Introduction

HR metrics are metrics that are used to measure the performance of an HR function. The term HR metrics can be divided into two categories: operational and analytical. 

It’s important to measure the success of your HR practices. By using HR metrics, you can see how well they’re working and where they could be improved.  

The best way to determine what metrics are most important is to talk to your team members and get their feedback on how they feel about their jobs. If you’re not sure how to go about measuring these things, here is a list of some of the most common KPIs and metrics for HR professionals:

What Are HR Metrics?

What are HR Metrics? HR metrics are updated and recorded data that tell you about key performance indicators for your human resources team. 

HR metrics also measure how well your employees are performing in their tasks and activities. They tell you about the efficiency of the department, which shows if things are going well or not. 

There are many different kinds of HR metrics, including workforce analysis, employee relations, compensation and benefits plans, measurement of performance and many more.

Why HR Metrics Matter

• Executives Want More HR Reports: One of the most important reasons to measure HR metrics is to show your executives how you’re doing. The more they know about your team and how they’re performing, the more likely they are to make positive changes in future plans. In fact, a 2016 Gallup poll found that only 20% of employees felt like their CEO was concerned about their personal development.
• Measuring Employee Experience Needs to Be a Priority: The second most important reason why measuring HR metrics matters is because it shows how happy employees are. If you don’t have metrics for employee experience or engagement, then it can be hard to know how successful your company is at retaining talent and growing your business through new hires.
• What Are the Most Important HR Metrics?: The most important HR metrics are those that help guide decisions and inform strategy throughout an organization. These are employee retention rates, employee engagement levels, employee turnover rates, absenteeism rates among managers, employee satisfaction surveys and so on.
• HR Metrics Impact Your Strategy: HR Metrics can be a powerful tool in your arsenal to help you manage your workforce and set goals for future performance. However, it’s important to understand how HR metrics impact your strategy. For example, if you’re trying to increase the number of new hires, but that isn’t reflected in the numbers for new employees hired or annual turnover rate, then it may not be the best use of your HR metrics data. You could look at hiring rates specifically, or you can see if there’s a correlation between turnover and hiring rates.

24 Best HR KPIs and metrics for managers (definition, formula, What it means)

Recruitment

• Acceptance Rate: The acceptance rate is the number of people who applied for a position and were accepted as a candidate. This rate is a good indication of how well your company is doing at attracting new talent, because it shows how many people are applying for jobs and how many of those applicants are actually being hired. To calculate acceptance rate, divide the number of accepted job offers by the total number of job offers given within a period of time.
• New-Hire Turnover: The turnover rate is the number of employees who depart from a company within a given period of time, usually one year. It’s important to track turnover rates because they can help you identify areas where there are high rates of employee turnover and opportunities to improve the way you hire and retain employees. Calculate the new hire turnover by adding the number of employees that leave in a year/quarter or month together, then divide the sum by an average number of employees that work within the selected period and then multiply the number you get by 100.
• Time to Hire: Time to hire is an indicator that shows how long it takes for candidates to be selected for a position after they apply for it. This metric can help you identify which parts of your hiring process are taking too long or not getting enough attention. To calculate time to hire, let’s assume that the day you put up a specific position is Day 1. If your best candidate accepted your job offer on Day 30, and the candidate applied for the job on Day 10, your time to hire is 30-10 =20.
• Cost per Hire: This metric measures what it costs your organization to acquire each new employee, including salary, benefits, recruiting fees, relocation expenses, training costs, etc., over their first year on the job. You’ll want to track these costs so you know whether or not the recruitment is yielding the best benefits for your organization. Calculate this by adding up both external and internal labor for all your hires, divide that number by the number of people that you hired at a specific time or period then multiply it by 100.
• Headcount: Headcount metric is one of the most popular KPI in HR departments because it shows how many employees are working at any given time. It’s useful when you want to know how many employees are on board with your company’s mission and vision. To calculate Headcount just divide the number of employees at your company by the number of days in one month. For example, if there are 30 employees at your company only and they work 8 hours per day then their headcount metric is equal to 30/8 = 2.5 (rounded off).

Engagement & Retention

• Talent Turnover Rate: The percentage of employees who have left your company in the past year. To determine this, calculate the number of employees that left the company by the average number of employees in a specific period of time then multiplied by 100 to get a percentage.
• Employee Satisfaction: The percent of employees who are satisfied with their work environment, benefits, and compensation package.
• Employee Retention Rate: The employee retention rate measures how many people remain with a company after one year; it does not include temporary workers or consultants who do not intend to stay for longer than 12 months (i.e., “walk-in” consultants). The formula is based on finding out how many people left your company over that time period and then dividing this number by all people who started working for you during that time period but did not leave after 12 months.
• Voluntary Turnover Rate: The percentage of employees who voluntarily leave your company within a year of joining it. You can determine this by dividing the number of employees that voluntarily left the business by the average number of employees. For example, 20 /1000 = 2.0 percent.
• Retention Rate per Manager: The average length of time that a manager keeps an employee on his or her team before they leave to look for another job. calculate the retention rate by dividing the number of employees that stayed with your company till the present by the number of employees you started with on day one. Then, multiply that number by 100

Time Tracking

• Absence Rate: The average number of employees who are absent from work, by day, per month. Calculate absence rate by dividing the number of unexcused absences in a given period of time, by the total period, then multiply by 100
• Absence Rate per Manager: The average number of employees who are absent from work, by manager, per day.
• Overtime Hours: Total Time Worked for all employees divided by total hours worked by all employees. This can be calculated by multiplying the hourly pay rate x 1.5 x overtime hours worked. For example $10x 1.5x 2 hours

Employee Value & Performance

• Revenue per Employee: This metric measures the revenue generated by each employee based on their effort level. The higher the number, the more value employees are providing to the company. Calculate the revenue per employee by dividing the company’s total revenue by its current number of employees.
• Performance & Potential: This metric measures the performance and potential of each employee. It is calculated by analyzing their past performance and assessing what they can do in the future. This metric is helpful in determining whether an employee is likely to succeed or fail in their current role.
• Employee Performance: This metric measures how well your employees are performing at work compared to other companies within your industry. It uses statistics from various sources such as the company’s annual report, job descriptions and feedback from managers about how well employees are performing on tasks assigned to them by supervisors.
• Goal Tracking: This metric measures how well you are tracking your goals for each department within your company against expected results so that you can assess how successful you are at meeting those goals without having to rely solely on subjective feedback from coworkers or supervisors who may not have accurate data about what success looks like from an external perspective (such as benchmarking against competitors within their industry). 
• Company Performance: Compare your company’s performance against competitors using key performance indicators like return on investment (ROI), average time to market, customer satisfaction rate etc. This can be calculated by dividing the company’s net profit by their net assets, and then multiplying by 100.

HR Service & Software

• Ratio of HR Professionals to Employees: This metric measures how many HR professionals there are per 1,000 employees. You’ll want this number to be as low as possible so that you have the most resources available for your team members. If there is too much overlap between HR and other departments, it will be harder for managers to manage their respective departments effectively.
• Cost of HR per Employee: This metric measures how much money it costs your organization to pay an employee’s salary, benefits, training and other expenses. If an employee costs more than $100k per year (or if their salary doesn’t match up with other employees in your organization), then that may indicate that there’s an issue with their compensation package or benefits package.
• HR Software Employee Participation Rate: This metric measures how many employees actually use the HR software on their own time, rather than just when they need help with a specific project or task like filling out a form or submitting an application online (often called “self-service”).
• ROI of HR Software: An ROI calculation can help you determine whether or not a particular investment in HR software is worth it in terms of return on investment (ROI).

Conclusion

If you’re not measuring your HR metrics, you might not be able to see where your company is going wrong and how it can be fixed. You also won’t know whether or not your employees are happy with their work environment, which is vitally important to maintaining a productive, happy workplace.