Human resource metrics in a nonprofit organization enable the collection of information from the past and present of the organization, in order to formulate future plans. These metrics also add strategic value to leadership decisions by measuring the cost and impact of programs related to employee experience, thereby helping the organization improve organizational development, employee effectiveness, and competitive ability.

When the organization identifies the quantitative impact of human resource-related actions, it can then present that data to board members, donors, funders, employees, and other key stakeholders to support changes that would enhance productivity and employee engagement, ensuring overall team satisfaction.

The suitable human resource metrics to be collected vary from one organization to another, and some organizations may face difficulties in gathering them. However, once the organization embarks on this process, these metrics will add tremendous value to its human resource-related practices.

What is the Importance of Human Resource Metrics?

Human resources are one of the most important assets a nonprofit organization has, as the success of the organization depends on the performance of these resources. Therefore, the organization must take necessary actions to enhance investment in its human resources.

Consequently, human resource metrics are more than just data collected by the organization; they contribute to better decision-making, increased investment in human resources, and highlight the strategic value of the human resource role in the organization. To build that strategic value, human resources must play a role in empowering individuals within the organization to fulfill the organization's mission to the communities they serve.

Identifying the Appropriate Human Resource Metrics for Your Organization:

There are two types of human resource metrics. The first includes human capital metrics that measure the optimal use of human capital and organizational outcomes. This also includes metrics related to recruitment, benefits and compensation, employee demographics, and their engagement metrics.

The second type consists of human resource productivity metrics that evaluate the ability, efficiency, and effectiveness of human resource management itself. These metrics include the ratio of human resources to full-time employees, the cost of human resources per employee, and human resources as a percentage of total operating expenses.

For a nonprofit organization to determine the appropriate human resource metrics it needs to collect, it should consider a series of questions related to the relationship between human capital and its objectives:

  1. What capabilities does the organization need to provide services or programs that donors and supporters will want to engage in?
  2. Do the skills and capabilities the organization possesses enable it to understand and respond to the needs of the communities it serves in the short and long term?
  3. Do the organization's investments in human resource practices lead to effective outcomes at the employee, leadership, and community levels?

Analyzing and Comparing Human Resource Metrics:

When analyzing human resource metrics, the organization should be careful to identify problems or opportunities, set workforce goals in alignment with its strategic plan, and find ways to achieve these goals. Additionally, it should determine how to evaluate and monitor performance in the future. The organization should then organize the data while considering what is important and valuable in the present, versus what will be important and must be taken into account for the organization's future.

Some of the main components of analyzing human resource metrics include comparing them to the organization's own historical figures, as well as to the figures of competing or similar organizations. However, in order to make an accurate comparison, definitions, calculations, time frames, and data collection methods for the compared metrics must align.

Beyond simply comparing the organization's human resource metrics with those of others, this comparison adds credibility to the organization's figures, helping it learn from other organizations and build momentum for making necessary changes to achieve its human resource goals.

Common Mistakes and Best Practices to Avoid:

Some newer nonprofit organizations may fall into the same pattern of mistakes, as they may seek to track numerous human resource metrics to the extent that they lose focus on human capital objectives, or they may keep their analysis too close to administrative tasks of human resources, failing to connect the metrics to their overarching goals and mission.

To avoid these common mistakes, the organization should follow these human resource-related practices:

  1. Follow the organizational strategy and goals related to programs and operations. When tracking and analyzing its human resource metrics, the organization must consider the most important information and how this data can inform its strategy.
  2. The organization can collaborate with the operations team and program leadership to understand their views on how human resources contribute to the organization's success. It can also communicate with the finance team regarding specific measures it will take and those it believes will be of greater value to the organization and them.
  3. The organization can identify two or three metrics that would clarify the impact of human resources within the organization. If the organization cannot access the resources to gather data, it can initially focus on a department, program, or small grant initiative and work on expanding its efforts in the future.
  4. The organization can organize metrics that include job performance and integrate them into team member performance evaluations, rewarding achievement of important goals and recognizing good job performance when appropriate.
  5. Careful monitoring of human resource metrics requires ongoing attention and a commitment of the right amount of time. Therefore, the organization should establish continuous systems and make data collection and analysis routine.

With the appropriate procedures in place, the organization can improve its human resource practices and increase its impact.

Location: Nonprofit HR