Picking Performance Indicators from a List

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A human resources manager was looking to improve the reporting on the company’s workforce. The existing report included the usual performance indicators such as the employee turnover rate, absenteeism rate, revenue per employee, and training spend per employee.

The manager turned to a list of industry metrics for ideas. In reviewing the list of 130 performance indicators, he found a handful that might be useful. He wondered whether it would be adequate just to add those measures to his report.

Picking performance indicators from a list is not the best approach. To provide useful business insight, you need to identify what information the business needs. This company has a tough time retaining talent. It would be beneficial to understand the reasons for the high turnover rate and monitor the outcomes of what the company does to retain talent.

As it turned out, employees leave because they feel the company doesn’t invest in them. There is a tiny budget for professional development, and senior positions are mostly filled by external hires. To retain talent, the company could allocate more money for training and modify its practice for internal promotions. A new performance indicator the manager could introduce is the internal promotion rate. The training spend per employee that the company currently tracks is still relevant. At the end of the year, the company would want to see if the adjustments to the training budget and promotion practice make any difference.

Selecting what is relevant to monitor depends on the focus of the business. That focus might change over time, so randomly picking measures from a list would not be fruitful.

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