open to ALL feedback, regardless of how painful it might be.
  2. Provide results and discuss issues that were prevalent to the majority of employees (they want to hear the results, and you don’t have to show ALL the results, just the ones most important to them as a whole).

You can measure the percentage of employees who look forward to coming to work, relationships with managers, and so forth. Since managers should be rewarded for high productivity and high employment engagement scores, these statistics are helpful to reveal unproductive departments and/or managers to help you determine where problems exist. You can look at the turnover compared to employees input on certain managers to see if there is a correlation (especially if turnover is high and reviews are bad for the same manager). Also performance appraisals for employees compared to last year is good to see if employees are growing within the organization as well as their overall satisfaction with their appraisals. They can also measure the effort from HR and managers to properly train and manage employees to achieve the desired results.

For the CFO, a statistic such as the improvement in dollars spent on people costs for every dollar of revenue or profit generated (compare to years past) is very important. So from an HR standpoint, the amount of money spent in your department on ads, hiring, interviewing, etc for every dollar generated. Instead of just focusing on costs, focus on statistics like this that are relevant to the bottom line.


At the most recent Crossroads Conference last September for the Salt Lake chapter of SHRM, we had a panel of CEOs from various companies speak. They mentioned that one of the top 5 things that they expect from HR is statistics on recruiting and hiring. Here are a few bullet points of the additional metrics CEOs expect to see:

  • Manager satisfaction with new hires (survey again compared to years past).
  • Turnover rate of new hires within the first year (which I would break down into 30 days, 90 days, 6 months, 9 months and 1 year). You can do an overall employee turnover too, but for small companies I found that not only was it a waste of time, but the reasons people left at that point were not as relevant as reasons in the first year, so I stopped measuring beyond one year).
  • Average performance measures on new hires compared to last year.
  • Time-filled (in other words, the time the position became vacant to the time it was filled, especially for key roles).
  • Percentage of diversity in your hiring.
  • The dollar impact on bad hire decisions.
  • Offers made compared to offers accepted.

This will lead to the need for retention measures as well:

  • Performance turnover: how often turnover is related to performance on the job (in other words you let them go because they under-perform).
  • Exit Surveys: often called preventable or avoidable turnover where you find out why folks leave and if any of those things mentioned could have been prevented.
  • Dollar impact of employee turnover in key positions, or in departments with high turnover (such as the sales department) because there are costs to retrain, etc. Keep in mind that typically lower performers should receive less weight for their reasons for leaving than higher performers.
  • Diversity turnover.
  • Manager satisfaction with HR involvement (or lack thereof) in training and retention efforts, as well as the impact that this has on productivity. I had really good relationships with managers, so sometimes these measurements contained bias, so you need to make sure the questions you ask deal specifically with how the training, etc. directly affected the productivity of that particular department or unit.


Depending on the size of your organization you may or may not have benefits in place. In my experience, we had some candidates not accept an offer based on benefits. You need to look at those areas as well as the overall feel of how employees view the benefits and compensation. By the same token, we had people eventually leave for benefit or compensation reasons, so understanding the employee overall satisfaction is very helpful. We found that once we discovered the biggest issues, our service providers in competition with others we were looking at would create better plans for us. One very beneficial measure is the cost of compensation and benefits that it took to generate one dollar of revenue (again, compare to years past).

Training and Development

Development and growth are important for employee retention. It is also important to understand the type of development employees and managers are in order for these measurements to be effective. These are again based on surveys, which would include the new hires in their training and development so you can pinpoint key areas where there may be a need for improvement. This can also have an impact on employee referrals for open positions. If an employee loves their work and the potential for growth and development, they are very likely to share open job opportunities with a friend.

The final metric to look at is the percentage of goals that were completed (met or exceeded) for the year. Since these usually revolve around the training and development, as well as advertising and general recruiting efforts, these would vary by company. But they are a great way to set goals, quantify and prioritize specific goals and get them approved by Senior Management to be reported on at the end of the year.

More about Steven

Introducing our Newest Blog Contributor - Steven J Smith, PHR

Steve has over 5 years experience within the Human Resource and Recruiting professions for mid-sized organizations. His contributions have marked a distinct and significant improvement in the acquisition of top tier personnel that have made an unmistakable contribution to the growth and strategic development for the organizations for which he has worked. In his current role with iApplicants, his goal is to help HR departments simplify their hiring process by providing better reporting and tracking capabilities. He feels very strongly that HR should be a strategic partner with the executive team, and by providing an applicant tracking software that is user-friendly and customizable, clients can save time, money, and have the ability to better show the value of their department. Steve holds a B.S degree in Finance from Brigham Young University and is PHR certified.