Have you ever considered what successful firms share? They examine corporate performance and set goals using people’s data. HR metrics are one method for accomplishing this. After all, human resources are an essential component of a company’s success.
People strategy, workforce analytics, and HR metrics can all help you achieve your company objectives.
It makes no difference if you have 10 or 1,000 employees. The sooner you begin tracking HR metrics, the better. So, let us have a look at the examples of the HR metrics, why these metrics are significant, and how to apply them.
What are HR Metrics?
HR metrics are used to assess the effectiveness of various HR functions and activities such as hiring, employee retention, training, and labor costs. Human resources departments can utilize these metrics to increase their efficiency and show senior management the value of their work.
Recruitment HR Metrics Example
#1. Time to hire (in days)
The ‘time to hire’ is an essential recruitment metric. This is the number of days that pass between an applicant applying for a job and accepting a job offer. Time to hire provides information about recruiting efficiency and candidate experience.
The speed with which HR processes a candidate – assessment, interview, and role acceptance – is measured by recruitment efficiency. If your company takes a lengthy time to hire, it indicates that your operations are inefficient. The length of time it takes to hire reflects on the candidate’s experience. Candidates may withdraw from the recruitment process if it is lengthy. Would not you rather start a new career in two weeks than two months? The most qualified individuals are in high demand and do not have to wait.
The time to hire is not the same as the time to fill. This metric often counts the number of days that pass between the approval of a job requisition and the candidate accepting the job offer. This definition is consistent with that of the Society for Human Resource Management (SHRM) and ISO 30414.
#2. Cost per hire (total hiring cost divided by the number of new hires)
The ‘cost per hiring (CPH)’ statistic, like the time to hire, illustrates how much it costs the organization to hire new personnel. This also acts as a measure of the effectiveness of the hiring procedure.
Calculating the cost per hire might be time-consuming. Before The Society of Human Resource Management and the American National Standards Institute agreed on a common formula, there was a lot of variety in how organizations computed this indicator.
CPH can be computed by adding internal and external recruiting costs and dividing the total number of hires. Both the expenditures and the number of hires will reflect a chosen measurement period, such as monthly or annually.
#3. Early turnover (the proportion of recruits that leave within the first year)
This is likely the most essential indicator for determining a company’s hiring performance.
This early leaver measure reflects whether there is a misalignment between the individual and the company or between the individual and his or her position. Early turnover is also quite costly. Employees typically require 6 to 12 months to thoroughly learn the ropes and reach their “Optimum Productivity Level.” According to a Glassdoor poll conducted in 2018, the average cost of employee turnover in the United Kingdom is £11,000 per worker.
#4. Time since last promotion (avg time in months since previous internal promotion)
This simple indicator will help you understand why your high potentials leave.
Revenue-related HR Metrics Examples
Revenue per employee (revenue divided by the total number of employees)
This indicator demonstrates the overall efficiency of the company. The metric revenue per employee’ indicates the quality of employed staff. Check out this Business Insider story to see how the world’s top 12 tech businesses rank on this metric.
#5. Potential and performance (the 9-box grid)
When measuring and mapping an individual’s performance and potential in three levels, the 9-box grid appears. This methodology identifies which employees are underperformers, valued specialists, rising stars, or top performers. This statistic is excellent for distinguishing between desired and unwanted turnover, for example.
We discussed qualitative and quantitative methods of measuring employee performance in another article. Net Promoter Score, management by objectives, amount of errors, 360-degree feedback, forced ranking, and other metrics are examples of metrics.
#6. Number of billable hours per employee
This is the most concrete example of a performance indicator, and it is particularly relevant in professional service firms (for example, legal firms and consulting firms). This type of performance can be related to staff engagement or other input metrics, which makes for an interesting examination. Benchmarking this statistic across departments and managers/partners can also provide useful insights.
This indicator is also related to employee utilization rate, which refers to the amount of working time spent on billable tasks by employees.
#7. Engagement Rating
A productive staff is one that is engaged. The most important soft HR outcome may be engagement. People who enjoy their jobs and are proud of their firm are more likely to be engaged, even if the work environment is demanding and pressure is strong. Employees that are engaged perform better and are more inclined to see problems as positive and fascinating. Furthermore, team engagement is a key criterion for the success of a team manager.
Other Examples of HR Metrics
#8. HR cost per employee (e.g., $ 600)
This measure displays the cost efficiency of human resources in dollars.
#9. HR professional-to-employee ratio (e.g., 1:60)
Another indicator of HR cost efficiency is the HR-to-employee ratio. An organization with fully developed analytical capabilities should be able to get more done with fewer HR professionals.
#10. HR business partner-to-employee ratio (e.g., 1:80)
A measure is comparable to the preceding one. Again, HR will be able to measure and predict the impact of HR policies with a set of highly developed analytics capabilities. This allows HR to be more efficient while also reducing the number of business partners.
#11. Turnover (number of departing employees/total organization population)
This metric indicates how many employees depart an organization in a particular year. When paired with another indicator, such as performance, the ‘turnover’ metric can track the difference in attrition between high and low performers.
You would want to see low performers depart while high performers remain. This statistic also gives HR business partners a wealth of information on which departments and functions people enjoy working in and which departments and functions they dislike. Turnover is incredibly useful information to have while developing a recruitment strategy. Furthermore, attrition may be an important factor in determining a manager’s success.
#12. HR software effectiveness
This is a more complicated metric. The effectiveness of learning and development software, for example, is measured by the number of active users, average time spent on the platform, session duration, total time spent on the platform per user per month, screen flow, and software retention. These metrics allow HR to assess what works and what does not work for employees.
#13. Absenteeism (percentage of absence)
Absenteeism, like turnover, is a strong indicator of unhappiness and a predictor of turnover. Because long-term absence can be costly, the absenteeism rate can provide information to help prevent this type of leave. Differences between individual managers and departments, once again, are highly important indicators of (possible) difficulties and bottlenecks.
HR Metrics Examples in Major Business Areas
Human resource metrics are statistics that assist you in tracking data throughout the HR department and the organization. The most critical regions are highlighted here. We listed the important HR metrics examples connected with various categories in this list of HR metrics.
#14. Organizational effectiveness
- Turnover percentages
- % of the regretted loss
- Statistics on why the personnel is leaving
- Absence percentages and behavior
- Recruitment (time to fill, number of applicants, recruitment cost)
#15. HR Administration
- HR efficiency (for example, the time it takes to resolve HR self-service tickets)
- HR effectiveness (e.g., perception of the quality of HR services)
#16. Process improvement
Process optimization aids in the analysis of how we do things in Human Resource Management. This area’s HR metrics and analytics are concerned with changes in HR efficiency and effectiveness over time. HR metrics and analytics are then used to reengineer and reinvent what is going on in HR. This aids in the optimization of the Human Resource delivery process. Next-level metrics for process optimization. They are still uncommon in modern enterprises because they necessitate a high level of data and analytics maturity.
How to Apply HR Metrics
Simply having data and employee metrics on hand is only the beginning for HR departments, but it can be half the battle. If your business is lacking in data gathering, seek new ways to acquire data or ways to analyze current, underutilized data using statistics. Data collection does not have to imply invading employee privacy. It can be as simple as gathering data on employee bonuses in one place, for example, so that patterns can be identified and more bonuses can be provided where they will be counted. Another excellent way to begin is with a basic employee survey, which may be surprisingly insightful.
Look for areas where your firm is most interested in obtaining unknown information—evaluating candidates throughout the hiring process, for example, is a huge one, as are the numerous elements that might promote or hinder staff productivity. Many businesses are also more “in the dark” than one might think about the issues that influence retention and attrition. In any event, a data-driven approach using HR metrics outperforms guesswork.
Overlaying different HR metrics to create a larger picture is one of the greatest methods to use HR metrics. Many of the metrics presented below provide useful information on their own, but when combined, they provide genuine insight and adjustment recommendations. Employee compensation metrics such as salary averages and salary range penetration, for example, simply allow HR to identify who gets paid what.
When this data is compared to employee satisfaction metrics like eNPSs or departure rates, patterns may emerge, answering concerns about how effectively (or ineffectively) pay methods are promoting retention and where raises can be deployed most economically.
What are the Most Important HR Metrics?
- Absence Rate per Manager.
- Overtime Expense.
- Employee Productivity Index.
- Training Expenses per Employee.
- Training Effectiveness Index.
- Training Efficiency.
- Employee Happiness.
What Are Some of the Most Widely Used HR Metrics and Analytics Software?
- IMB Kenexa.
- Workforce Planning.
- People Analytics.
- Feedback.
- TalentSoft Analytics.
- Aurion.
- Oracle HR Analytics.
- Emplysight.
Is HR Measurement Used in All Businesses?
HR metrics are increasingly prevalent in medium- to large-sized enterprises. This is because larger organizations typically have more employees and a larger HR department, providing a larger pool from which to collect data. These businesses also have investors and vice presidents who want to know how the HR department is doing.
How Might HR Metrics Aid in the Resolution of Staffing Issues?
If your company is facing personnel challenges, the correct HR metrics may be able to help you determine the source of the problem. However, because the data from your HR metrics will only be quantitative, you must be able to examine it on your own and establish the reason for any low numbers in your reports.
What are “Soft” HR Metrics?
“Soft” HR metrics rely on qualitative rather than quantitative information. Soft metrics are identified through the collection of subjective employee replies. Workplace contentment, innovation, and morale are examples of soft HR metrics.
What Is an HR Metrics Dashboard?
A metrics dashboard is a web dashboard that displays all of your HR metrics in one place. You may use your HR software’s dashboard to update information and maintain all of your HR analytics in one location.
What Are the Most Often Used Recruitment Metrics?
HR departments evaluate their recruitment efforts using recruitment metrics such as applicant competitiveness, cost per hire, quality of hiring, retention, and diversity.
What is the Distinction Between HR Metrics and Analytics?
HR metrics track and quantify historical performance, whereas HR analytics analyze firm data to provide predictions or insights.
Conclusion
It is difficult to determine how your work makes a difference or establish strategic goals for progress without measuring the HR metrics that matter.
If you are not currently measuring any human resources metrics, meet with your executive and HR teams to determine which data you should start tracking right away. Keep it simple: If you are already measuring some HR metrics, double-check that your data is assisting your firm in meeting its objectives.
And if you have not started yet, do not put it off any longer or you will miss out on vital information.
- KEY METRICS: Essential Metrics Every Business Should Have
- SUCCESS METRICS: Customer, Project, Business Metrics & All You Need
- Performance Metrics: What They Mean For Your Business
- MARKETING METRICS: Meaning, Examples, Email, Social Media & Content Marketing.
- SALES METRICS: Definition, Examples, and Guide
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