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A Guide To People Analytics: HR Metrics That Matter

HR metrics are the heartbeat that keeps the system alive and thriving. These numbers on a spreadsheet are more than data; they're the stories, the narratives, the pulse of an organization. Performance metrics measure the success of the business's human side. They help track progress and inform talent decisions.

What Is an Indicator or HR Metric?

An indicator or HR metric is a quantitative or qualitative factor or variable that offers a direct, simple, unique, and reliable signal or means to measure achievements, reflect changes connected to an intervention, project, activity, or task, or help assess performance.

In the context of business or human resources (HR), indicators are a handy way to measure all crucial elements of an organization's performance. Indicators provide information that leaders, managers, teams, people, and those who support them can use to make decisions and take action to improve them.

Leading and Lagging Indicators

Generally speaking, in business operations, indicators can be classified into two broad categories: leading and lagging.

  • Leading indicators are proactive, predictive measures that can signal future events. They give an organization an idea of what might happen based on current conditions. For example, employee satisfaction surveys are useful as a leading indicator for employee turnover rates.

  • Lagging indicators are reactive (ex-post) and occur after the fact. They provide information about past events and performance, often used to evaluate the success or failure of a project or a strategy. In HR, lagging indicators include metrics such as the total number of employees who left the company in a given period.

Both types of indicators are valuable. They offer data-informed insights that can be used to drive improvements and make evidence-based, data-backed informed decisions.

Why This Guide?

HR leaders must understand and monitor key business metrics to inform their decisions and strategies. HR metrics, ranging from revenue per employee to return on employee investment, not only measure the company's financial health but also reflect the effectiveness of HR policies and practices.

This guide will provide you with fundamental HR metrics, definitions, and leading and lagging indicators to help you understand how well your organization is doing. And where it can improve.

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