HRM textbook

CHAPTER 3 HUMAN RESOURCE MANAGEMENT STRATEGY AND ANALYSIS 85
they may focus narrowly on specific human resource management and activities
(again, such as hours of training per employee ). 21 In any case, the bottom line is
that measuring how we re doing, and why is important for managing one s
human resources.
Types of Metrics
There are many measures that human resource managers use. For example, the
HR-to-employee ratio averages about 1.12 HR employees per company employee
for all employers. However, the ratio varies with employer size. For example, there
is (on average) one human resource employee per 100 company employees for
firms with 100 249 employees. The HR employee-to-employee ratio drops to
about 0.79 for firms with 1,000 2,499 employees and to 0.72 for firms with more
than 7,500 employees. 22
Figure 3-10 illustrates more focused human resource management metrics. These
include absence rate, cost per hire, and health care costs per employee. 23
Improving Productivity Through HRIS
Tracking Applicant Metrics for Improved Talent Management
As an example of the benefits of using metrics, consider that most employers spend
thousands of dollars (or more) each year recruiting employees, without measuring
which hiring source produces the best candidates. The logical solution is to assess
Organizational Data
Revenue
Revenue per FTE
Net Income Before Taxes
Net Income Before Taxes per FTE
Positions Included within the Organization s
Succession Plan
HR Department Data
Total HR Staff
HR-to-Employee Ratio
Percentage of HR Staff in Supervisory Roles
Percentage of HR Staff in Professional/Technical Roles
Percentage of HR Staff in Administrative Support Roles
Reporting Structure for the Head of HR
Types of HR Positions Organizations Expect to Hire in 2011
HR Expense Data
HR Expenses
HR Expense to Operating Expense Ratio
HR Expense to FTE Ratio
Compensation Data
Annual Salary Increase
Salaries as a Percentage of Operating Expense
Target Bonus for Non-Executives
Target Bonus for Executives
Tuition/Education Data
Maximum Reimbursement Allowed for Tuition/Education
Expenses per Year
Percentage of Employees Participating in
Tuition/Education Reimbursement Programs
Employment Data
Number of Positions Filled
Time-to-Fill
Cost-Per-Hire
Employee Tenure
Annual Overall Turnover Rate
Annual Voluntary Turnover Rate
Annual Involuntary Turnover Rate
Expectations for Revenue and Organizational Hiring
Percentage of Organizations Expecting Changes
in Revenue in 2011 compared to 2010
Percentage of Organizations Expecting Changes in Hiring
in 2011 compared to 2010
Metrics for More Profitable Organizations
Total HR Staff
HR-to-Employee Ratio
HR Expenses
HR Expense to Operating Expense Ratio
HR Expense to FTE Ratio
Annual Salary Increase
Target Bonus for Non-Executives
Target Bonus for Executives
Maximum Reimbursement Allowed for Tuition/Education
Expenses per Year
Percentage of Employees Participating in Tuition/Education
Reimbursement Programs
Time-to-Fill
Cost-Per-Hire
Annual Overall Turnover Rate
FIGURE 3-10 Metrics for the SHRM ® 2011 2012 Customized Human Capital Benchmarking Report
Source: Reprinted with permission from the Society for Human Resource Management. All rights reserved.