What are the right things to measure when it comes to people in my business?
When there is a tight labour market and your investment in your people is under the microscope we’re fielding a lot of questions from our clients around how do they measure their performance when it comes to people, and how do they measure the value we’re getting out of our people. Here’s a few key measures that every business should calculate around their people…because knowing your numbers means you:
- Can see how well your performance with leading your people is going
- Can assess where there may be areas for you to pay attention to
- Understand how your investment in your people is converting into productive performance for your business
Our view is that the top 4 ‘people stats’ small to medium sized businesses need to measure and track over time are:
- Voluntary team member turnover - as distinct from total turnover, this measures those who voluntarily leave a business. It is calculated by dividing the number of voluntary leavers over a given period with the average number of team members employed during that period.
- Team productivity - normally this is calculated based on worked time compared to an appropriate productivity indicator in the business. For our dairy farming clients we recommend milksolids produced per worked hour as a good metric to use. For other businesses you’ll need to ascertain what a key productivity measure is (e.g. production, service timeframes) and then compare it to something like worked hours / time spent on a job. The secret is to agree with your team what a good indicator would be, measure it and discuss progress with your team regularly.
- Team stability – measures how stable your and is measured by calculating the number of people with (say) 1 year’s service and dividing this by the average number of people employed over that same period. The cost of turnover, and particularly hiring team members who don’t stay is significant and tracking team stability can help ensure this key measure is moving in the right direction.
- Attendance – measuring attendance is based on the premise that more involved and engaged team members have less time off. This measure is helpful for business owners to understand as a potential lead indicator on team turnover.
Knowing your numbers in these key areas will help you spot risks and opportunities and help you lead your people and your business well. As will all statistics, if there is something in the numbers causing you concern, take a closer look at the reasons why…the solutions lie in the root cause of the issue, not the number itself.