Yes, human resources is about people –their skills and attitudes, their backgrounds and prospects. But managing human capital also entails an awareness of how your workforce performs in terms of ratios.
According to a 2014 joint study by SuccessFactors and the Australian Human Resource Institute, following are some of the workforce metrics you could use to get a better view of your organization.
1
Retention Rate. Retention rate simply refers to your ability to keep employees in the organization. A high turnover is not desirable because it has implications in cost, efficiency, productivity and customer service. Recruiting new employees and then training them frequently is costly. These new employees would also take time to reach their full capacity. The morale, workload and stress levels of existing employees will also be affected.
A formula to determine retention rate would be:
Start of Period Headcount – Total Terminations + Total External Recruits
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Start of Period Headcount + Total External Recruits.
2
Staffing Rate. Organizations must also address issues such as the retirement of a big group of employees. This will have implications in knowledge management, succession planning and skills retirement, especially if the positions to be vacated are in the professional and managerial roles. This is the reason that companies have to anticipate retirements way ahead of time.
End of Period Headcount Approaching Retirement Eligibility
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End of Period Headcount
3
Generation ratio. This ratio takes into consideration not only the number of employees per generation but also how they deal with each other.
Silents are those born between 1925 and 1945. Early Boomers 1946-1954. Late Boomers 1955-1963. Generation X 1964-1978. Generation Y 1979-1994, and Generation 1995 onwards.
This is an especially crucial ratio to watch for those organizations who believe their labor flow dynamics will change as the age composition of their workforce changes as well.
End of Period Headcount of Silents & Boomers
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End of Period Headcount of Generations X and Y
4
Average Workforce Tenure. This measure will be useful to companies that perceive they have a very low or very high tenured workforce or that expect to experience significant knowledge drain from a retiring baby boomer employee population that has very high tenure.
Total Workforce Tenure
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End of Period Headcount
5
Unscheduled absence per employee. This measure tells a company about the amount of lost time incurred per employee who is absent. A high result should prompt further examination of absence by occupation, reason, location, tenure etc. Absence provides a measure of both lost time and productivity. It is also often regarded as a measure of employee morale and as an indicator of future turnover. There are direct and indirect costs to the organization arising from absence.
Total Unscheduled Days Absent
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Employee (Headcount)
6
Net recruitment ratio
Net Recruitment Ratio shows the number of total external recruits that replaced terminating employees. This is a good way to determine whether the organization is expanding or contracting.
Expressing the net recruitment ratio in gender terms may also be useful, so you can determine whether positions held by males are now going to females, vice versa, or if there is no meaningful change at all.
Total External Recruits
—————————–
Total Terminations
7
Career path ratio.This is significant for those organizations that see the internal movement of employees as strong developmental opportunities or that focus on promotions to gauge success of internal grooming of managers, performance management process controls or remuneration cost management.
Promotions
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Transfers
8
Employee Initiated separation rate. This measures the percentage of employees who left the organization out of their own volition for reasons such as resignation, transfers or retirement. Note that employee-initiated separations are different from organization-initiated separation such as redundancies.
This ratio is of particular importance to companies with high turnover positions or that recruit from talent markets that are susceptible to cyclical shifts.
Initiated Terminations
———————————————-x 100
Employees (Headcount)
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