We’ve all heard the saying “what gets measured gets done” but did you know this adage holds particularly true in the realm of the workforce? To ensure your workforce operates at peak efficiency and contributes effectively to your bottom line, it’s crucial to keep a close eye on these five key metrics:
Employee retention
Turnover can inflict various costs on an organization, including decreased productivity, increased training expenses, and the loss of institutional knowledge. Therefore, meticulous tracking of retention and attrition rates is imperative for effective workforce management.
While turnover is generally seen as detrimental, it’s equally vital to discern who is departing – your star performers or underperformers. A more revealing metric involves measuring the turnover rate among high-performing employees and devising strategies to retain your top talent. To calculate this metric, divide the total number of high performers who leave during a specified period by the average headcount of high performers.
Overall productivity
Measuring how much your workforce accomplishes is a fundamental yardstick. A recent study discovered that a staggering 68% of employees are disengaged. To counter this, leaders of smaller teams should consider employing time-tracking tools and methodologies to enhance office productivity. Even simple measures, such as having employees submit weekly timesheets detailing their tasks, foster accountability without resorting to heavy-handed micromanagement.
Total workforce cost
This metric encompasses all workforce-related costs, spanning compensation, benefits, and other expenditures for both full-time and contingent workers over a defined period. It provides a comprehensive view of your workforce expenditure and aids in making informed decisions regarding workforce strategies, especially in staffing. Calculating this can be challenging if your contingent workforce experiences fluctuations throughout the year. Therefore, partnering with a staffing firm that can keep this data for you is crucial.
Profitability per worker
Revenue lies at the heart of any successful enterprise, making it essential to monitor the profits generated per employee. Calculating this is straightforward: divide the total revenue by the total number of employees. This not only gauges the contribution of employees to the bottom line but also offers insights into assessing the cost incurred when an employee is lost due to turnover.
Effectiveness ratio
To track this metric, determine the gross profit your company generates for each dollar spent on salaries for both full-time and contingent employees. Accounting entrepreneur W. Michael Hsu underscored the significance of calculating the effectiveness ratio, emphasizing that “results and value-add trumps hours of work any day of the week.” In essence, this metric is superior to measuring profit against time since the goal is to encourage the team to work smarter, not longer.
Undoubtedly, what gets measured gets accomplished. Metrics serve as a driving force for results and pave the way for ongoing enhancements. Ultimately, this benefits high-performing employees and contributes positively to your organization’s bottom line.
But monitoring these metrics can be time-consuming. If you require assistance in implementing these metrics into your daily business practices or seek further valuable insights into workforce management, contact us today. We are always ready to help.