Human resources are an integral part of today’s workplace. Many HR professionals work tirelessly across multiple organizations. They help with defining job duties and provide equal employment opportunities. Notably, a lot of HR terminology is used in work environments. Knowing these terms is essential, especially if you work in human resources.
Seeking to learn the definitions of essential HR terms? This guide will help you stay ahead and deepen your knowledge about key HR terms and definitions.
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35 Essential HR definitions (human resource glossary)
The HR department has experts with bona fide occupational qualifications. They’re the backbone of every organization. These experts handle the hiring process, job title definition, and employee engagement. In executing business objectives, here are some standard terms that HR professionals use:
1. Absenteeism
This term refers to an employee failing to show up at work, as scheduled. People recorded for frequent absenteeism can end up dismissed. However, things may be different in some situations. For example, workers who are absent due to health concerns may not face termination. In this case, termination may be regarded as a violation of the Family and Medical Leave Act (FMLA). It may also go against the disability act.
2. Applicant tracking system (ATS)
The ATS is a software that supports the effective management of employee data. This system also manages organizational recruitment requirements. It aids in hiring and onboarding candidates and managing training opportunities. This software application also supports succession planning management across small and large enterprises. With this tool, businesses can reduce the time spent on hiring new employees.
3. Attrition rate
This HR metric indicates the number of employees who leave without instant replacement. The attrition rate of a company is dependent on both voluntary and involuntary exits. It is critical in measuring the retention efforts of an organization.
4. Background checks
Before hiring someone for a particular position, companies run background checks. This screening involves the validation of applicants’ qualifications. It also measures their knowledge in specific fields. Other critical checks that hiring managers may approve include particular skill tests. There are also substance abuse or drug screenings. It goes further to analyze criminal records in line with federal agency regulations.
5. Behavioral interview
A behavioral interview is aimed at picking qualified candidates. But the assessment focuses on the candidate’s past experiences. It evaluates how they’ve handled real-life situations and their fit for the open role. When interviewers adopt this approach, they ask open-ended questions. Then, applicants will need to describe specific experiences in handling certain scenarios. Behavioral interviews improve hiring consistency. Aldo, it aid the selection of people who are fit for key positions.
6. Benefits
Benefits are a kind of compensation that employees receive from their employers. This perk is in addition to their salary for a particular job. In fact, employee benefits are required by law for specific (mostly high-risk) roles. And for roles where they’re not mandatory, employers may offer them voluntarily. The exact form of such benefits varies from workplace to workplace. Noteworthy mentions include healthy canteen foods and gym membership offers,. There are also wellness programs and retirement plans.
7. Blind screening
Another popular HR term is blind screening, a term employed in candidate screening. During this process, the firm obscures or omits a person’s personal information. It prevent bias, ensuring that hiring depend on the applicant’s experiences/skills/qualifications. Many organizations use tools to blur out a candidate’s name, date of birth, address, etc., on their resume.
8. Career pathing
Career pathing is a term commonly used in HR. It outlines career goals and trajectories that employees may achieve. So, across different organizations, plotting career development pathways is quite common. These issues are often handled by HR professionals, employers, and employees together. This way, employees assess and recognize perceivable skills that will advance their career.
9. Compensatory time off
Also known as comp time, this term refers to a payment employees receive for working overtime. How does it work? Let’s say you work 45 hours per week when you’re supposed to do 40 hours. Instead of an overtime pay, you’ll get a 5-hour paid time off. The sole aim of this offer is to provide employees with some level of flexibility. And, it supports employers in the effective management of payroll costs. However, this may not be widely adopted across all organizations; it is popular in the public sector.
10. Confidentiality agreement
A confidential agreement is a business necessity for organizations. It prevents employees from sharing organizational information with outsiders. In some cases, this agreement still binds even after an employment contract ends. Such agreement mainly applies to include mergers and acquisitions or contractor contracts. This agreement protects the employer, keeping the organization’s information away from competitors.
11. Constructive dismissal
This HR terminology describes employee resignation resulting from poor or toxic working conditions. Such a decision stems from severe incidents instigation by the current employer. These incidents breaches the contract between the employer and the employee. Employees may file a case in court and even receive compensation for this occurrence.
12. Cost per hire
The cost per hire is a calculation for measuring all the expenses resulting from recruiting candidates. It is derived by dividing the total recruitment cost by the number of hires made. Now, the cost of recruitment covers all expenses from adverts for the role to hiring. It also considers costs from bonuses awarded during the employee referral program. Other costs include those relating to admin, equipment, and travel.
13. Cultural alignment
This concept refers to workers holding values that align with the company culture. It contributes to the overall satisfaction that members working in an organization. Thus, cultural alignment can help with promoting employee retention.
14. Discrimination
Discrimination refers to all unfavorable treatment that workers may experience. Such poor treatment includes that resulting from prejudice or unconscious biases. Notable examples are abuses against people’s race/ethnicity, age, and gender. It also extends to disability, religion, mental health, and sexual orientation. Across many countries, the Employment Act frowns prohibits discrimination. Thus, there are legal standards that ensure fairness with anti-discrimination clauses.
15. Diversity training
Diversity training increases a company’s awareness on cultural, cognitive, and skills differences. It helps boost workplace inclusivity and cohesiveness within a team, encouraging positive interactions. Also, this concept eliminates unconscious discrimination, bias, and prejudice, highlighting team members’ uniqueness.
16. Employee lifetime value (ELV)
The ELV is a metric that pops up frequently in HR-related matters. It relays the measured future worth or value that an employee brings during the time spent there. The knowledge, skills, and abilities of employees are an integral part of this calculation. The ELV always has a way of influencing employees’ contributions in the long term to a company.
17. Employer branding
HR professionals often use the term “employer branding.” It describes efforts in maintaining a good organizational reputation and brand. It involves all strategies that help attract top talent, engage them, and retain them. Such efforts embedded in this approach include developing a company blog or career page. The aim is to enhance how applicants and employees view a particular firm.
18. Employment contract
An employment contract is a legally binding document. It highlights job acceptance, indicating agreement to the company’s terms. Key details like pay range, payment frequency, structure, and likely bonuses are documented. The focus is not on one party alone, as the contract also relays the duties of workers and employers alike.
19. Employment status
This term groups employees as either freelance, full-time, or part-time. Such classification is necessary to determine rights/benefits in the work environment. It also helps define workers’ tax responsibilities. Furthermore, employment status reveals how labor laws protect workers.
20. Exit interview
An exit interview is a voluntary meeting. It involves employers obtaining honest feedback from an employee who’s exiting an organization. The employer reviews the experience and salary range of the employee’s position. All these are necessary for developing enhanced retention strategies. This interview also works well for employees retiring. They can clarify issues relating to retirement benefits and pension plans.
21. Health savings account
This account holds the regular contributions that employees, employers, or both parties make. The aim is to build savings that cover health care. Such medical costs covered include doctor visits, alongside eye and dental care. A health savings account is often paired with a high deductible health plan (HDHP). Furthermore, these savings can earn tax-free interest over time.
22. Human resource information system (HRIS)
This system is handy within the HR department, suitable for handling varying activities. It streamlines work processes, supporting efficiency. The HRIS system can simplify payroll and employee management. This system handles applicant/candidate tracking, employee onboarding, and benefits. With HRIS, organizations can track or monitor various work activities and leave/vacation.
23. Human capital management (HCM)
As a strategic approach, HCM involves the treatment of employees as valuable assets. It centers on the attraction and nurture of talents, and then management and retention. Such action takes place through recruitment and onboarding. Then it continues with performance management and skills training for achieving business goals. The procedure can also be automated using special software or tools.
24. Job profile
This term refers to a part of a job description. It outlines the skills and duties of a reasonable person for a specific position. Notable details that go into a job profile include the department and colleagues that the prospective employee will report to. It may also highlight performance standards for job evaluation that the management will use on successful candidates’ projects. Furthermore, an applicant can align their skillset with a role using a job profile.
25. Job description
This document is often developed by HR professionals and posted on job boards or listing sites. It holds a summary of a job role, featuring the responsibilities/duties, qualifications, and skills for the advertised role. The typical structure of a job description holds a section that describes the company culture, mission statements, and values. Then, the benefits and perks offered by the organization are listed, alongside the wages for the vacant position. Often, it is through this job description that applicants find out about a company and apply for their open roles.
26. Learning management system (LMS)
In HR or the general work environment, the LMS is a software used for developing, delivering, and tracking technical skills training. This digital tool helps employers select a training pathway or job-related skills that employees will acquire. With this software, monitoring employees’ progress becomes easier. And organizations can easily tell what other programs are necessary by gauging workers’ reports. The goal is to help employees advance in their careers.
27. New hire turnover
This recruitment metric is used for measuring the number of employees that exist in a firm within the first year. Depending on the industry of the firm, the set period may be shorter. The new hire turnover is essential in indicating the organization’s effectiveness in recruiting and onboarding.
28. Non-compete agreement
This legal contract restricts ex-employees from working for a competitor’s business or operating a similar company. It remains binding for a specific time and across a set geographic location. The document is designed to protect an organization’s proprietary information, trade secrets, and customer list. As a downside, this document may be a form of hindrance to former employees. Seeking a new job or setting up a business within their industry becomes challenging.
29. Onboarding
The onboarding process involves bringing new hires up to speed regarding the job. It takes place after a successful recruitment process. Onboarding is necessary for familiarizing new employees with the company’s culture and other employees. No doubt, it is essential for creating a strong employer-employee relationship.
30. Performance evaluation
This term describes a formal process for assessing the work inputs of employees within a given time. It analyzes the value that workers add to a company’s revenue, offering frequent feedback to inform employees of areas for improvement. During this process, employees are allowed to share their thoughts on the progress so far. They can highlight things they consider appropriate for improvement or what they’re comfortable doing.
31. Promotion rate
This HR metric highlights the frequency of employee promotion within an organization. Kindly note that this evaluation is for a specific time. With a healthy promotion rate, new employees can assess a firm. They can observe how the company supports professional growth and motivates existing employees. This metric reveals the efficiency of a firm’s talent management and succession planning, and how it recognizes talent and performance from within.
32. Revenue per full-time equivalent (FTE)
Revenue per FTE evaluates how much an organization generates per employee. It is measured in full-time units. It is aimed at revealing work efficiency and productivity. This way, employees’ influence on the overall business health becomes visible. It is calculated as the total revenue divided by total FTEs within a period.
33. Source of hire (SoH)
The SoH is a metric used during recruitments. It tracks the sourcing channel that applicants learned about a job vacancy. With this information, companies can learn about which channels (job boards, social media, the firm’s career page, etc.) work best for attracting and hiring talent. Thus, they can optimize budgets for future openings and improve their recruitment strategies.
34. Workforce analysis
This strategic process helps with the collation and analysis of data concerning a company’s current employees. It identifies their skills, performance, demographics, etc., and uses them for decision-making. This data influences an organization’s future decisions in recruitment, people management, retention, and future staffing needs.
35. Yield ratio
This metric measures efficiency and helps HR track successful recruitment processes. It unveils the percentage of individuals who proceed from one stage to another. For example, it shows the number of people moving from the application to interview stage, and then the percentage of those who eventually get hired.
Conclusion
The roles of HR not only hover around an organization’s hiring and firing. They engage in varying activities that foster growth across different levels. In executing their duties, these professionals use a lot of terminology.
These terms define words that control talent recruitment in compliance with laws from state and local governments. Also, HR professionals use them in performance management and even career development. Thus, understanding and mastering essential HR terms is necessary for operational efficiency.