Strategy & LeadershipHR Effectiveness5 key HR effectiveness metrics for 2020

5 key HR effectiveness metrics for 2020

At the beginning of a tumultuous year of accelerating change, HRD Connect gives you the top 5 HR effectiveness metrics to help you measure your success in 2020.

As the world of business fluctuates, so too does the way we measure the effectiveness of HR initiatives. Scarcely has there been a time in recent memory when greater change has occurred in so brief a period than the present, with the business world suddenly hurled into uncertainty and new modes of working by the coronavirus outbreak.

The spread of coronavirus has sent the business world into frenzy, with Deutche Bank now projecting a 13% crash in U.S GDP as a result – more than one and a half times the effect of the 2008-2009 financial crisis. But this situation will not just impact profit margins; rather, it will surely seep into every area of a business, and as is often the case, HR will feel the full effects of these changes, and must keep track of them in order to cope.

With this in mind, here are 5 key HR Effectiveness metrics to consider in 2020:

  1. Talent Retention

The talent space is undoubtedly one of HR’s focal points in the modern age. However, with many organizations now cutting costs and the buoyancy of the labour market taking its toll, retention is arguably the biggest concern. As unemployment rates have reached all-time lows in many of the world’s largest economic powers, employee turnover rates have steadily increased, with roughly 3.5% the latest monthly average being reported by United States officials. Keeping track of this metric will allow an organization to more accurately assess the effectiveness of its HR strategy, and in its simplest form can be calculated by dividing the number of employees who leave an organization by its total number of employees.

  1. Employee Wellbeing

Though generally a more qualitative element of business, wellbeing metrics are becoming increasingly popular among employers as more targeted initiatives are being adopted. For instance, a CIPD survey shows that over 80% of organizations indicated that they’re making changes in an attempt to actively improve employee wellbeing. Moreover, with the world’s major regions being blighted by a new virus, employee wellbeing is now more crucial than ever.

The introduction of more comprehensive or sophisticated wellbeing metrics can allow employers to design and implement such initiatives more effectively. Though broad and approachable from various angles, such metrics could include job satisfaction, biometric data and participation in wellness activities. In a nutshell, such data can enable an organization to optimize the performance of its workforce, leading to greater profitability.

  1. Change Readiness

Such is the ever-changing nature of modern business that organizations need to be consistently equipped to roll with the times. This principle has never been more relevant, with the business climate now changing on a daily basis due to the current global pandemic.

Gartner reports that the average organization today has undertaken 5 major changes in the past 3 years. But large-scale changes, particularly those on an organizational level, can be costly and fraught with risk, so its important to determine the likelihood of success.

Readiness is an increasingly common way of working out which step to take next, and typically requires the following calculation: (vacant positions/total positions) x (employees with desired competency rating/total employees assessed) x 100[1]. In the same report, Gartner showed that half of change initiatives fail. Measuring readiness could be the key to avoiding the same fate.

  1. Equal Pay

Inclusion continues to be a key area for HR leaders in 2020. UK companies with more than 250 employees are now compelled by the Government to submit pay ratio reports on an annual basis. Again, several methods exist for recording such data, such as introducing representation across quartiles (rather than mean or median values), breaking the gaps down by job level, cross-referencing gap data with other factors (e.g. age and tenure) and so on. According to the Global Gender Gap Report 2020, gender parity will not be attained for nearly 100 years at the current rate. This, among other things, shows this is more pressing than ever before.

  1. Employee Net Promoter Score (eNPS)

In any business environment, one key principle consistently remains: the employee experience always reflects in the customer experience. Not only this, but with the onset of technology and the internet, and the subsequent digitisation of the corporate world, a company cannot evade its reputation for how it treats its workforce. It becomes public information and affects its ability to market and hire. Therefore, it is important to keep track of the feeling amongst the employees, and eNPS is an effective way to do so. Recording this information may prove particularly handy in the current climate, as employees hold their employers to account throughout their handling of the virus outbreak and the inevitable changes resulting from it.

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On average it costs around 20% of an employee’s annual salary to replace them, so its important to improve employee engagement if necessary to ensure retention. Keeping track of your eNPS could be an effective basis on which to act.


[1] https://www.inc.com/michael-schneider/11-essential-hr-metrics-that-every-organization-should-know.html

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