Why companies should systematically record HR KPIs

An HR KPI system summarizes all the personnel KPIs relevant to a company in fields of action. The key figures can be described with target figures. Systematic and regular reporting with variance analyses creates the basis for strategic HR management.

The HR strategy bundles the fields of action of HR work and has a direct influence on the company's success. A distinction is usually made in-between the areas of personnel structure, health, personnel costs and recruiting. In order to achieve the greatest possible impact, the HR strategy should be in line with the overarching corporate strategy. The aim is to have the right people with the right qualifications in the right place at the right time, in order to safeguard the company’s HR strategy.

Corporate management based on key HR figures

Strategy determines the relevant HR KPIs

Which personnel key figures are relevant for an organization depends largely on the corporate strategy. Is the company pursuing a growth, consolidation or profit strategy? Does it need to increase or reduce its workforce accordingly? What qualitative development is required for employees so that they can make the best possible contribution to the realization of the corporate strategy?

Irrespective of such questions, there is a common core of personnel indicators that almost all organizations report. These usually include statistical indicators such as headcount and full-time equivalents (FTEs). An important requirement in HR Analytics systems is the ability to report these key figures separately according to company criteria such as employee groups, job families, age or gender etc.

Personnel costs and health management

The key figures on personnel structure are supplemented by key figures on employee turnover and personnel costs. Structured analyses of personnel costs are relevant today, not least against the background of gender-equitable payment and a desired composition of the personnel structure.

Another field of action is health management. Sick leave - with and without continued remuneration - is traditionally tracked here. Two aspects in particular play a role in this: on the one hand, companies are interested in losing as little productive time as possible due to illness. Secondly, employers have a duty of care and should proactively support the health of their employees. In companies with a strong focus on production, key figures such as cost per capacity (FTE) have also a high visibility.

Employee satisfaction and organizational efficiency

Key figures in the context of employee satisfaction are important in the long term. Their purpose is to better understand the perception of employees in order to be able to draw conclusions about fluctuation risks, organizational grievances or unused potentials.

The HR key figures are usually rounded off by process key figures in terms of organizational efficiency. For example, how long does it take to process a personnel procedure in the organization? How long does the company need to fill advertised vacancies? How long does an application pass through the organization?

This is where recruiting figures come into play: How many advertised positions are there in the organization? How many applications with which qualifications does a company receive? Where do the applications come from?

ESG reporting also requires key personnel figures

By systematically recording HR key figures, companies directly manage and support their corporate strategy. Irrespective of this, the legal provisions relating to the topic of “Environmental, Social & Governance (ESG)” make it necessary to report a range of personnel key figures. For example, the Corporate Sustainability Reporting Directive (CSRD) requires companies to take a stand on the impact of their value chain and business activities on employees, partners, suppliers and fellow human beings.

However, the required ESG key figures are not fundamentally new. Rather, they are key figures that companies already collect for their employees. They only need to be detailed with additional information that should be included in a holistic HR KPI system anyway.

It is therefore necessary to clarify how illnesses and accidents at work are reported today and to what extent the data basis may need to be refined. Conversely, criteria such as positions, job profiles, employee groups and circles as well as gender and age should already be available in an analytical personnel reporting system. These criteria enable a drill-down, for example for the presentation of gender-equitable pay.

Conclusion: Procedure for establishing an HR KPI system

Systematically recording HR KPIs provide companies with a number of advantages.. Ideally, organizations should take their corporate and HR strategy as a basis to define the relevant fields of action and HR KPIs. Once these have been identified, the next step is to think about the necessary reporting features and criteria.

It is then important to define suitable formats with which the content can be transported to the target groups. For example, power users in personnel controlling tend to require Excel-based lists for further drill-down options, while the line management generally prefers similar, structured reports with fewer degrees of freedom. For top management, on the other hand, aggregated evaluations in interactive dashboards are more suitable. The appropriate formats ensure that the various company divisions and hierarchy levels can make the best possible use of the key figures provided to complete their tasks.