Data analysis, performance measurement, and continuous improvement are among the fundamentals of human resources management. But how will you measure your performance? How will you know whether you’re performing well or poorly, and whether you’re meeting standards and staying within budget? KPIs (key performance indicators) play a crucial role in decision-making and evaluating results. In this blog, we’ll take a closer look at some key KPIs for better results: labor costs, cost per hour (CPH), productivity, and availability.
Payroll costs are, of course, an obvious KPI that must be closely monitored. They include all costs associated with paying employees: salaries, bonuses, vacation pay, and all other additional benefits. Monitoring payroll costs helps you with budgeting and ensures that you raise awareness of these costs among your employees.
Cost per hour (CPH) is another important KPI in human resources management. This KPI is calculated by dividing labor costs by the number of hours worked. This means that your cost per hour will decrease if you hire lower-cost employees. While you’ll likely aim for low average labor costs per hour, it can sometimes be a good choice to assign higher-paid employees to specific tasks—for example, to improve the customer experience or to gain more experience during peak hours.
In short, the goal is to keep the cost per hour as low as possible, while maintaining a balance with the desired quality, customer experience, and business performance. A lower cost per hour can indicate improvements in productivity and efficiency, which in turn can increase your company’s profitability.
Productivity is a key KPI in human resources management because it is directly linked to the efficiency and performance of your employees. Productivity is defined as revenue per hour worked. Measuring productivity provides insight into your company’s overall performance. The goal is to maximize productivity. Therefore, it may be worthwhile to invest in processes, tools, or technologies to increase efficiency and productivity.
Employee availability poses a challenge for many companies. By this, we mean the extent to which your employees are available when they are needed. In a tight labor market where employees have increasing autonomy, the challenge lies not only in recruiting new staff but also in ensuring the availability of existing employees. It is therefore crucial to monitor availability at all times and to create work schedules in a timely manner. This is essential to avoid unnecessary overtime or—worse yet—not having enough staff to meet operational needs.
Effective workforce management and planning are critical to the success of any business. By focusing on the right KPIs—such as labor costs, cost per hour, productivity, and availability—you can continuously improve your company’s performance and make timely adjustments as needed. Good workforce management software plays an indispensable role in collecting and analyzing data to optimize these KPIs.
