Workforce metrics, specifically those you want to include in your organizational chart, are a lot like toolboxes.
They come in all shapes and sizes. Their contents also vary, depending on the type of work the owner performs. Most contain a handful of the same basic devices: screwdrivers, hammers, wrenches, pliers, duct tape, etc.
Different companies may need different sets of workforce metrics depending on their particular needs, but some metrics are essential to any business’s organizational chart.
Let’s take a look at the top five fundamentals.
1. Salary rollup
A business’s biggest expense is often its human capital, so keeping tabs on the tab is a must when monitoring workforce metrics. Salary rollup combines the pay of everyone in the company, providing a starting point for budgetary discussions surrounding your workforce.
The total cost of your staff may also include bonuses and other compensation, but budgeting for your people needs usually focuses on their salary. This metric can be further investigated at the departmental or individual level to give you a more thorough understanding of where most of the company’s cash is going.
By having an org chart equipped with the salary rollup metric, executives and HR professionals can visualize the total cost of their workforce and make more accurate projections for the coming months, quarters, years and so on.
Knowing how many bodies are in the building (or buildings) is crucial when calculating budgets and analyzing the effectiveness of your organization. The headcount metric is the basis for workforce analytics like turnover rate, total compensation per employee, and span of control.
Apart from simply displaying headcount, your org chart should help you identify employees by type (i.e., full-time, part-time, contractor) as well as physical location. This information is important when calculating external reporting needs like the number of full-time and full-time equivalent employees as they apply to health care reform.
Evaluating total headcount and its distribution – both geographically and departmentally – guides human capital strategy and helps ensure that the manpower needed to achieve organizational goals is where it should be.
3. Span of control
A subcategory of the headcount metric, span of control measures the proportion of employees to managers of employees. This part of your workforce metrics can be calculated for the whole organization or specific parts of the business and is useful when measuring and analyzing managerial efficiency. Just be sure not to include those who are managers by name only when doing the math.
The word “manager” is often attached to roles that don’t actually have direct reports. A project manager or program manager is a good example of this. It’s important to make that distinction when calculating span of control so your numbers are as accurate as possible.
When span of control is coupled with metrics like performance rating and budget, HR strategists can gauge the effectiveness of individual managers. For example, you might expect a manager with 10 direct reports to be stretched thinner than a manager with just four. If he is within budget and his group is performing at a high level, however, that manager is showing no sign of needing help.
4. Employee turnover
Every company loses staff members for one reason or another, making employee turnover a fact of business life. And it’s not always a bad thing. If an organization is going through drastic changes – restructuring, for instance – a higher-than-usual turnover rate might actually be good for business.
The problem arises when turnover rates soar during “peacetime” or when high performers decide to hit the road. When this happens, examining the turnover rates at different levels of your org chart can help identify the real problem.
High turnover rates specific to one branch of your org chart may denote an ineffective or overzealous manager. And increased turnover among your star players may point to a lack of upward mobility or a faulty compensation strategy.
5. Performance rating
To make this part of your workforce metrics work best for you, you must first have a solid performance management system designed to align your employees’ goals with the business’s overall objectives. Once you have that, the accompanying performance ratings can be plugged into your org chart and used for numerous organizational analytics.
For example, a company undergoing succession planning needs to rely on solid data like performance ratings when plotting its future. Personal opinions and biases should be avoided during this process, if possible.
Additional uses for the performance rating metric include:
- Identifying flight risks – Sometimes an individual’s salary doesn’t match their performance level. This may lead to them seeking employment elsewhere. In the same vein, star players who’ve been mired in the same job role for years may give up on a promotion and consider leaving.
- Identifying termination risks – Staffers at the bottom of the performance pool need to step it up if they want to remain with the company. This is especially true if they command a sizeable salary. And if training or education can’t keep them afloat, a well-recruited replacement may be best for the business.
In today’s business world, your org chart can no longer be just an empty toolbox. Adding and using these powerful workforce metrics can help you craft an organizational structure that can endure employee changes and thrive.
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