Success becomes easily attainable when you keep a tab on the key figures that reflect value and effectiveness of initiatives taken by you. Human resources metrics are the measurable factors used by organizations to track their human capital and see how well their HR initiatives are performing. Some examples of HR metrics are: turnover, cost-per-hire, absence rate, and selection ratio among others. Assessing this data helps to recognize what’s working well, what needs improvement, and what trends to expect in the future, thereby helping companies establish their people strategy.
“Metrics essentially give us a way of qualifying the health of our organization, and, to that end, HR metrics are now different. They’re measuring how the HR function is doing as a whole and also how we’re leveraging the people in the organization to maximize the performance of the company.” – Ross Sparkman, Head of Strategic Workforce planning for Facebook in Menlo Park, Calif.
Mentioned below are 21 critical HR metrics that are a must for any HR team that wants to help build a solid, data-driven management strategy for their organization. These essential HR metrics are divided into 2 parts: 10 HR performance metrics and 11 Recruitment & General Workforce metrics.
Let’s dive in!
10 HR Performance Metrics
Revenue Per Employee/FTE
*FTE is the hours worked by one employee on a full-time basis.
Revenue per employee or FTE is calculated as a company’s total revenue divided by its current total number of employees or total number of FTE. It is an important ratio that roughly measures how much money each employee generates for the firm.
Labor Cost Per Employee/FTE
Labor cost per employee or FTE is calculated as a company’s total labor cost divided by its current total number of employees or total number of FTE.
Profit Per Employee/FTE
Profit per employee or FTE is calculated as a company’s total profit divided by its current total number of employees or total number of FTE.
Overtime Per Employee
Overtime per employee is calculated by the hours of overtime divided by total number of hours (contractual hours + overtime) per period.
Training efficiency is determined by the total expenses per employee divided by the overall training effectiveness.
Absence or absenteeism rate is the total number of absence days divided by the total number of working days. Similarly, absenteeism cost is calculated by the cost incurred due to absence days per unit divided by the total number of working days per unit
Turnover rate is defined as the number of employees terminated during a certain period divided by the total number of employees at the beginning of the period.
HR To Employee Ratio
It is evaluated by dividing the total FTE working in HR by the total number of FTEs.
HR Cost Per FTE
The formula to calculate this HR metric is:
Total HR cost / total number of FTEs
Promotion rate is determined as the number of employees promoted divided by the total headcount whereas, promotion time is the time taken to promote employees out of the overall headcount of the company.
11 Recruitment and General Workforce Metrics
Time To Fill/Hire
This is a crucial HR metric, calculated by determining the gap between the number of days of publishing a job opening and hiring the candidate.
Cost Per Hire
Cost per hire direct formula is given by:
Total cost of hiring / total number of new hires
Candidate/HR Satisfaction Rate
To deduce the candidate or HR satisfaction rate, you need to find out the ratio of the number of candidates/HRs who report being satisfied in their job to the total number of new employees/HRs in the organization.
Applicants Per Vacancy
Applicants per vacancy is an Hr metric evaluated by using the formula:
Total number of applicants/number of job openings
Sourcing Channel Effectiveness/Cost
Sourcing channel effectiveness: Total number of impressions of the channel/number of applications of the channel
Sourcing channel cost: Advertisement spending per channel/number of successful applicants per platform
Formula used to calculate the Selection Ratio is as follows:
Number of hired candidates ÷ total number of candidates
Yield Ratio is a common yet important human resource metric that is determined by dividing the total number of applicants who successfully completed the stage by the total number of applicants who entered the stage.
15:1 (750 applicants apply, 50 CVs are screened)
5:1 (50 screened CVs lead to 10 candidates submitted to the hiring manager)
2:1 (10 candidate submissions lead to 5 hiring manager acceptances)
5:2 (5 first interviews lead to 2 final interviews)
2:1 (2 final interviews lead to 1 offer)
1:1 (1 offer to 1 hire)
Offer Acceptance Rate
Offer acceptance rate is the rate at which the total number of applicants are presented with a job offer as compared to the number of applicants who accepted a job offer.
Average age is the sum of ages of the overall headcount of the organization divided by the total headcount.
Engagement rate: Employees above the engagement norm in period / headcount at beginning of period
Satisfaction rate: No. of people who report being satisfied in their job / total employees
Lastly, this one is the HR metric calculated as follows:
Employees retired in a particular period / headcount at the beginning of that period
In order to stand out in the competitive market, it is, thus, a necessity to track these 21 key HR metrics and follow this cheatsheet religiously to emerge triumphant.