The last decade has seen a lot of changes in the way businesses run. There have been tremendous growth spurts, tragic falls and strong recoveries. The past ten years have seen almost every business climate that markets can possibly go through. It has led almost every organization to restructure, downsize, get lean and retrench their employees. For the most part, they have been somewhat of a knee-jerk response to the ebbs and flows of the business cycles. Planning and strategy should have been the back ground of this, but was not. Organizations frequently lack insight into the right human capital metrics to monitor the health of their workforce, and when they do have the metrics, they don’t know what to do with them.
These are some of the most valuable human capital metrics that can help any organization to get a clearer picture of their workforce and use the intelligence to make critical workforce decisions.
Total workforce cost
Total cost of workforce (TCW) is a measure that shows how much the company is spending on the staff. For every company, employees are the single most important and expensive resource – even for capital and machinery-intensive firms. Important questions like, how can a company know if it has the right staff, does the company have the right number of people working on the right processes, can be answered through this. TCW is the grand total of all costs related to the workforce that a company has to bear; including benefits and other compensations.
Management span of control
Management span of control (MSC) is not just a metric, but a tool that measures the amount of money that the company bears to manage its staff. In other words, how much is going into the management. MSC can be used effectively to ascertain the specific regions within the management that can work better than the others. It can also describe if the management is overly top heavy or spread out thin.
High performance turnover rate
Turnover rate is a fairly common metric and almost all companies measure it. However, it can be improved as a high or low turnover rate would mean little if a company cannot tell where it is losing out on its most important staff members. It would do the company best to measure how many of its top performers are being lost. By measuring the high performance turnover rate, the company can come to an understanding about how much it has lost in value.
Career path ratio
Career path ratio looks to measure the number of promotions that have gone a step up versus a step down. It is an important measure as there are only a few possible ups, but a large number of lefts and rights that the staff can take. Lateral movement is perhaps the most cost-effective way to build a stronger workforce over time.
Talent management index
Talent management index is more of a life cycle measure than a specific metric. It is an index that an organization can use to analyze and compare management practices and quality along with recruiting, performance management, mobility, retention and turnover, development and training.
By collecting and socializing these using these human capital metrics, your company can go from making reactionary decisions to developing a more data-driven and strategic approach to decision support. These metrics and others produce the workforce intelligence your line managers and leaders need to continually move your business forward and create lasting value through your most significant investment – your workforce.