What are HR metrics?
Human resources metrics are the KPI (key performance indicators) of HR. These are evaluated by HR professionals to assess the effectiveness of HR functions, operations, processes, and strategies.
Human resources metrics can help to compare the efficiency of HR operations to the expenses made. It gives an insight into the impact of the HR department in the organization, and the prevailing gaps in HR functions that may have adverse effects on the organizational well-being.
Hence, this metric holds great significance in strategizing data-driven decisions that would benefit your organization.
Let us know in detail about the types of HR metrics and analytics, as well as their significance in the organization’s structuring.
What are the 35 Key HR Metrics?
The key HR metrics that have impactful significance and that you need to consider while evaluating the parameters include the following, such as:
Note– We have segregated the HR metrics according to the genre they belong to for better understanding and clarity in perceiving their importance.
➔ Nine Recruitment Metrics
Let us learn the first 9 recruitment metrics which will exhibit the number of new hires per HR, headcount per department, and more.
1. Time to hire and Fill
This metric evaluates the time to hire the total number of employees to the actual time consumed to fill up the vacancies or requirements.
It accesses how quickly the vacant positions are filled by the HR professionals. It measures the time taken to fill the job vacancies by calculating the length of days from which the vacancies are posted to the day of hiring the candidates.
2. Acceptance Rate
Acceptance rate evaluates the number of offer letters extended to candidates and the number of offer letters accepted by the candidates.
A low acceptance percentage indicates gaps or deficiencies in compensation, benefits, or HR management skills, which gives an insight into HR policies that need attention.
This metric is also used to calculate the decline rate of offers extended to the number of employees who had qualified interview phase.
3. Cost Per Hire
Cost per hire calculates the total cost of recruitment or the total cost incurred to fill the vacancies including advertisement for the posts, sourcing spent, recruiter fees, and other related spends.
It measures the efficiency of HR professionals in managing the recruitment budget efficiently.
4. Diversity Metrics
It measures the diversity and inclusion in your candidate pool, including newly hired and prevailing ones.
The diversity parameter includes ethnicity, background, caste, gender, and other demographic factors. It exhibits the networking strength of your organization and HR professionals.
5. Cost per Quality Hire
Cost per quality hire measures the number of efficient employees hired, who add value to the organization’s productivity and performance.
It takes into account not just the cost of hire, but the cost of quality hires in terms of their performance in the organization.
6. Headcount per Department
It is the number of employees per department. It helps to track the number of employees present per department and the actual number of employees required in a department, hence giving a depiction of the hiring efficiency of the HR professionals.
7. Cost of HR operations per Employee
It identifies the expenses per employee that are expenses incurred for managing HR functions per employee.
It provides insight into HR operations and helps in budgeting, cost analysis, and efficient handling of human resources by HR professionals.
8. Early Turnover Rate
An early turnover rate measures the turnover rate of new hires. It calculates the number of employees who leave the organization within 6 months of joining or within a specified time frame which is early to their joining.
A high early turnover of new hires indicates or highlights deficiency in recruitment, onboarding, training, or task management issues.
9. Sourcing Channel Effectiveness
This metric evaluates which sourcing channels (Social media employee referrals, job boards, etc.) are most effective in providing efficient candidates to the Human resources department.
➔ Four Training and Development Metrics
There are 4 key Training and development HR metrics, such as:
1. Training cost per Hire
It evaluates the percentage of training expenses incurred per number of employees who are hired. Your organization needs to track the expense budget for training and understand the expenses associated with training new employees upon their joining.
2. Training Completion Rate
It measures the percentage of employees who have accomplished or completed the assigned training by your organization.
✱ Formula: Training Completion Rate = (Number of Employees Who Completed Training divided by the Total Number of Employees Assigned Training) x 100
3. Time Per Training Completion
It measures the average time consumed for completion of specific training by an employee to whom it is assigned by the organization.
This metric helps in assessing the efficiency and effectiveness of training programs.
✱ Formula: Time per Training Completion = Total Time Spent on Training / Number of Learners Who Completed
4. Training Effectiveness Index
It provides a holistic view of the overall effect of training on the learners or the total number of employees who have attained the training. It takes into account various factors such as learner or employee satisfaction, training outcomes, etc.
✱ Formula: Training Effectiveness = (Post-Training Assessment Score – Pre-Training Assessment Score) / Pre-Training Assessment Score
➔ Seven Engagement and Employee Retention Metrics
1. Absenteeism Rate
It is one of the essential HR metrics that measures the percentage of scheduled work hours that employees are absent from work.
The reason for absence can be both planned leave (such as vacations or approved time off) or unplanned absences (such as sickness or unexcused leave).
✱ Formula: (Total Number of absence hours from work divided by the total number of scheduled hours) X 100
2. Engagement Rating
This metric measures the level of engagement, motivation, enthusiasm, and commitment in the work of employees.
3. Employee Satisfaction Rate
This is one of the important HR metrics which measure the satisfaction in the work rate of employees. It measures how content, happy, and fulfilled employees are within the organization.
✱ Formula: Employee Satisfaction Rate = (Number of Satisfied Employees / Total Number of Employees) x 100
4. Retention Rate per Department
This metric calculates the retention rate of employees per department. It shows the team dynamics and employee relation to the department.
✱ Formula: Retention Rate per Department = [(Number of Employees at the Start of the Period – Number of Departures during the Period) / Number of Employees at the Start of the Period] x 100
5. Overall Retention Rate
This metric evaluates the inclusivity created by the human resource department to robust the relationship of employees with the organization.
✱ Formula: Employee Retention Rate = [(Number of Employees at the Start of the Period – Number of Departures during the Period) / Number of Employees at the Start of the Period] x 100
6. Voluntary Turnover Rate
This metric evaluates the voluntary departure of employees from the organization by resignation. It is the metric which exhibits areas of improvement for retaining employees.
✱ Formula: Voluntary Turnover Rate = (Number of Voluntary Departures during a Period / Average Number of Employees during the Period) x 100
7. Talent Turnover Rate
This metric measures the percentage of total departures of employees from an organization who possess critical skills, competencies, or specialized knowledge. The reason for exit can be both such as voluntarily and non-voluntarily.
✱ Formula: Talent Turnover Rate = (Number of Key Talent Departures during a Period / Total Number of Key Talent at the Start of the Period) x 100
➔ Four Time Metrics
1. Time since last promotion (average time in months since last internal promotion)
It measures the time that has passed since the employee got the last promotion. It can be evaluated on both departmental and individual basis. It evaluates the promotion policies of the organization.
✱ Formula: Time since Last Promotion=Current Date−Date of Last Promotion
2. Overtime Hours
This is one of the most important HR metrics which measures the overtime or extra hours worked by the employee and also showcases the performance management in the organization by the human resources management department.
3. Absence Rate Per Department
You can use absence rate per department HR metrics to track the total number of present in the department to the total number of actual employees.
4. Total Absence Rate
This metric is vital for measuring the overall rate of employee absenteeism within the organization.
✱ Formula: Total Absence Rate=(Total Days of Employee Absence/ Total Scheduled Workdays)×100
➔ Four Performance Management Metrics
1. Revenue per Employee
It measures how efficiently the company is utilizing its human resources to gain overall revenue.
✱ Formula: Revenue per Employee=Total Revenue/ Total Number of Employees
2. Company Performance
This is an important HR metric that evaluates the KPIs (key performance indicators) of the company for accessing the effectiveness of the business.
3. Employee Productivity
Employee productivity is one of the HR metrics which measures the productivity of employees in a specific period. It exhibits the company culture and HR policies that navigates employees performance.
4. Performance as per Potential
This HR metric measures the individual or team performance relative to their maximum capabilities and potential.
➔ Three HR service and Software Metrics
1. Percentage of vacation days
It is a valuable HR metric that is used to evaluate employee work-life balance, well-being, and the extent to which employees are utilizing their paid time off from work.
✱ Formula: Percentage of Vacation Days=(Total Vacation Days Taken/ Total Vacation Days Available)×100
2. Effectiveness of HR software
This is one of the most important HR metrics that measures the effectiveness of automation and HR software in human resources management.
3. HR software Participation Rate
This HR metric is used to measure the engagement and level of adoption of Human resources Management system (HRMS) software in the organization.
✱ Formula: HR Software Participation Rate=(Number of Users Actively Engaging with HR Software/ Total Number of Users with Access to HR Software)×100
➔ Four Expenses Metrics
1. Cost of HR per employee
It is an HR metric that helps your organization measure the spending associated with the human resources department on a per-employee basis.
✱ Formula: Cost of HR per Employee=Total HR Department Costs/ Total Number of Employees
2. Healthcare costs per employee
This HR metric measures the total expenses incurred on the healthcare benefits of employees by the organization on a per-employee basis.
✱ Formula: Healthcare Costs per Employee=Total Healthcare Costs/ Total Number of Employees
3. Expenses per employee
Expenses per employee is a financial HR metric that evaluates the total operating expenses incurred by the organization.
✱ Formula: Expenses per Employee=Total Operating Expenses/ Total Number of Employees
4. Compensation and Benefits costs per employee
This HR metric calculates the total costs of revenue, wages, bonuses, benefits (e.g., health insurance, retirement contributions), and any other forms of compensation or benefits paid to employees.
Benefits of Evaluating HR Metrics
The evaluation of HR performance by accessing HR metrics is highly advantageous for your organization as it holds significant prominence in:
- Accessing and monitoring the performance of HR professionals
- Evaluating the effectiveness of HR initiatives and activities
- Initiating data-driven decision-making
- Identifying the loopholes in the organization’s structuring
- Ensuring the value proposition of HR functioning
- Streamlining HR processes, reduce costs, and save time
- Identifying the areas of improvement for HR professionals
- Benchmarking the performance of your organization with the competitors and peers.
- Improving the overall well-being of your organization by focusing on employee satisfaction, retention, and engagement.
- Analyzing predictive models for futuristic alterations in workforce trends.
- Improving HR team dynamics of the company
- Evaluating returns on human capital investment and more.
In conclusion, HR metrics help to track human resource management functioning, hence enabling HR professionals to improve their areas of deficiencies.
They can also strategize initiatives or activities and make informed decisions, efficiently with data-driven inputs abstracted from the evaluation of HR metrics.
There are major elements that require cautious consideration while evaluating HR metrics, which include:
- Safety and security of data for evaluation, as most of it is confidential and is subject to a legal lawsuit in case of a breach.
- Unauthorized access should be nullified by strict supervision.
- There should be an alienation between the HR metrics and the organization’s objective to achieve the overall goal of the company.
- HR metrics require careful analysis of the company’s culture, industry, and history and should not be evaluated on the mere face value of the organization.
- HR metrics are required to be used ethically without initiating discrimination, or biases caused due to conscious or unconscious biases and ingrained psychological thoughts.
- It needs to be flexible to match the rapidly changing market landscape and not fixed to rigid parameters, as its adherence can have counterproductive consequences for a company. Etc.
Keeping these considerations in mind, HR metrics can be measured ethically with efficiency and apropos.