Tuesday, February 28, 2012

KPI for HR: How, When and Where?

Key Performance Indicators (KPI) also known as KSIs which stand for Key Success Indicators are not specifically linked only to HRD, but has to do with the entire organization. Since HR is the heart of any organization usually HR is assists other department also to set and identified their KPIs, which are measurable and quantifiable in nature so as to measure the success of the organization in terms of the organization's mission and goals. Hence KPIs can be defined as measurements for an organization's success.

For example, HR Department could have Employee Turnover as one of its KPIs. The goal for setting this KPI would be to reduce employee turnover. It could be defined numerically for better definition such as to reduce employee turnover by 5% every year. This KPI could be defined as the total of the number of employees separated from the organization for reasons of resignation or termination divided by the number of employees at the beginning of the year. It could be measured on a fixed time schedule like every month or every quarter. For HR Department other KPIs can be following: Recruitment KPI, Training KPI, Health and Safety KPI, Performance KPI, HR Efficiency KPI, Working Time KPI, Compensation KPI, Labor Relation KPI, Employee Satisfaction KPI, Employee Loyalty KPI, HR Budget and Accounting KPI etc.

Sample Explanation:

Frequently used HR KPIs include:
FTE = Full Time Employees
Revenue per Employee (FTE) 
Assets per FTE 
Training Hours per FTE 
Training Costs per FTE 
HR Department Cost per FTE 
FTEs per HR Department FTE
Acceptance Rate 
Average Cost per Hire 
Absence Rate
Turnover Rate
Resignation Rate 
Human Investment Ratio 
Compensation & Benefits/Revenue 
Average Remuneration
Time taken per recruitment
Cost per recruitment

The choice of HR KPI will vary from year to year, subject to organization’s strategic planning, corporate strategies and objectives which in turn affect HR’s strategic planning, HRM strategies and objectives. Bellow, I am providing only one KPI’s in details here. If anyone needs the details of other metrics, please do email me.

Training KPIs include key performance indicators as follows:

1. Training courses
• Number of courses offered
• Number of courses implemented.

2. Training costing
• Organization training expenditure (% of salaries and wages)

3. Training certificates
• Number of employees completing sponsored education programs

4. Training hours
• Average number of training hours per employee

5. Training budget
• % of HR budget spent on training
• Average training costs per employee

6. Training satisfaction
• Employee satisfaction with training.

7. Training results
• % of employees gone through training
• Average time to competence. That is average time it takes until expected competence level is reached.
• % & employee reach competence after training.

8. Training penetration rate
It measures the percentage of employees completing a course compared to total number of employees employed.

9. E-learning training
• e-learning courses utilized
• % of e-learning pass rate

And indeed e-HRM is the key tool to measure all the metrics successfully with 0% error.

© Shaki, Ahmed R (2012), Candidate of PhD in HRM, UUM


Ashis Mittal said...

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Washington DC Financial Advisors

Ahmed R Shaki said...

Thanks Ashis Mittal for your time to make comments here. ATB

Aleksey Savkin said...

Most HR Training KPIs are useless as they are not aligned with he final result.

For example: % of HR budget spent on training.

Well, with that KPI it is possible to measure the budget spent on training, but it doesn't tell anything about results for your business?

As I write in my article "Training KPIs for HR measures aligned with the final result", employee might study full time MBA, but will it help your employee deliver better results and to what extent?"