HR KPI

Descriptions

What KPI stands for?

KPI stands for key performance indicator which help your team focus on what is important for your organization.KPIs are the key targets one should track to make the most outcome on his or her strategic business goals.

XYZ is an organization trying to innovate in a very competitive setting for their organization. For this reason, the board of directors decided that they will cut costs everywhere, except in the product innovation department. The question is, how will this goal be translated into HR KPIs?

Suppose the entire organization needs to save money, including HR. This reduction could apply to recruitment cost, for example. The cost is currently at $500,000 and needs to be reduced to $400,000. In this case ‘Recruitment cost in Dollars’ is the KPI, the current score is $500,000 and the target for this KPI is $400,000.

This doesn’t mean that everything that you can measure is a KPI in HR. Only metrics that have a direct link with the organizational strategy can be called KPIs.

“S-M-A-R-T” is a fine way to spell KPIs, as this is a solid framework for making decisions about KPI selection.

•        Smart

•        Measurable

•        Attainable

•        Relevant

•        Time-Bound

Knowing these criteria should help you in creating the relevant Human Resources key performance indicators you need for success. For example Average length of service is not a SMART KPI. It does not link in with the overall needs and aims of the business.

In contrast, the internal promotion rate is a SMART KPI. If a company does not have to externally recruit, they save cost.

Leading vs. lagging KPIs

A lagging indicator refers to past developments and effects. This reflects the past outcomes of KPIs. If productivity is a leading HR KPI for labor cost, sickness rate would be a lagging KPI. An alternative lagging KPI would be the labor cost per employee

What are the 4 main KPIs headed on?

•        Customer Satisfaction,

•        Internal Process Quality,

•        Employee Satisfaction, and.

•        Financial Performance Index.