HR metrics
Understanding HR Metrics and Their Role in Business Success
In this post, we will discuss what HR metrics are, why they matter, and the key formulas you can use to track and improve your HR performance.
Let’s look at these sections:
What are HR metrics?
HR metrics are simple numbers or data used to check how well the HR team is doing their job in a company.
They help track things like how many people are hired, how many stay, how well employees are trained, how happy they are, how they perform, and how productive they are.
By looking at these numbers, companies can make better decisions, improve their HR work, and make the organisation grow stronger.
Why are HR metrics important?
Making HR decisions based on data is not just helpful, it’s smart. Here’s why HR metrics are important:
1. Smart talent planning:
With proper data, HR can understand where talent is missing or what skills are needed. This helps in hiring the right people, training them properly, and keeping them for the long run. So, HR can plan better and build a stronger team.
2. Controlling HR costs:
By checking data related to hiring, training, or employees leaving the company, HR can figure out where the money is going. This helps them plan the budget better and save money where possible, while still improving employee experience.
3. Better long-term planning:
HR metrics show trends like how many people might leave, or what skills will be needed next year. This helps the company prepare for the future, and HR becomes a key part of planning business growth.
4. Clear decision-making:
Instead of guessing, HR can make decisions based on facts. For example, if wellness programs reduce sick leaves, HR can confidently continue or improve those programs. It’s all about making the right move with the right info.
5. Showing HR’s real value:
When HR tracks its efforts properly, they can clearly show how their work helps the company grow, whether it’s better performance, lower attrition, or improved employee satisfaction. This helps HR get support from top management for future plans.
Top HR metrics
The following are the top 20 common HR metrics and their formulas are there that you can follow to predict the strength and vulnerability of your current strategy. And along with this, you can save time.
But before following the metrics and formulas, you need to consider and analyse when using hr metrics includes, such as what data needs to be gathered and calculated, what metrics are necessary to the organisation, how you can analyse to use for development, planning, decision making, and problem-solving, how will be analysed the data and set the benchmark.
Let’s see what the basic formulas are for HR.
|
Metrics |
Formulas |
Details |
|
Absenteeism |
1. Individuals Absent rate = (No.of absent days / no. of working days in a month)* 100 2. Team Absent = (No. of absent days / average no. of employees) * 100 |
Employee’s unplanned absence due to some emergency, sickness, or any other reason. |
|
Cost of employee, program, or benefits |
The total cost of employee, program, or benefits / total number of employees |
The number of employees who participated in the program and got the benefits from the organisation, such as rewards, recognitions, and others. |
|
Turnover Rate |
Total Turnover Rate = (No. of the left employee during the specific time / No. of remaining employee specific time) * 100 |
The percentage of employees who left the organisation includes voluntary resignations, retirement, dismissal, and non-certificate. |
|
Retention Rate |
Employee Retention Rate = (No. of employees staying across the time period / No. of employees at the start of the period) * 100 |
Percentage of the employees who remained on employees from the beginning to the End of a period. |
|
Cost Per Hire |
Cost per hire = Internal + external / Total no.of recruitment |
The average amount that you have spent on recruits in a specific period. |
|
Revenue Ratio |
Revenue Ratio = Annual revenue / no. of employees |
It measures how much profits are generated by the employees. |
|
Employee satisfaction |
Employee satisfaction = (score sum / 3) – 1) / 9 X 100 |
It is calculated to improve their work environment, culture, retention, productivity, and others. Based on the following factors – how satisfied employees are, how well your current workplace perform and meet your expectation, and How close you are to your ideals at your workplace. |
|
Return on Investment |
(ROI) = (Net revenue – total costs) * 100 |
It reflects the financial value of the workforce as a result of the amount spent on the employee. |
|
Employee training hours |
Employee’s training hours = total training hours / no. of total employees * 100 |
It shows the average number of hours required to train the employees because it helps find accurate data to understand the training effectiveness. |
|
Employee training cost |
Employee’s training costs = Total training costs / no. of total employees * 100 |
It shows the total costs your organisation spent on employee training. |
|
Time to hire |
Total no. days taken to fill the position / total number hired |
It shows the average days to recruit a candidate for a job role. Starting days of hiring are when the job role is approved, and the ending date and first date are when the candidate starts the job role. |
|
Tenure |
Length of the time period an employee has served an organisation. |
Basically, job categories are short and long to measure the essential criteria for hiring a new employee. |
|
Turnover costs |
Total turnover costs = Total cost of Termination + Replacement + Vacancy + Training |
You can analyse the hiring practice that can help you to incorporate accurate data and calculations to generate the turnover costs. |
|
Benefits Rate |
Total no. of employees utilising benefits / total no. of eligible to utilize benefits * 100 |
It identifies the total number of employees who enrolled in specific benefits through the company. |
|
Utilisation Rate |
Utilisation Rate = employee’s total billable rate / total available hrs * 100 |
It measures the total billable hours per employee and is a common practice that provides the service. |
|
Worker’s compensation Cost per employee |
Cost per employee = Total worker’s compensation cost for the year / average number of employees * 100 |
you can determine the cost efficiency of workers’ compensation. |
|
Employee referral |
Employee referral = Total no. of referrals recruited / no. of vacant jobs resulting in referrals |
You can offer an employee referral program and track its success. |
|
Overtime Rate |
Overtime Rate = (overtime payment / total payroll) * 100 |
Analyse the organisation’s overtime percentage so that you can easily maintain an appropriate schedule. |
|
Workers’ compensation incidence rate |
Workers’ compensation incidence rate = (no. of injuries or illness per 100 full-time employees ∕ total hours worked by all employees during the year) * 200,000 |
It helps to analyse the common base and a specific time involved that rates can help to measure both the problem areas and develop in preventing work-related injuries and illnesses. |
|
Yield ratio |
Total percentage of applicants from the recruitment moving from one level to another level of the selection process. |
We’ve reached the end! Feel free to drop your thoughts or questions in the comments below, we’ll be happy to help you out.
FAQs
Q. Why are HR metrics important?
Ans: HR metrics, especially people-related ones, help you understand what’s working well in your company and where things need improvement. They give you the right data to plan better for your team and spot future trends early.
Q. What is the difference between HR metrics and HR KPIs?
Ans: HR metrics are numbers or data that show how HR activities are working like hiring, employee retention, or training. But HR KPIs are those specific numbers that help track if HR is meeting its bigger goals and helping the company grow. So, all KPIs are metrics, but not all metrics are KPIs.
Q. What is an example of a soft metric in HR?
Ans: Stay connected with us on social media for the latest updates and trends in HR.
Q. Can HR Metrics Help Address Staffing Problems?
Ans: Yes, definitely! When you check things like how much work is getting done, how happy employees are, and how often they take leave, you can easily spot if there’s a staffing issue. This helps in taking the right steps at the right time.
