When you look at your financial statements, you might wonder why you go to all the trouble of employing staff. The only two places you see mention of employees are as expenses (wages, salaries, training, canteen, uniforms, staff amenities etc) and as liabilities (wages owing, holiday pay owing, PAYE owing etc). They either cost you or you owe them!
However, there is more to your people than just costs and debts for, if there weren’t, you wouldn’t employ them! Without them, your business is never going to:
- Grow beyond a one-person enterprise,
- Allow you time off, or
- Grow large enough to be a substantial asset to sell, when you get too old and/or crotchety to enjoy it, to afford you a retirement in the luxury you deserve!
None of this would be possible without staff and yet their benefits to you and the business are not shown anywhere in the accounts.
A few multinational accounting firms realised, some twenty years ago, that staff were not just a cost and a debt, but, more than anything else, a huge asset. They have been trying, all these years, to perfect systems for valuing staff and showing them as an asset in their Balance Sheets – or Statements of Financial Position, for those of you who like big words! In these systems, employees are rated, based on things like their qualifications, experience, particular expertise(s), charge-out rate and other things, including their health which can affect an employee’s long-term benefit to the firm. These ratings are then converted to dollar values in the assets of their balance sheets.
Some people may find it insensitive – even obscene – to put dollar values on people. These employee valuation systems are not perfect but they are these particular accountants’ best attempts to put a value, in the accounts, on the biggest asset of any business enterprise – people.
No matter how clever these employee valuation systems are, they’re for accountants and, at the moment, very complicated and time-consuming to use. However, there are more simple and effective ways that you can see:
- Where things are going well with your staff,
- Where things are not going well, and
- Give you pointers on what you can do about them.
KPIs for Your Employees
These KPIs are simpler tools to use than the above employee valuation systems and they give you the information much sooner – in time to do something about it.
As with all other KPIs, these ones don’t only cover financial data – they also bring in ages, staff numbers, processes (e.g. interviews), meeting outcomes, resignation reasons and other non-financial data.
By narrowing down your most pressing employee concerns – is it their health, their qualifications/training, their dissatisfaction for work or whatever? – you can design KPI measures that give you management tools to help your employees help your business profit better. Below are some examples of employee KPIs.
- What are the ages of employees?
- What percentage of employees will retire over the next three years?
- Number of employee resignations?
- What were the reasons for staff resignations?
- Were any exit interviews carried out?
- How many employee sick days were taken?
- How many employee accidents occurred?
- Number of employee training hours achieved?
- Staff meetings held – outcomes of these meetings?
- Number and cost of potential accident claims?
- Sales achieved per employee?
- Gross profit earned per salesperson?
Remember, you can easily come up with KPIs that are specifically tailored to your business needs. If you need any help in doing that, don’t hesitate to call Kathi Fowler at The Bean Countess, who can steer you in the right direction.
