We often say that we live in a data-driven society. Yet, many organizations still fail to grasp the full business value of their metrics — and miss major growth opportunities as a result.
High-performing organizations are 3x more likely to attribute 20% or more of their earnings to their data analytics initiatives.
Tracking cost-saving data enables organizational leaders to understand exactly how money is being spent and make sound budget allocation decisions that save money and enhance profits. If you don’t have visibility into your workforce- and client-related metrics, you could be blind to operational shortcomings that are hemorrhaging your revenue goals.
89% of organizations blame a lack of investment in data analytics for missing their revenue goals.
In this article, we’ll cover five critical business metrics that can help your business reach its bottom line — as well as the cost of ignoring critical workforce data.
Why ignoring data is bad for business.
Ignoring data costs your business money. Organizations that don’t have access to business metrics — or fail to fully utilize analytics — miss out on new revenue opportunities, have increased employee performance-related expenses, and make poor investment decisions overall.
Human resources and people leaders are integral to keeping costs low for their organizations. A bad — or nonexistent — human capital management (HCM) software can cause expenses related to talent acquisition and employee retention, payroll, time and attendance, and compliance.
92% of HR leaders are playing a key role in budgeting and cost optimization initiatives.
By providing strategic workforce cost reduction data analytics, human resources and people leaders can make an important contribution to reducing business costs for their organization.
Five key business metrics you need to know.
A new employee doesn’t come cheap. The amount of time and money it takes to hire a new employee, complete onboarding, and get the employee fully integrated into their new position is taxing on organizations.
Replacing just one employee takes between 36 and 42 days and costs an average of $4,425. Once hired, it takes a new employee 12 weeks to become fully productive.
Having a clear picture of the financial cost of each hire is essential to optimize decision-making around recruitment practices, salary levels, and referral bonuses.
The next step in understanding how much your organization is spending on new hires is to total your turnover rate. Cost-per-hire shows you how much your organization needs to spend per new employee, but the turnover rate takes this a step further by showing how frequently your organization is having to cope with these expenses.
It takes up to six months for a company to recoup expenses incurred on a new hire.
Staying ahead of employee turnover means giving employees opportunities for growth, preventing burnout, and becoming more flexible in your recruitment strategy. But if you don’t know your turnover rate, you lack a holistic view of how much turnover is unnecessarily elevating payroll costs.
Knowing the total number of people employed at a specific point in time — and particularly granular information that separately analyzes people and positions — facilitates efficient workforce planning.
On-demand headcount budget reports and what-if scenarios help organizations make staffing plan adjustments based on open/filled job requisitions and historical labor cost trends to prevent budgetary waste.
Without this important cost-saving data metric, organizations lack a clear understanding of their hiring needs. This prevents them from accurately projecting their budgets and making strategic staffing plans — which loops back to cost-per-hire and unnecessary or out-of-budget hiring decisions.
Staying on top of your time-to-hire is a necessary component of building and maintaining a successful hiring strategy. A ballpark time-to-hire metric gives recruiters the opportunity to evaluate whether they’re spending too much or not enough time acquiring candidates, and adjust their behavior accordingly. A short time-to-hire not only affects employers’ ability to attract the best candidates, but also directly impacts hiring expenses.
42% of organizations say shortening time-to-hire also reduces cost-per-hire.
Once you have your time-to-hire metrics, you can dive deeper into determining what your biggest time-sinks are during the hiring process so you can optimize your hiring strategy.
Client Retention Rate
A company’s client retention rate indicates the proportion of the client base that has made repeated purchases from the company over time. A well-developed customer retention strategy can both cut costs and increase revenue.
The cost of acquiring a new customer is five to ten times higher than the cost of maintaining a current customer. Increasing customer retention by just 5% can boost revenue by up to 95%.
Company culture, leadership, and business practices all have an impact on retention rates along with customer service levels, product quality, and many other contributing factors.
Don’t let insufficient metrics tracking make you miss your bottom line.
Cost reduction data analytics are vital tools for proactive organizations to stay on top of their expenses so they can make better business decisions. A holistic view of your cost-saving data — particularly cost-per-hire, turnover rate, headcount, time-to-hire, and client retention rate — positions human resources professionals to help their organizations catalyze their growth.
PrimePay helps professionals drive business strategy with complete cost-saving data and analytics resources. Learn how you can turn your workforce metrics into actionable insights in our whitepaper.
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