Essential HR Metrics You Need to Know

HR metrics are fundamental figures that allow organizations to monitor their human capital. They help HR professionals evaluate performance and predict future events. These metrics are an essential part of HR analytics as they offer a brief survey of workplace effectiveness. Besides, they help businesses measure how efficient the HR activities are.

The primary purpose of HR techniques and metrics is to ensure business success. There’s so much more to them than helping solve employees’ problems and checking whether they are content. If your company strives to make strategic and well-informed choices in the future, it’s time to implement these metrics.

Principal Human Resources Metrics

Metrics and analytics that HR professionals use aren’t linked only with people. They also involve other vital processes such as employee recruitment and retention, salary and compensation, bonuses and benefits, etc.

HR professionals are well-aware of the significance of implementing HR measures. That’s why they measure basically everything, ranging from headcount to benefits of active participation. However, the most important data obtained from HR metrics and analytics is the one that will ensure the growth and success of your company, as it shows what has to be done to improve the company’s status.

Generally, these metrics may be classified into six categories:

  • Recruitment
  • Engagement and retention
  • Time tracking
  • Employee value and performance
  • Training and development
  • HR service and software

All of these groups further include measures that HRs implement in their research. The types of HR metrics most substantial for the proper development include:

  • Cost per hire
  • Employee turnover
  • Absence rate
  • Training efficiency
  • Employee satisfaction
  • Revenue per employee
  • Engagement rate
  • Retention rate per manager

Besides these measures, HRs may implement various tools and methods such as worker satisfaction analysis, team evaluation, and exit and stay interviews to determine and improve the company’s status.

Examples of HR Metrics in Recruitment

Metrics and analytics allow HR managers to ensure that the company is lucrative and its employees are content. HR analytic processes consist of five stages. Stage one involves the rationalization of essential human capital investments. Stage two measures the leadership’s responsibility. Stage three refers to the efficiency of KPIs. The fourth stage includes value creation and authentic insights. Finally, the last stage represents the analytics’ effect and constructive changes.

HR analytics and measures are essential since they help the company to prosper. Without them, businesses would have a hard time reaching success and profit.

  1. Time to hire

(AIHR Analytics)

These HR recruitment metrics refer to the number of days that have passed since the position was open to the date when a candidate signed a contract. It is a great way to measure the efficacy of a recruitment process that helps understand how difficult it is to fill a particular job position.

The time to fill metric, on the other hand, measures the number of days from the date of position opening to the day when a candidate accepts to work for the company.

  1. Cost per hire

(AIHR Analytics, Workable)

Cost per hire human resource metrics refer to the average costs of hiring new employees. Besides, they show how efficient the recruitment process is. These figures are generated by summing internal and external hiring expenses, then dividing the sum by the number of workers hired in a specific period.

  1. Early turnover

(AIHR Analytics, TalentLyft)

This is possibly the most critical HR metric. It indicates the number of workers who left the company in a particular year. If combined with HR performance metrics, it can monitor the distinction in attrition of great and poor performers.

All managers would like the latter to leave and the former to stay. The turnover metric offers human resources’ business partners a great deal of data about departments and roles in which workers thrive, as well as the positions they don’t want to take. Attrition might just as well be among the key HR metrics for assessing managers’ success.

  1. Time since the last promotion

(AIHR Analytics, HRANALYTICS101.COM)

This simple metric refers to the average time passed since the last promotion. It’s useful for obtaining an insight into the reasons why great employees leave the company. Namely, if you tend to prolong promotion in your company, you may eventually lose exquisite and talented employees who might feel ignored or overlooked. Being conscious of the right time to promote could positively influence development conversations and assist in defining adequate expectations for rising talents.

  1. Headcount

(Bamboo HR, Insperity)

Headcount HR metrics refer to the overall number of workers in one company or in a particular department that is monitored. Knowing how many people there are in the company is essential for calculating and evaluating the business’s efficiency. In addition, the headcount measure is fundamental for labor force analytics, such as total compensation per employee, control span, and turnover rate.

  1. Demographics

(Bamboo HR, Child Care Human Resources Sector Council) 

Demographics is among human resource measures that show the essential characteristics of employees within a company. These include age, gender, education degree, length of service, etc. Demographic data is crucial for HR and succession planning. As an illustration, if the mean age of the supervisory personnel is 60, such employees are likely to start retiring. Therefore, the HR department should create learning and advancement opportunities to allow younger workers to compete for these positions.

  1. Acceptance rate

(Bamboo HR, Employee Cycle)

The acceptance rate belongs to common HR metrics and presents the number of offer letters the company extends divided by the number of applicants who accept the offer. To get the percentage, you should multiply the given figure by 100.

This metric enables HRs to see whether candidates are refusing or accepting their offers. The acceptance rate should generally exceed 90%. If the acceptance rate falls below that percentage, it signals that there might be a problem in the final phases of the recruitment process.

  1. Time to productivity

(Bamboo HR, EmployeeCycle)

Yet another recruiting measure included in HR reporting metrics is time to productivity. It refers to the time that new employees need to acclimatize to the new working environment in order to start showing their full productivity.

Typically, this measure is impacted by the efficiency of the onboarding program, quality training, and effective hiring practices. All three factors are necessary to help a new employee adapt as soon as possible and thus optimize the time needed to reach optimal productivity.

Engagement and Retention as Human Resources Metrics 

Employee engagement refers to the degree of a worker’s commitment and devotion to a company. It has appeared as a vital driver of a company’s prosperity in a highly competitive market. High engagement levels further promote talent retention and client loyalty and enhance business performance and stockholder value.

  1. Billable hours per employee

(AIHR Analytics)

These HR performance metrics are essential to professional service companies such as law or consultancy firms. Linking such performance with employee engagement or any other input metric generates an engaging analysis. Also, gauging this measure between divergent departments and leaders can produce precious insights and vital information.

  1.  Engagement rate

(AIHR Analytics)

It’s no secret that an engaged employee is a productive employee. Team engagement rating is among the most important HR metrics for indicating a team leader’s success. Employees who are satisfied with their job and proud of their company are more committed, despite a stressful environment or high pressure. On top of that, committed workers have better performance and are more likely to perceive challenges as positive experiences.

  1. Employee satisfaction

(Bamboo HR, Data Pine)

An employee who is content with their company would recommend it as an excellent place to work. Employee satisfaction human resource metric measures the number of workers who would recommend their organization as opposed to those who wouldn’t. This way, the metric shows the total employee satisfaction.

Employee fulfillment is essential for the company’s success. A satisfied worker is more productive and less likely to seek other opportunities. Thus, businesses with content workers have significant advantages over those whose employees aren’t satisfied.

  1. Total turnover rate

(Bamboo HR)

This measure belongs to human resource calculations that show the number of workers who have left the company during a particular period. To calculate it, you should divide the number of employees leaving by the average number of all workers. Then, to come up with a percentage, multiply this figure by 100.

The voluntary turnover rate metric calculates the number of workers who leave the company voluntarily. Likewise, the talent turnover rate belongs to HR analytics metrics that calculate the turnover rate among the company’s high performers and high-potential workers.

  1. Retention rate

(Bamboo HR, SHRM)

Many business owners tend to use “retention rate” and “turnover rate” interchangeably. However, the former, also called the “stability index,” signifies the retention of employees over a specific period of time. Furthermore, it accompanies the turnover rate, offering a clearer insight into worker movement.

To measure the number of employees who are still in the company, HR professionals divide the number of workers who remained during a specific period by the total number of employees.

Time Tracking HR Metrics Examples

  1. Absence rate

  (AIHR Analytics, Patriot)

Employee productivity is closely connected to their presence at work. In other words, the more absent they are from work, the less productive they are. Reasonably, none of the businesses want such workers.

The absence rate is a key measure that calculates absenteeism, i.e., the percentage of absent employees over a particular period. It also belongs to HR benchmarking metrics as it offers a benchmark over time.

Namely, absence rates may differ from month to month; however, all companies want to keep absence rates low over a more extended period of time. An increasing absence rate may show an unfavorable working environment, growing stress, or an epidemic of a contagious disease. A regular absence rate should amount to 1% to 2%.

  1. Absence rate per manager

  (AIHR Analytics, Patriot)

Human resources reports and metrics can help discover whether something is going on with a particular team or department. Namely, if some leaders or managers grapple with continuously increased absence levels, they might not be doing their job properly. As a result, their performance and productivity suffer.

The HR team can intervene and resolve the issue before it’s too late by dividing the number of absence days within a team or department by their total full-time equivalent. Discovering problem fields in a company can serve as a timely diagnosis and thus prevent further issues.

  1. Overtime expense

 (AIHR Analytics, Employee Cycle)

Assessing overtime costs is an effective human resource metric for coming up with a labor force strategy. If exploited strategically, overtime may be an efficient method for company management.

To calculate the overtime expenses, set the time frame you want to analyze. Afterward, take the overall amount of salaries and divide it by the total number of employees who worked overtime. The result stands for the mean overtime expense per worker.

Employees are generally okay with working overtime sporadically. But, where there’s too much overtime work, absence rates tend to rise. Prolonged excessive overtime also generates turnover. The HR team can efficiently resolve continually increased overtime levels by hiring extra workers.

  Employee Value and Performance Metrics in HR

  1. Revenue per employee

(AIHR Analytics, Better Team)

This HR metric indicates the efficacy of the company as a whole. It shows the quality and performance of hired employees. Revenue per employee is calculated by dividing the business’s overall revenue per year by the number of workers. This metric can be used for individual departments as well.

  1. Goal tracking

(Bamboo HR)

Other common HR metrics include goal tracking to enable the HR teams and companies to see their workers’ objectives. Also, this metric can show how their objectives relate to the company’s and what progress workers have made.

  1.  Performance and potential

(AIHR Analytics)

Alternatively called the 9-box grid, this HR performance metric includes nine different employee categories based on the level of their performance and capacities. The categories range from underperformers, emerging performers, and valued specialists to top talents. It’s excellent for discriminating between wanted and unwanted turnover.

  1. Company performance

(Bamboo HR)

HR measures don’t calculate only employees’ goals and performance. They measure organizations’ performance as well. This metric shows a prominent comparison of employees’ performance vs. how engaged and appreciated they feel.

Training as HR Metrics After the Staffing Process

  1. Training expenses per employee

 (AIHR Analytics, Bamboo HR)

Training expenses per employee is another metric that helps track development expenses. Besides, it allows the HR team to make smarter investments in staff advancement.

HR teams are getting accustomed to the fact that not only are one-day training courses expensive, but they also tend to be inefficient. These courses fail to provide the continual learning experience that workers seek. However, allocating a budget for an adequate learning experience will result in more efficient training programs.

HRs calculate the expenses by dividing the overall costs of training courses and programs by the overall number of employees.

  1. Training completion rate

(Bamboo HR)

After training is complete, human resources reports should account for the number of workers who successfully finished the training. To calculate it, divide the number of workers who completed the course by the total number of workers. To get the percentage, multiply the obtained sum by 100.

HRs also calculate the time necessary to complete the training. Time to completion is the mean amount of time employees need to finish a course or a training program.

  1.  Training effectiveness

 (AIHR Analytics)

HR reporting metrics measure the training efficiency to check what the trainees have learned. However, this metric is tricky since it’s not possible to measure a worker’s performance before and after the training with clear precision.

The reason lies in the fact that employees typically take up new courses when they’re aware they’re underperforming. Those who tend to underperform for one month will possibly return to their average the following month. Such a phenomenon is called “regression to the mean,” and it’s the main “obstacle” to obtaining a good insight into training efficiency.

Typical ways to measure efficiency include tests and assessments which generate a pass/fail rate.

HR Service and Software Metrics

  1. The list of HR metrics used to measure HR performance includes:

 (AIHR Analytics, Bamboo HR)

  • Cost of HR per worker, calculating the cost efficacy of HR in dollars
  • The ratio of HR per employee, measured by dividing the number of HRs by the total number of workers
  • HR software employee participation rate, calculated by dividing the number of workers who use HR software by the total number of workers
  • ROI of HR software, measuring the discrepancy between the software costs and the money it generates or saves

 The Bottom Line: What Are HR Metrics?

They are tools or measurements that allow a company to monitor primary fields in HR data. They enable HR management to ensure the company is profitable and its workers are satisfied. Despite what is believed, those metrics aren’t linked only with people. They are also related to other vital processes such as employee recruitment and retention, salary and compensation, bonuses and benefits, etc. SHRM HR metrics advise sticking to their four fundamental tips.

The first tip points to data analyses and reaching conclusions based on them. One should be aware of not having too much data as it can lead to a false sense of productivity. The second tip points out that the metrics’ primary purpose is to help the company make well-informed decisions. HR metrics data that results in no improvement signifies that it’s high time for a change or a new strategy.

The third tip mentions the significance of the proper audience for every HR metric. Not every number is of equal importance for each team. The last tip reminds us that all companies should define their objectives and targets and that there is no such thing as an ideal number that could be assigned to rates and costs.

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