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Your human resource department can be one of the most crucial departments in your organization.
But there’s a lot to manage at the same time. So how do you make sure your organization uses its data and resources with maximum efficiency?
Human resource reporting is one of the best tools to help organizations make the most of their human capital.
Let’s define human resource reporting, its characteristics, and break down the key metrics you should track with this process.
What is human resource reporting?
Let’s start with the human resource reporting meaning:
Human resource reporting is a process in which companies track key metrics about their employees and workforce.
With these reports, HR managers can analyze their data and uncover crucial information about their organization. This process is often done through human resources information systems (HRIS) and HR software.
The HR department of a company will work to track and analyze these key metrics to make sure the organization works smoothly and efficiently. They’ll also use this information to keep a tab on what’s happening in the workforce.
For example, HR professionals can use HR reports to track the hiring costs when hiring for a new position. By tracking the hiring costs, they’ll be able to better estimate the cost of hiring for this position in the future.
Why are HR reports important for all companies?
Any organization with more than a handful of employees should use HR analytics and reporting. Here are five reasons why it’s important:
1. Identify the root of problem areas
The larger an organization, the more difficult it can be to pinpoint the root of a problem. This gets even more difficult when you’re not tracking the right metrics.
By creating and managing human resource reports, HR professionals can better analyze data and find the root cause of issues that appear.
For example, if there’s a performance issue, HR reports can help look at the data and notice this issue early on. Leaders can then do performance reviews and start coaching their employees to help them achieve their potential.
2. Manage information
The more an organization grows, the more information it needs to manage.
For example, there’s a higher headcount. Not only is there the headcount to manage, but there’s also more performance reports, more leave requests, and more departments.
HR reports provide a streamlined way to organize and manage this information. When your organization needs access to info, it’s much easier to pull up if it’s organized logically.
3. Perform effective planning
According to Gartner’s HR Trends and Priorities for 2021 report, 37% of HR leaders aren’t equipped to lead change.
But organizational design and change management is a top HR priority for HR teams, at 46%. And 36% don’t know what skills gaps their current employees have.
Having access to the right HR data can help organizations figure out these needs and plan effectively.
4. Make better hiring decisions
It can be difficult to hire the right people.
With human resource reporting, you can analyze data about current and past employees. This can help you improve your decision-making processes. It can also simplify talent management.
5. Identify and predict patterns of employee turnover
According to the US Bureau of Labor Statistics, the employee turnover rate for 2020 was 57.3%.
And according to Work Institute, employee turnover costs approximately 30% of an employee’s annual salary.
So, for an employee who makes the median annual wage of $48,672, the cost is about $15,000.
Plus, Work Institute states that 37.9% of employees leave their job after one year or less. But ¾ of employee turnovers are preventable.
To improve employee retention, organizations need to know the reasons why employees leave. The data obtained from HR reports can help identify patterns of employee turnover.
As a result, your organization can take the necessary steps to lessen its turnover rate and improve employee engagement.
What HR metrics should companies track?
So, which HR metrics matter for an organization?
Here are eight crucial data points to keep in mind when choosing what to track in your HR reports:
1. Active employees
Active employees are all employees currently on your payroll. This metric doesn’t include employees who have recently left, were laid off, or terminated.
2. Turnover rate
What percentage of employees leave over any given period of time? It’s important to track your turnover rate to pinpoint any arising issues. As well as, what you can do to supercharge your employee experience.
If an HR professional notices that turnover rate has increased over the past year, the organization can take action to increase employee retention rate.
3. Education level
Education level represents what education path your employees have taken. This can include high school, certifications, graduate degrees, or post-graduate degrees.
It’s important to keep track of the demographics of your employees so that you can assess the diversity and equality in your organization.
5. Cost of labor
6. Absenteeism (and its cost)
What percentage of the time are your employees absent?
In addition to the rate of absenteeism, your organization should also track the cost of absenteeism. Tracking these metrics can help you assess the well-being of your workforce.
It can also help you find any workplace issues and eradicate them.
7. Training and recruitment costs
Recruiting and training new hires has a cost. This cost varies per organization.
Knowing this cost can help you establish the cost of turnover.
Training and recruitment costs can also vary per role. Tracking this metric helps you figure out which roles are more difficult to hire for so that you can maximize your efforts to increase retention for these people.
For example, you may discover that hiring software engineers costs your organization more than to hire marketing managers. Every time you need to hire a new software engineer, you’ll know what to expect in terms of cost. You’ll also know that it’s important to find someone who sees themselves working at your organization long-term.
8. Function type
You can track what roles exist in your organization and how many people occupy each role. This metric can be broken down by department or location.
For example, you can have manufacturing, purchasing, engineering, and accounting functions (and many more).
What are the different types of HR reports?
To track these metrics, organizations need various HR report types. Here are eight types of HR reports you can use:
Headcount reports, or the number of employees, showcase how your employees move over time. This includes moving between departments or leaving the company entirely.
Headcount reports also help you track attendance, training costs, and an employee census. This type of report can also help organizations keep track of turnover rates.
Diversity reports help organizations keep track of employee age, gender, and ethnicity.
One such type of report is the Equal Employment Opportunity report from the US Equal Employment Opportunity Commission.
All private sector companies with 100 or more employees, or federal contractors with more than 50 employees, need to submit this report annually.
But, even if your organization doesn’t meet these criteria, you can still benefit from creating these types of reports.
It can help you analyze the diversity within your organization and come up with a plan of action if there’s a lack of it.
Recruiting reports are crucial for managing employee recruitment and new employees. These HR reports tell you:
- Current open positions and filled positions
- The average cost of recruiting for each position
- The number of candidates in the running for each position
- Which recruiting step each candidate is currently in
Recruiting reports ensure all candidates are accounted for so that none fall through the cracks. They also help manage recruitment costs and manage employee onboarding.
For example, for a single open position in your sales department, you could have:
- 10 candidates in the running
- Two candidates who are at their first interview stage
- Three candidates who need to be contacted for a second interview
- Three candidates who need to be dismissed
- Two candidates who have to do a test
To build high-performance teams, you need to track employee performance. Performance reports help you:
- Pinpoint your top performers
- Find potential leaders to develop
- Discover which employees need mentoring or coaching
Performance reports can also help managers provide more relevant feedback to employees.
Here’s an example. Let’s say an employee in your research and development department is having performance issues. HR reports show that performance issues only arise during teamwork. This employee’s manager can coach them on improving their teamwork (or find external coaching support to help this employee).
Compensation reports are crucial to figuring out the cost of labor. But they can also help HR departments understand how employee earnings grow over time.
This can help companies forecast overhead costs. For instance, let’s say the cost of the software engineering department has significantly grown over time. You can use this report to make a more realistic forecast for what the department will cost in the next five years.
Compensation reports usually include:
- All employees’ base wages
- Paid time off
- Payroll deductions
- Overtime pay
Organizations can keep track of these key performance indicators (KPIs) for various periods of time.
Annual reports can show long-term trends. They also aid in long-term planning for organizations.
Employee turnover is an example of an important metric to track over a longer period of time. This is because employees rarely leave after one week or one month.
Generating human resource reports monthly can help organizations spot trends and fix problems faster than annual reports.
While they don’t show long-term trends, they can still pinpoint arising trends that should be fixed before they get worse.
These types of reports can also help with recurring trends. For example, let’s say many employees ask for vacation leave during the month of July. In the past, this caused workload issues. But with a monthly leave report, leaders can better plan for July in the years to come.
Weekly reports can help spot short-term changes. For example, let’s say performance tanks during a specific week. HR departments can quickly take action to prevent the problem from getting worse.
5 characteristics of human resource reporting
Keeping track of HR reports isn’t always easy. Here are five characteristics of effective human resource reporting:
1. The process is continuous
Human resource reporting should be a continuous process.
Creating one report can be helpful. But continuous reports are what help you establish trends and really get to know your workforce.
2. It’s pervasive
Effective HR reporting should be pervasive. This means that it shouldn’t discriminate between levels of management or employees in different departments.
All departments of an organization should perform HR reporting.
3. It serves other departments
HR reporting itself doesn’t generate revenue or create profits. It’s designed to serve other revenue-generating departments.
The invaluable data generated by HR reports can help other departments increase their profitability.
4. It’s result-oriented
It’s easy to get bogged down by the processes of human resources reporting. But your organization should be focused on results rather than processes for the sake of processes.
Your HR reports should help improve your organization. If it doesn’t serve that purpose, something needs to change.
5. It’s focused on people
Effective human resource reporting is people-focused.
Its purpose should be to help your organization build human capital by helping your people develop to their full potential.
How to write an HR report
Now you know why you need HR reporting and what types exist. Here’s how you can write an HR report in five steps:
1. Select data carefully
Your first step should be to pick what data goes into your report. But not all data is created equal.
Inaccurate data can be unfair to your employees. It can also misrepresent your workforce and give you an inaccurate picture of your human capital. For example, if you’re tracking diversity, only tracking for gender may give you the impression that you’ve hired a diverse workforce, even if the reality is far from that.
2. Choose your report frequency
Once you have the right data, choose your report frequency.
Your report will look very different if it’s a weekly report compared to a monthly or even annual report. It’ll also determine how often the report needs to be updated.
3. Describe the information briefly and clearly
Provide context for the data in your report. Do so clearly, but remain brief and on topic.
Any unnecessary information will be a waste of time when other people want to analyze the report.
4. Double-check the report
Mistakes can happen to anyone.
Always double-check the report to avoid data discrepancies. A small mistake can snowball into bigger discrepancies down the line.
5. Communicate quickly
For your HR report to be effective, it’s important to show it to decision-makers quickly. As a result, they can adjust their strategies to fix any arising problems before they get worse.
How HR departments are automating the human resource reporting process
Because there’s a lot of data to manage, HR departments use software to automate the process of human resources reporting. Automation is one of the top three technologies companies are planning to invest in for the next 12 months, at 25%.
HR automation frees employees from performing repetitive tasks so that they can focus on strategy and decision-making.
Some processes that HR departments automate include:
- Employee timesheets: automated timesheet apps can help track absenteeism and leave much more efficiently than managing timesheets by hand.
- Employee onboarding: with all the paperwork involved in onboarding a new employee, automation can streamline this in a single app so that nothing falls through the cracks.
- Performance management: By automating performance management, you can minimize the bias involved.
Use human resource reporting to improve your organization’s human capital
Human resource reports, when done right, can help you analyze your workforce and quantify your human capital.
If you uncover skills gaps in your workforce, you can remediate the situation with BetterUp’s personalized and comprehensive coaching.
Try a custom demo to see what BetterUp can do for your organization.
Sr. Insights Manager