KPIs for People Teams

Understandably, teams and leaders are always curious about how to best monitor, track, and analyze data for various functions at the company. In this post, we’ll focus on:

1. The most useful KPIs for People teams

2. How to establish tracking and reporting metrics regarding these areas of responsibility

3. Common metrics that are often misinterpreted or meaningless

Beyond all else, the most important metric for HR and Recruiting is retention (either by percentage or by average tenure). Having excellent retention shows that you’re taking the right steps to provide a meaningful and valuable experience to your current staff, which can be highly leveraged in the recruiting process (think of life@ type videos, glassdoor reviews, and referrals). Unless you’re having management issues, this is also a key indicator that you’ve hired the right people for the right roles.

Other useful KPIs for recruiting are: acceptance rate, job offer timeline, and number of qualified candidates. These factors certainly overlap in the sense that having qualified candidates will allow you to adhere to an acceptable timeline and will allow you to build a package that’s likely to be accepted. If there are issues being successful in any of these realms, they are 100% fixable from within; which are the types of issues you want to have.

I should point out that, on the topic of recruiting, I’d never discount the fact that the best person for the job might very well not be job hunting at all. To get the best talent, you often have to proactively seek and attract those people. While this can be more work, I’ve often found it to be a better use of time, and it doesn’t have to take more people-hours than passive recruiting takes.

Other useful KPIs for human resources are: progression of employees (career path), median and mean review scores, and job satisfaction scores (this can take many forms: happiness, opportunity, growth, approval, etc). Hopefully the connection between these KPIs is apparent. These are all centered around alignment and execution of the corporate goals, mission, and values. In a fully-optimized organization, the KPIs above are downstream effects of those top line efforts succeeding.

Tracking can happen with something as simple and low-budget as excel or can be improved and semi-automated by systems such as Google Hire, Lever, Lattice, or Small Improvements. Often tools are misjudged based on their ability to track certain things. The reality is, most systems are on par with these baseline features. The true usefulness beyond tracking lies in the ability to visualize, extract, and analyze the data that’s entered into the system. Without proper and consistent insights, actions can be misguided, time wasted, and experiences diminished.

KPIs that are often misunderstood or seen as overly-important include: number of interviews per role, time to fill a role, cost per hire, and percentage of cost of workforce. By now, my reasoning behind these should be very straightforward.

• What you need is to have the best people in the right roles doing the most important work; absent that, you have major company-wide impact and issues.

• To find the best people, the measure is not how long or how many interviews it takes to fill a role; it’s whether or not you hired the right person.

• If that was the first person you interviewed, great. If it took 33% longer than expected, but you ended up with the right person, that’s equally as great. Absent a clear breakdown in process, or missing key functions of talent acquisition, it’s okay if it takes longer than expected to find the right person–it will pay dividends for years to come.

• The same logic applies to cost. If cost is out of whack, you can fix that by adjusting the process and tools that are being leveraged. What you don’t want to do is to preemptively and artificially impose penalties for taking longer to hire (longer equates to more costly in this example) if it’s geared at getting the best person for the role. If it’s an issue of the right person not accepting the job and having to start over, that’s a different issue.

• Lastly, the cost of the workforce is only an issue if there are larger, more systemic issues throughout the organization. If the corporate structure, product-market fit, or growth targets are out of sync, this can make it seem as though the cost of the workforce is out of step. However, in a world where the goals of the corporation are flowing through the entirety of the organization, the workforce’s value will always displace its cost (which can mean different things at a startup, of course).

Thoughts? Please share in the comments below!