New to HR? Here’s 4 Important HR Metrics and Its Function

April 13, 20202:42 pm1083 views
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Metrics report present, ongoing and year-over-year numbers for common areas of HR, such as turnover, employee engagement, recruitment, attrition and other organisations’ base enticements related to management performance. HR metrics that are associated with corporate and business strategy add value and drive organisational usefulness. Additionally, metrics can be used in diverse functions of the human resources department like talent acquisition, learning and development, retention, commitment, etc. Below, HR in Asia presents some important metrics covering these topics. 

General Workforce metrics to track employees overall satisfaction over work culture and employer’s programs 

  • Average age to plan and identify future staffing needs. Formula: Sum of age of all headcount / headcount
  • Average length of service to see where greater investment might help to generate higher returns. Formula:  Length of service of all headcount / headcount
  • Engagement rate to show how much your employees are content with their job. Formula: Number of employees above the engagement norm in period / headcount at beginning of period
  • Retirement rate to serve as your future recruitment guide. Formula: Number of employees retired in period / headcount at beginning of period
  • Salary hike since last year to serve as your budgeting record. Formula: (Current salary – salary previous year) / salary previous year
  • Satisfaction rate to know overall satisfaction of your employees, thus, helping you create a better retention strategy. Formula: Number of people who report being satisfied in their job / total number of people

See also: HR Metrics & Its Alignment to Business Success

HR Performance Metrics to track employee performance and productivity

  • Absence rate to be your starting point for ascertaining patterns and to set a benchmark for your company. Formula: Number of absence days / total number of working days
  • Absence rate per manager or department is useful for organisations whose staffing and operations might be significantly impacted by employee absence. Formula: Number of absence days per unit / total number of working days per unit
  • Cost of absenteeism to measure the relative health of your organisation which will help you in terms of a wellness program. Formula: Total employee hours lost to absenteeism * hourly pay (including benefits) + Supervisor hours lost in dealing with absenteeism * hourly pay supervisor (including benefits) + other costs (including temporary staff, training, loss of productivity, quality loss, overtime, etc.)
  • Cost of turnover to know how much loses and gains you get from losing an employee. Formula: multiply to the total cost per employee by the number of departing employees
  • HR to employee ratio to establish HR staffing and determine how well HR delivers services. Formula: FTE working in HR / total number of FTE
  • HR cost per FTE (Full Time Equivalent) to understand whether early development of HR function needs higher infrastructure and outside consulting investment. Formula: Total HR cost / total number of FTE
  • Involuntary turnover rate to determine the number of employees that left business for involuntary reasons, thus, helping HR to prepare for new recruitment. Formula: Number of Involuntary Terminates during period / number of Employees at the beginning of the period 
  • Labour cost per employee to the total amount of investment made in a single employee. Formula: Total labour cost / total number of employees
  • Labour cost per FTE. Formula: Total labour cost / FTE
  • Labour cost percentage of revenue. Formula: Total labour cost / organizational revenue
  • Labour cost percentage of total expenses. Formula: Total labour cost / total organizational expenses
  • Overtime expenses per period to know the exact amount taken for single overtime.  Formula: Overtime pay / total pay per period
  • Overtime per employee. Formula: Hours of overtime / total number of hours (contractual hours + overtime) per period
  • Profit per employee to understand how productive your employees can turn into profit. Formula: Total profit / total number of employees
  • Profit per FTE. Formula: Total profit / total number of FTE
  • Promotion rate. Formula: Number of employees promoted / headcount
  • Revenue per employee to measure the total revenue for the last twelve months. Formula: total revenue divided by total number of employees 
  • Revenue per FTE to determine whether a corporation is being run efficiently. Formula: total revenue divided by total number of FTE 
  • Time until promotion to know average time (in months or years) until promotion
  • Training efficiency. Formula: Training expenses per employee / training effectiveness
  • Training expenses per employee. Formula: Training expenses / total expenses
  • Turnover rate to understand the overall turnover rate, helping HR prepare for the next recruitment. Formula: Number of terminates during period / number of employees at the beginning of period 
  • Turnover rate of talent to help HR in future recruitment of senior position. Formula: Number of terminates who qualified as high potentials during period / number of employees at the beginning of the period 
  • Turnover rate per manager or department. Formula: Number of terminates per unit during period / number of employees in the unit at the beginning of period 
  • Voluntary turnover rate. Formula: Number of Voluntary Terminates during period / number of employees at the beginning of period

See also: Inclusive Recruitment: Practice HR Leaders Should Do

Recruitment Metrics 

  • Application completion rate to know how effective your job ads strategy is. Formula: Total number of people who completed the application / total number of people who started with the application
  • Applications per opening to measure the effectiveness of platforms and job ads in each platform. Formula: Total number of applicants / number of job openings
  • Candidate job satisfaction to help HR create a better candidate experience. Formula: Number of hires who rate themselves as satisfied in their new job / total number of hires
  • Cost per hire to determine where to invest your recruitment cash. Formula: (Total internal cost + total external cost) / total number of hires
  • First-month turnover rate to measure new hires’ satisfaction of onboarding and/or the first-month service in the company, helping create a better work culture. Formula: Employees who left the organization within 1 month / total number of recruits
  • First-year turnover rate. Formula: Employees who left the organization within 1 year / total number of recruits
  • Hiring manager satisfaction to know how effective the hiring manager is during recruitment. Formula: Number of hires who perform well / total number of hires
  • Offer acceptance rate. Formula: Number of applicants presented with a job offer / number of applicants who accepted a job offer
  • Selection ratio. Formula: Number of hired candidates / total number of candidates
  • Source of hire to get a comprehensive sourcing channel used to attract the hire. The formula to calculate the effectiveness of your source is (Number of successful applicants from a source / total number of applicants from a source) x 100
  • Time to fill to know how effective your job ads are. Formula: Number of days between publishing a job opening and hiring the candidate
  • Time to hire to know how effective your recruitment process is. A good recruitment process will not take more than a month. Formula: Number of days between the moment a candidate is approached and the moment the candidate accepts the job
  • Vacancy rate to know the unoccupied or vacant position at a particular time. Formula: Total number of open positions / total number of positions in an organisation 

Employee Development metrics  to measure and track the effectiveness of a development program

  • Above-average performance management to measure how many employees are performing at a high level. Formula: Number of employees rated above average / all employees
  • Innovation to track the progress of the development team. Formula: Number (or value) of successful product or process ideas / total number of suggestions 
  • Time to productivity to determine how long it takes for a new hire to be 100 percent productive. Formula: Date new hire hit the target – new hire start date
  • Training ROI to know whether your training is worth the investment. Formula: Cost of employee training / value of increased performance 
  • Training spends per employee to determine how much you are spending training your employees. Formula: Total training costs / number of employees

Read also: New to the HR World? Know These HR System Terms