Workforce management metrics are now a crucial part of managing your workforce.
Monitoring workforce management metrics can lower operational costs and ensure positive results in your team’s happiness and your product and sales output.
As businesses grapple with international lockdowns, asynchronous work, and hybrid schedules, they must utilize workforce management metrics to maintain productivity.
There are many ways to measure — but which ones are the most important? In this article, we’re looking at the top workforce management metrics and KPIs you should be focusing on for your business.
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Top workforce management metrics and KPIs
Metrics are measurements of overall business health, while KPIs (Key Performance Indicators) measure progress toward specific goals. Often, a company will have a core set of metrics they need to focus on at a high level but then set individual KPIs for particular departments and individuals.
Here are seven of the critical workforce management metrics you can monitor and create KPIs from:
1. Total Cost of Workforce
The first workforce management metric is the Total Cost of Workforce (TCOW), and that’s more than just employee salaries. It’s the total amount invested in human capital.
TCOW includes direct compensation, health benefits, taxes, and workforce overhead like equipment, facilities, travel, and relocation expenses.
2. Employee productivity
How you track employee productivity is entirely dependent on the nature of your business, and what matters to stakeholders.
For example, call centers usually have staffing productivity KPIs that center around the number of calls they should take each hour or how long each should last. However, these KPIs need to be weighed against customer satisfaction metrics. Otherwise, your call staff could just put customers on hold and then hang up on them to hit their KPIs.
Hubstaff offers a suite of employee productivity tools that managers will love.
3. Attrition rates (voluntary vs. involuntary employee turnover)
Voluntary vs. involuntary employee turnover is a vital staffing metric to track.
In fact, the Society for Human Resource Management (SHRM) reported that it costs a company six to nine months of an employee’s salary to replace them.
If an employee makes $60,000 per year, it costs $30,000 – $45,000 to recruit and train a replacement.
High employee turnover rates also impact company culture, brand perception, productivity, and overhead. Retention is key.
4. Recruitment
In the same way that voluntary vs. involuntary employee turnover is a critical workforce management metric, so is recruitment. Top metrics for measuring recruitment, onboarding, and staffing include source of hire, acceptance rate, applicants per hire, and hiring manager satisfaction.
A fundamental metric to watch is Time to Fill. Here’s what that equation looks like:
Time to Fill = Time it takes to fill each position over x time frame / Number of roles filled
(Looking for highly-skilled freelancers to recruit? Check out Hubstaff Talent.)
5. Customer Satisfaction
It’s also valuable to collect data and feedback from clients or potential clients about their experience with your employees. Gather data after an email exchange, chat session, or phone call.
Of course, it’s important to remember that metrics and KPIs need to be measurable and not vague to assess your workforce accurately. A standardized set of questions with a 1-10 score rating is usually the best option. It’s also important to have questions about the employee rather than the company or problem.
For example, a customer who is very angry about a product might rate the product and your company as a 1 out of 10. However, they might have experienced a very polite and friendly agent who deserved an 8 out of 10 for trying to resolve the problem. Managers should understand these distinctions to reward and incentivize good employees.
6. Employee satisfaction
When calculating workforce management metrics, businesses must factor in employee satisfaction.
Typically, the factors that are a part of employee satisfaction include remuneration, rating of leadership, stress and mental health levels, teamwork, company culture, and work-life balance.
Today, companies need to be tuned in to the well-being of their employees. Not only because it’s the right thing to do but because it is directly linked with productivity, retention, and profitability.
According to the American Institute of Stress, 83% of US employees suffer from work-related stress, with 25% saying their job is the number one stressor in their lives. In short, companies must monitor these metrics, and they must constantly improve.
7. Average absenteeism percentage
Following on from employee satisfaction is the average absenteeism percentage. This is a core workforce management metric because it focuses on the total number of days or hours lost to sickness, injury, stress, or unauthorized absences.
According to the Bureau of Labor Statistics (BLS), the absence rate for all full-time wage and salary workers is 2.8%. If your staffing absenteeism percentage is above average, ask questions about your policies or company culture.
You can also look at how to remedy this with solutions like private health coverage, mental health counseling, and improved work conditions.
Calculate your company’s absenteeism percentage like this:
The number of days or hours lost / The number of working days. Multiply this result by 100 to calculate an average absenteeism percentage.
Workforce productivity metrics
Productivity is an important metric that can filter down to your KPIs.
Measuring productivity identifies areas for improvement, prioritizes them, and can also benchmark you against your competitors. Large organizations value their workforce productivity metrics and will include the following core areas to watch:
1. Projects completed
The metrics and target will vary based on the nature of your business. For instance, it is crucial in manufacturing and factory settings where the same “job” is performed repeatedly with only slight variation.
Worth watching: American Factory, an award-winning documentary by Netflix, examines the workings of an American automaker that closed and was then taken over by a Chinese billionaire. The “projects completed” theme is apparent as American workers struggle to keep up with their Chinese counterparts.
2. Sales
When it comes to sales, you don’t need an introduction or explanation of why they matter in productivity metrics. They are one of the most basic measures of your company’s health.
There are various sub-metrics here, such as sales growth. This metric benchmarks you against yourself over time. How are your sales compared to last year or five years ago? What are your projected sales for next year or five years? The formula to calculate year-over-year growth is:
Sales = Price of each product or service X Number of units / Services sold
3. Revenue per employee
The revenue per employee metric essentially snapshots the money you receive due to having each employee in place.
This metric isn’t used to uncover that Amy (who works in admin) isn’t bringing you direct revenue. Not every employee will be in a sales or customer-facing role.
Also, it shows you how effectively and profitably your business is running. It can also benchmark against competitors’ profitability and staffing norms in other industries.
The formula to calculate revenue per employee is:
Revenue per employee = Total revenue for last 12 months (LTM) / Current number of full-time employees
Workforce management metrics are crucial to understanding stumbling blocks and improving your business. Of course, you’ll need to have the correct formulas to gather, understand, and implement workforce management metrics and KPIs.
Workforce management metrics: A quick checklist
- An agreed business strategy for the next five years signed off by key stakeholders
- Agreement on the metrics that relate to your business and matter to your success
- The correct software or processes to monitor productivity, recruitment, retention, employee satisfaction, customer satisfaction, and the other metrics
- Solid data from the people, company, labor market, and benchmark industries or competitors
- A team of senior leaders and HR experts to work with on translating the metrics into actions and policy
- A commitment to change. Without this, all the data and KPIs in the world won’t be of use
Today, competitive business arenas require advanced workforce management metrics and streamlined tools. Does your business use workforce management metrics, and how successful have you been? Tweet us @Hubstaff and share your thoughts.
