Just as keeping track of stock, budgets and spending can help your business save money and be more efficient, so can understanding your HR data. Here we discuss four key areas to keep an eye on.
Recruitment
Even if this is your first ever hire, monitoring your recruitment activity will help you improve your future recruitment and save you money. The CIPD found that in 2020 the average cost of recruiting for management and professional positions was £5000 per hire and £2000 for other employees. Unlike most things the cost of recruitment has actually fallen year on year as employers have got more savvy at negotiating rates with agencies and using online job sites, but it can still turn into a major expense if you’re recruiting regularly. There are also the empty roles to think about, the longer it takes to fill a vacancy the longer someone else is left covering the role or the job isn’t getting done, either way productivity is affected.
As a bare minimum keeping a record of where shortlisted candidates came from will help you to
focus your recruitment spending in the right places. But we would recommend you record the
following:
• Which agencies and job sites you use,
• How many applicants you got from each source,
• Where the shortlisted candidates were sourced from,
• How much each source cost you and how much the final recruitment cost in total.
Review these figures regularly and remember as with all things the popularity of specific job sites
and agencies change over time so be prepared to try new things if a previously successful source
starts to wane.
Absence
It is a legal requirement for all employers to keep records of sickness absence for three years, this must include:
• the dates the employee was off sick,
• which days were qualifying days (which days should they have been at work),
• the reason they said they were off work,
• their NI number.
So, it is likely that you have this data somewhere but are you doing anything with it? Sickness absence can be a signifier of wider problems, for example poor management practices have been linked with higher rates of minor illnesses (colds, sickness etc) as well as workplace stress. If you are tracking absence data, then you can look for patterns and differences between teams and potentially do something about them.
Sickness absence costs the UK economy billions of pounds each year in productivity and while it isn’t possible to completely eliminate sickness absence, particularly now when so many employees are being required to self-isolate, analysing your businesses data can save you money. For example, did you know that the second biggest cause of sickness absence in the UK is musculoskeletal issues (ONS), many of which are work related and could be avoided with changes to processes or better training. Having people off sick also has a knock-on effect on other employees who have to pick up extra workload, it won’t come as a surprise then when we tell you that businesses with high absence rates almost always have high turnover rates as well and as we saw above recruitment can be
expensive.
You may have noticed that we haven’t yet mentioned manging individuals who have excessive absence. There is a reason for this, in our experience employees who are truly ‘milking’ the system are very rare and normally not very good at hiding it so end up getting caught out even if you aren’t managing your absence data. The people that monitoring for excessive absence normally ‘catches’ are people with legitimate illnesses who may be covered by discrimination legislation in the Equality Act 2010. If you find you have an employee with higher-than-average absence, we would always recommend you manage them sensitively and get specialist support.
Reward
How do your pay and benefits compare to others? You can find this out using pay benchmarking. If you’re a small business with only a few employees then pay benchmarking can be as simple as looking up similar roles in your area on a few job sites and comparing to your own staff salaries but remember to compare against other industries too,
particularly for transferable roles such as finance and admin. If your business is a bit larger, then the process is a bit more complex as it won’t be feasible to compare every employee and you will need to group similar roles together for comparison, but the good news is lots of job sites and agencies provide free benchmarking reports.
Why analyse reward data? You don’t have to pay the most to attract the best employees or offer the best benefits but if you want to attract and retain your staff, they need to believe what you’re offering is fair. Benefits don’t have to be tangible or costly to be of value to employees, volunteering time, flexible hours and matched charity funding have all become popular benefits with employees, particularly women and younger people.
Remember if you have more than 250 employees then you are required to report your gender pay gap to the government on the 4th April (30th March for public sector).
Employee Turnover
Employees leaving your business is not always a bad thing; it is good to get new people bringing new
ideas. But the level of turnover needs to be manageable for your business because recruitment and training
new people costs time and money. The right turnover for you is going to depend on many factors,
the industry to operate in, how many competitors for talent there are, how long it takes to train new
hires to name a few. Turnover is normally expressed as a percentage, but this is of limited value and
unless you want to undertake external benchmarking, we would suggest you put the calculator
away.
Instead look at what is happening. How long are people staying, if new employees are leaving
quickly then it could suggest there is a problem with your recruitment or induction process. Where
are they leaving from, do particular teams or functions seem to lose more people than elsewhere
and would this be expected, for example cinemas often have higher turnover in customer services
roles because of the large number of students that compliment their studies with part time work in
evenings and weekends. Where are they going to, do you have a competitor that is offering
something you are not. Why are they leaving, is this something you can change?
A good way to begin to collate why people are leaving and where they are going is exit interviews or
surveys. This isn’t a fool proof method because not everyone is going to tell you the truth, but you can collect useful information and there are ways of improving the responses you get. Consider for example getting HR or managers from other departments to conduct exit interviews or if numbers are sufficiently large using anonymous surveys (best used in conjunction with exit interviews).
Your people are an important part of your business and a costly part, intelligent use of HR metrics can make managing them easier and more cost effective as you can spot problems quickly and stop them becoming major issues.
Redway HR offer support and advice on analysing your HR data for strategic decision making, we also offer an HR Management System which will automate the process of producing your metrics.
Get in touch today to find out how we can help you get the most from your people
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