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The best HR metrics to track

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If you’re in human resource management, you know that HR metrics indicate how effective your strategies and programs are in relation to employee engagement and retention. Reviewing key HR metrics helps you develop a sound business strategy to increase your HR efficiency. Employee engagement and employee satisfaction are the ultimate measurements of HR efficiency.

HR analytics give you a picture of what HR initiatives you should implement to improve your HR metrics. Which HR metrics should you pay the most attention to in order to improve the performance of your human resources department?

What are HR metrics?

Measuring metrics – what works, what doesn’t, what needs improvement and what trends to expect in the future – helps companies and other organizations determine their strategies for the recruitment and hiring process. HR metrics, or human resources metrics, are data measurements that indicate how effective human resources strategies are. HR metrics include employee turnover, cost per hire, benefits participation rates and other statistics.

Understanding HR metrics allows your HR team to utilize all the tools available to them to implement innovative solutions like HR self-service tickets. Using appropriate HR data, human resource management can work with a company’s entire workforce to increase satisfaction and decrease turnover.

Which HR metrics should you be measuring?

Tracking HR metrics has become more critical over the years. Now, it’s recommended that all HR professionals measure specific key HR metrics to assist with performance management. Which metrics should you be paying the most attention to? Here’s a list.

Recruitment Metrics

  • Number of employees: This HR metric can measure the total number of employees in the company or the number of employees in one department, depending on your measurement goals.
  • Demographics: The characteristics of your workforce such as gender, age, education level and length of service.
  • Time to hire: Time to hire is the average number of days between a job posting and when a candidate accepts your offer of employment.
  • Acceptance rates: The number of offer letters you give divided by the number of candidates who accept your offer.
  • Cost per hire: The average amount it costs to hire a new employee. This number is calculated by adding internal and external hiring costs and dividing that by the number of people you hired in a given period.
  • Time to productivity: The length of time it takes before employees are acclimated to the environment and become fully productive.
  • New hire turnover: The number of new hires that leave within a given period – for example, within the first year of employment.

Engagement and Retention Metrics

  • Employee satisfaction: The number of employees who would recommend working at your company because it’s an excellent place to work versus the number of employees who wouldn’t recommend working there.
  • Total turnover rate: The number of employees who leave your company within a given period divided by the average number of employees. Don’t forget to multiply your answer by 100 to get a percentage.
  • Voluntary turnover rate: The employee turnover rate of those who voluntarily leave your company.
  • Talent turnover rate: The turnover rate among high-performing or high-potential employees.
  • Retention rate: The retention rate is the opposite of the turnover rate. You divide the number of employees still working at the company by the total number of employees you’ve hired.
  • Retention rate per manager: This is your retention rate broken down by department, team or manager.

Time Tracking Metrics

  • Absence rate: Average number of days employees are absent within a given period, not including paid time off (PTO).
  • Absence rate per manager: This is the absence rate broken down by department, team or manager.
  • Overtime hours: The number of overtime hours worked by your employees in a given period. You can calculate this by individual employee or total overtime hours.

Employee Value and Performance Metrics

  • Revenue per employee: Revenue per employee is exactly what you might expect. It’s your total revenue divided by the number of employees on your payroll.
  • Performance and potential: A performance and potential matrix allows you to categorize your employees based on their performance and potential to help you plan for leadership positioning.
  • Employee performance: You can use several tools to measure employee performance, including peer reviews, self-assessments, manager assessments or any combination of these tools.
  • Goal tracking: Use your performance management software to track employees’ goals, how they match company goals and the progress your employees are making toward their goals.
  • Company performance: This is a comparison of how your employees are performing versus their engagement and how valued they think they are.

Training and Development Metrics

  • Training costs per employee: Divide the cost of your training programs by the number of employees you have to get this HR data.
  • Training completion rate: Take the number of employees who completed a particular training program, then divide that number by the total number of employees you have on the payroll.
  • Time to completion: The average amount of time it takes an employee to complete a training program.
  • Training effectiveness: You can measure training effectiveness in various ways, including giving pass/fail assessments.

HR Service and Software Metrics

  • Ratio of HR professionals to employees: The number of employees in the company compared to one HR professional.
  • Cost of HR per employee: Divide the amount spent on HR functions by the number of employees.
  • HR software employee participation rate: The number of employees who actively use your HR software divided by the total number of employees. Multiply that number by 100 to get a percentage.
  • ROI of HR software: Find the difference between how much the software costs your company and how much money it makes the company. Alternatively, you can use the number for the amount of money the product saves your company.

Why are HR metrics important?

HR metrics give you a measurement of how well your human resources department is doing. HR professionals agree that reviewing HR metrics helps them to revise their overall business strategy with the goal of boosting employee satisfaction and, ultimately, employee performance. Key HR metrics give a picture of HR effectiveness in their ability to recruit new employees and retain old ones.

HR metrics also give you an idea of where employee training needs to be changed or improved. Metrics also look at employee morale with the goal of increasing employee satisfaction. A satisfied employee generates greater customer satisfaction, which yields greater revenue for the company.

Who needs to evaluate HR metrics?

Are you wondering who should review the HR metrics you gather? The simple answer: everyone. You should share your HR metrics with your HR manager, who can then share them with your top executive and HR teams.

HR metrics can help your HR department create strategic policies to streamline hiring and increase employee satisfaction. HR leaders can use the data to analyze the cost of new hires as well as the total cost of hiring practices. Knowing metrics allows HR teams to develop effective HR solutions, such as an applicant tracking system. Human resources metrics can help you institute procedures for new employee onboarding.

Your total number of employees helps you determine which HR metrics are the most important to evaluate. HR metrics can evaluate everything from hiring protocols to retention rate metrics. The right HR metrics lead to better HR processes and more effective human resources initiatives. More effective human resources initiatives can lead to human capital management innovation.

HR professionals aren’t the only ones who value the information provided by human resource metrics. Executives value HR reporting to help them better manage human capital. After all, human capital is what ultimately keeps the business running. Because of this, executives will likely be interested in the manager retention rate per employee.

The most important HR metrics are the ones that give the HR team insight into what processes they can improve to decrease voluntary turnover rate. When employees are satisfied, they are less likely to leave the company, reducing organizational performance turnover percentages. The HR team should share the most important metrics with company executives to evaluate ways to decrease employee turnover and increase retention.

The Takeaway

Human resources professionals can use HR metrics to develop innovations in hiring and employee engagement. Important HR metrics can provide insight when developing strategies for retention of new hires and prevention of new hire turnover. While all the HR metrics terms shared here are important, it’s ultimately up to your team to choose which metrics are most valuable.

Not sure where to start? Talk to someone who wants to listen.

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