What are KPIs?

KPIs (Key Performance Indicators) are metrics that reflect how successful a company is in reaching its business goals. KPIs can be quantitative or qualitative. Quantitative KPIs are typically expressed through a percentage. Examples include:

Qualitative KPIs can express the final result through a numerical value, yet they draw data from subjective feedback, such as employee surveys. Some examples are:

KPIs are critical for measuring the effectiveness of HR strategy and people programs, including  workforce management, retention, attrition, performance management, and more as they enable organizations to quantify the effectiveness of departments, teams, and individuals.

Why should HR leaders care about KPIs?

KPIs assist HR leaders in monitoring progress, identifying flaws, enhancing performance, and achieving business goals. KPIs also enable HR leaders to secure executive support by providing sound data to back up decision-making. Moreover, KPIs can strengthen HR management of:

  • Recruitment
  • Hiring
  • Onboarding
  • Employee experience 
  • Retention and engagement

What can HR leaders do to incorporate KPIs?

Choosing KPIs to use should not be a shot in the dark but rather a deliberate and thoughtful process. Here are a few ways to effectively implement KPIs.

  • Ask the right questions.  HR leaders can follow a systematic process of analyzing their practices, addressing pressing issues, and asking what they can do to resolve them. Strategic advisor Bernard Marr emphasizes the importance of KPQs (Key Performance Questions.) Identifying these questions, Marr explains, enables HR leaders to determine which KPIs to implement.
  • Align KPIs with the company mission. Every organization is at a different stage of the business process– perhaps one company is striving to boost engagement, while another is focusing on increasing the efficiency of its recruitment process. Using the company mission and strategy as a guide, HR leaders can identify KPIs that will address urgent workforce issues while also promoting the company’s vision and values.  
  • Cooperate with other departments. For optimal KPI functioning, HR leaders can incorporate data from other departments. Including this external information can provide greater context and perspective. For example, when evaluating employee retention, HR may want to integrate finance department data on employee ROI in addition to the HR metric, eNPS. 
  • Implement a system. Haphazardly incorporating KPIs can lead to inefficient and ineffective measurements. Instead, HR can institute a system that supports operative KPI procedures. HR professionals should determine whether to measure KPIs annually, biannually, or monthly and how regularly to evaluate them. A platform with easy accessibility and viewing can boost system effectiveness as well.    

How can effectively incorporating KPIs improve company culture?

Integrating KPIs can help leaders pinpoint and address issues to enhance the employee experience. The process of measuring KPIs enriches HR professionals’ understanding of workforce needs so they can be a step ahead. With increased knowledge in their HR toolbox, HR leaders can make smarter decisions that elevate the employee experience, the work community, and the company culture.