Share

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Vivamus convallis sem tellus, vitae egestas felis vestibule ut.

Error message details.

Reuse Permissions

Request permission to republish or redistribute SHRM content and materials.

What Are The Right Metrics To Measure Organizational Health?




Historically, organizations relied on intuition or mental synthesis to get an indicative idea of the health of a company in the absence of awareness about the reliable parameters indicating the company's overall wellbeing and the ability to track it. With the advent of reliable data science and analytics, the scenario changed. Today, merely being productive is no longer an effective metric for accurately determining organizational health. Aseem Nath Tripathi, CHRO, Vestige, stated at the SHRM and FitterFly roundtable discussion, "Organizational health is the sum of its employees' physical, emotional, financial, mental, and social health. A holistic approach to organizational health focusing on the outcome results in high productivity." Let us explore the learnings from the SHRM and FitterFly partnered roundtable discussion focusing on the HR metrics to measure organizational health.

Engagement Tracks Employee Connectedness

Engaged employees provide the macro picture of how successful an enterprise is in making employees care about their work, feel connected, stay longer, and be more productive. Engagement measure is way above general job satisfaction, as engaged employees are less likely to be dissatisfied with their jobs. Per the general industry standards, a dip below eighty percent in employees' participation and engagement is an alarming sign, impelling HR to reflect on why the workers are not in sync with the leadership's vision or what changes they need in the current opportunities.

Chetna Munshi, Global Transformation Director and DE&I Lead in Ericsson, said, "Engagement efforts need to be an ongoing process rather than just once a month tick in the calendar. By linking individual wellness efforts of employees with the company's engagement activities, they feel enthusiastic about being a part of the grand drive." Soliciting employee feedback by engagement cum satisfaction surveys is one of the tools to measure their engagement. Not to forget that, at times, surveys fetch better results when submitted anonymously.

eNPS Measures Workforces' Loyalty

If a full-stack employee engagement survey seems complex, start at a micro level with the Employee Net Promoter Score (eNPS). It measures the average reported eNPS score over the total number of employees. The eNPS involves asking employees to answer/rate one simple but all-encompassing question on a scale of 1 to 10 - "Would you recommend your friend a job in your company?"

Employee Net Promoter Score helps organizations measure employee satisfaction and loyalty. The eNPS is based on the premise that if an employee is ready to refer a friend to their employer, then they are likely to be content and productive in general.

Measuring Rewards' ROI Helps Strategize Budget

Rewards involve making investments in employee appreciation programs, rewards and recognition (R&R) software, and other employee benefits. Measuring ROI (return on investment) on rewards is a substantial determiner in strategizing budgets for the next cycle. Moreover, companies can maximize their ROI by tracking reward expenses and their correlation with employee happiness indicators. Dayanand Tripathi, Group Head TA & TM in R J Corp, stated, "Determining ROI on various initiatives is a challenge. Most HR folks fail to conduct post-initiative follow-up to measure what is achieved and in what proportion." If executed well, investing in rewards can reduce employee turnover by a substantial margin.

Regrettable Turnover Signifies Level of Job Satisfaction

Deplorable turnover measures the number of high-performing talent who left because of discontentment with their current jobs or lack of growth prospects over the total number of exited employees. Low morale and discontentment are indicative of poorly designed work policies, ineffective communication, or bad job fit. High top talent churn can significantly hit overall productivity, along with a spike in employee replacement costs.

To get a bigger view, overall retention must also be tracked to gauge the number of workers who stay for a considerable duration versus the exited ones. According to Nath, "tracking retention rates over time can give alerts about potential employee relations problems and allows HR to take preventive action steps." Measuring retention rates against industry benchmarks also shows how a company compares to its competitors in terms of retaining talent.

New Hire Fail Rate Indicates Employee Onboarding Effectiveness Levels

The new hire fail rate (NHFR) tells how many new hires are able to successfully complete their first 90 days in a company. It is determined by calculating the total number of failed new hires over the total number of new hires in the past 90 days. Though companies have varied target ranges unique to their industry segment or scale of hiring, anything above 30 percent of the NHFR is a red flag. A high new hire fail rate means a low or no ROI on new hire costs. A high rate reflects a company's ineffective work engagement, poor onboarding, and managerial ineffectiveness.

Training ROI Highlights Value Derived  

A training ROI helps track the value adds that a company's training programs provide to its employees. When learning and development programs are not adding real business value, proven by increased performance levels, strategic reforms are required. Ruchi Mago, Global Head TA and Shared Service Center in Orange Business, suggests adopting changing needs and behavior of the workforce, "Gamification is effective to gain traction and increase adoption rates of L&D programs, especially by multigenerational employees." Today's workforce is technology savvy with less attention span for simple classroom or virtual training sessions. Flexible learning options using mobile devices can also spike the overall learning curve.

There is no specific formula to calculate training ROI. Targeted pulse surveys are an effective tool to establish benchmarks and measure employee-manager sentiments pre and post, professional development training.

Advertisement

Advertisement