5 Ways HCM Data Can Improve Your Business’s Operations
As a business leader, you understand that taking small steps to improve efficiencies and reduce risks can have a big impact on your bottom line over time. One such step is leveraging the power of human capital management (HCM) data. Doing so can result in major cost saving opportunities, increased efficiencies and fewer redundancies across your entire business.
Following are five key ways HCM data can be leveraged to improve your bottom line.
#1 – Reduce average cost per hire
cost/hire = (internal recruiting costs + external recruiting costs) / total number of employees hired over a specific time period
Using HCM data to calculate your cost per hire allows you to better understand the total cost associated with identifying job candidates, conducting interviews and hiring qualified employees. This metric plays a key role in helping you establish a recruiting budget to meet your company’s hiring needs. It also allows you to identify opportunities to improve efficiencies and lower costs across the recruiting and hiring process.
#2 – Identify and address retention risks
retention rate = (number of employees who remained with the company at the end of a designated time period / number of employees at the start of the time period) x 100
High employee turnover can wreak havoc on a company’s bottom line. In order to protect the investment you put into hiring, training, compensating and providing benefits to your employees, it’s essential that you take steps to improve employee retention. HCM data can help you identify and address retention risks before they begin to threaten your bottom line.
#3 – Improve training return on investment (ROI)
training ROI = net monetary benefits of training / (total cost of training) x 100
If you’re like many companies, you invest significant time and resources in helping to ensure your employees are well trained and up to date on new technologies, regulations, competitive data, etc. HCM metrics can help you evaluate whether that investment is delivering an appropriate return.
#4 – Increase productivity
employee productivity = total output / total input in labor hours
By understanding the ratio between the amount of employee output and the amount of time it takes to create that output, you can make more informed decisions to help improve employee productivity.
Assigning metrics to employee productivity can help you identify and reward high-producing employees, identify issues before they negatively impact your business and proactively implement training programs and new technology to enhance your employees’ success.
#5 – Improve revenue and profit per employee
revenue/employee = total revenue / total number of employees
profit/employee = 12-month net income / total number of employees
When it comes to both revenue and profits, it’s true that you can’t manage what you can’t measure. Understanding how employee outputs relate to revenue and profits is a key aspect of your company’s potential long-term success. HCM data allows you to better understand how employees’ performance directly impacts your bottom line, and it gives you an opportunity to both identify risks and take steps to improve outcomes.