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

HRIS are used by Human Capital Professionals in Support of Strategic Tasks.

HRIS are used by Human Capital Professionals in Support of Strategic Tasks.

HRIS, or Human resource information system, is a software solution for organizations to help automate and manage their HR, payroll, management and accounting activities. A HRIS generally should provide the capability to more effectively plan, control and manage HR costs; achieve improved efficiency and quality in HR decision making; and improve employee and managerial productivity and effectiveness. HRIS is typically a database system that lets you keep track of all types of information related to any company and their human capital. However, be wary of companies that call their system an HRIS - not all employee management systems are comprehensive enough to warrant the title HRIS. For example, if a system only handles one or two functions, such as benefits administration or payroll, this is not a comprehensive HRIS.

Many companies provide a complete online application that is accessible to the currents employees, prospective job seeker and others from any location with internet access - the office, at home or from an airport terminal. Alternatively, some systems are software applications that definitely have to install at the users location and they utilize it by running a program from their desktop computer or laptop.

Apparently, HRIS should include all or most of the following can be announce standard at present day’s situation:

- Applicant tracking with current and future position application system,
- Employee Personnel File Management,
- Company Related Documents such as employee manuals and safety programs,
- Benefits Administration including enrollment,
- Manager and Employee Self Service modules,
- Complete reporting for each feature,
- Payroll integration, and
- Financial Software integration

A complete and integrated HRIS can assist Human Capital Manager to take more strategic position within the organization. Strategic tasks included strategic decision making and providing crucial information in support of this, in the areas of: HR Planning, Salary Advice, Employee Benefits and Industrial Relations. Operational level activities were considered to be background tasks, typically performed by junior personnel. HRIS can support different level of people starting from HR consultancy to strategic decision making.

We can see that a new development is the use of HRIS for strategically related Industrial Relations issues. It is currently being used to support strategic Union Relations (Industrial Relations) in large US organizations. Furthermore, HRIS is supporting Industrial Relations per se in UK companies, albeit marginally. This is true for both non-strategic and strategic purposes, regardless of company size. There is no evidence of this being so prior to 1999.

The non-strategic use of HRIS, regardless of company size, increased substantially over that by smaller companies since the survey of Ball in 1998. Moreover, this trend is expected to continue. Interestingly, there is no evidence that the level of use has increased significantly since 1999. However, from internet, management journal, HR magazine and industry news, we observe a significant increase of using HRIS by the business organizations. There is strong evidence found from various research and studies that HRIS were used in support of strategic tasks. The findings are consistent with organizations being increasingly more reliant on the use of HRIS in support of advanced strategic business tasks, irrespective of company size.

© Shaki, Human Capital Management, 2009