Measuring HR metrics is crucial for businesses to gain valuable insights into their workforce and make informed decisions based on data. In this article, we will discuss the top 20 HR metrics that every business should track, how to track and relevant benchmarking research statistics.
1) Employee Turnover Rate :
Employee turnover rate is the percentage of employees who leave a company during a given period. High turnover rates can cost businesses significant amounts of money in terms of recruitment, training, and loss of productivity. According to a report by Work Institute, the cost of employee turnover is estimated to be 33% of an employee's annual salary.
Formula: (Number of employees who left / Average number of total employees) x 100
2) Absenteeism Rate : Absenteeism rate measures the percentage of employees who are absent from work, either scheduled or unscheduled, during a given period. High absenteeism rates can lead to decreased productivity, increased costs, and lower morale. According to the Society for Human Resource Management (SHRM), absenteeism costs employers an average of 2.8% of their total payroll.
Formula: (Total days absent / Total scheduled workdays) x 100
3) Time to Hire : Time to hire measures the time it takes to fill a vacant position. A long time to hire can result in a loss of productivity and increased recruitment costs. According to a report by Glassdoor, the average time to hire in the United States is 23.7 days.
Formula: (Date the position was posted - Date the candidate accepted the offer)
4) Cost per Hire : Cost per hire measures the cost of the recruitment process to fill a job opening. High cost per hire can indicate inefficient recruitment processes, a lack of competitive compensation and benefits, or a shortage of qualified candidates. According to SHRM, the average cost per hire in the United States is $4,129.
Formula: (Total Recruitment Costs / Total Number of Hires).
5) Time to Productivity : Time to productivity measures the time it takes for a new hire to become fully productive. A long time to productivity can result in decreased productivity, increased costs, and lower morale. According to a study by Aberdeen Group, organizations with a strong onboarding process improve new hire retention by 82% and productivity by over 70%.
Formula: (Number of days to reach full productivity / Total number of days employed)
6) Revenue per Employee : Revenue per employee measures the total revenue generated by a company divided by the number of employees. This metric is important to track as it can help companies to understand the efficiency of their workforce and how they contribute to the company's revenue. According to a report by PwC, companies that are in the top quartile for revenue per employee are 2.6 times more likely to be profitable than those in the bottom quartile.
Formula: Total revenue / Total number of employees
7) Profit per Employee : Profit per employee measures the profit generated by each employee. A high profit per employee indicates efficient use of resources and effective management. According to a report by PwC, companies in the top quartile for profit per employee have a 14% higher return on equity than those in the bottom quartile.
Formula: Profit per Employee = Total Company Profit / Total Number of Employees.
8) Training and Development Cost per Employee : Training and development cost per employee measures the cost of training and developing employees within a company. High investment in training and development can lead to increased employee engagement, improved employee performance, and decreased turnover. According to a study by LinkedIn, companies that invest in employee training and development have a 37% higher employee retention rate.
Formula: (Total cost of training and development / Total number of employees)
9) Diversity and Inclusion : Diversity and inclusion measures the level of diversity within a company's workforce. This metric is important to track as it can help companies to create a more inclusive and welcoming workplace culture that fosters innovation and creativity. According to a study by McKinsey & Company, companies with more diverse workforces are 35% more likely to have financial returns above the industry median.
Formula: (Number of employees from underrepresented groups / Total number of employees) x 100
10) Gender Diversity : Gender diversity measures the percentage of male and female employees in the company. A diverse workforce can lead to increased innovation, better decision making, and improved employee satisfaction. According to a study by Catalyst, companies with more women in leadership positions have a 21% higher return on equity than those without.
Formula: (Number of Male Employees / Total Number of Employees) x 100% and (Number of Female Employees / Total Number of Employees) x 100%
11) Employee Productivity : Employee productivity measures the amount of work completed by employees within a specific period. This metric is important to track to identify areas where productivity can be improved and optimize workforce planning. According to a report by Gallup, businesses that score in the top quartile for employee engagement are 21% more productive than those in the bottom quartile.
Formula: Total output / Total number of employees
12) Employee Satisfaction : Employee satisfaction measures the overall level of satisfaction among a company's employees. This metric is important to track as it can help companies to identify areas where they can improve their work culture and employee engagement. According to a study by Harvard Business Review, satisfied employees are 31% more productive than those who are not.
Formula: (Number of satisfied employees / Total number of employees) x 100
13) Promotion Rate : Promotion rate measures the percentage of employees who have been promoted within the organization. A high promotion rate indicates a healthy career progression and growth opportunities for employees. According to a study by Harvard Business Review, companies that promote from within have a 90% employee retention rate.
Formula: Number of employees promoted during the period / Total number of employees * 100%
14) High Performer Turnover Rate : High Performer Turnover is the percentage of high-performing employees who voluntarily leave an organization. It is an important metric to track as it can indicate issues with retention and talent management strategies. According to a study by Harvard Business Review, companies that fail to retain top talent are 4.5 times more likely to lag behind their competitors in terms of revenue growth.
Formula: (No. of High-Performers Left / Total Number of Employees Left) x 100
15) Turnover Rate by Department : Turnover rate by department measures the percentage of employees who have left a specific department within a given period. It is important to track this metric to identify departments with higher turnover rates and take necessary actions to address retention issues.
Formula: Number of employees who left the department / Total number of employees in the department * 100%
16) Probationary Turnover Rate : Probationary turnover rate tracks the number of employees who leave the company during their probation period. Understanding the reasons why employees leave during probation can help HR identify potential issues with the recruitment or onboarding process, as well as help improve retention rates.
Formula: (Number of employees who left during probation period / Total number of employees who started during the same period) x 100
17) Employee Net Promoter Score (NPS) : Employee Net Promoter Score (NPS) measures the likelihood of employees to recommend the company as a place to work. High employee NPS can indicate high employee satisfaction and engagement. According to a study by Bain & Company, companies with high NPS scores grow at more than twice the rate of their competitors.
Formula: Employee NPS = (Number of Promoters – Number of Detractors) / Total Number of Responses x 100%
18) Women in Leadership : Women in leadership measures the percentage of women in leadership positions within an organization. This metric is important as it helps organizations track their efforts towards gender diversity and inclusion. It can also help identify any barriers preventing women from advancing into leadership roles. According to a study by McKinsey & Company, companies in the top quartile for gender diversity on executive teams are 25% more likely to have above-average profitability.
Formula: Number of women in leadership positions / Total number of leadership positions x 100
19) HR-to-Employee Ratio : HR-to-employee ratio is a metric that measures the number of HR employees in proportion to the number of employees in the organization. It is important because it indicates the effectiveness and efficiency of the HR department in managing the human resources of the organization. According to a study by the Society for Human Resource Management (SHRM), the average HR-to-employee ratio in the United States is 1.4 HR professionals for every 100 employees.
Formula: HR to employee ratio = Total number of HR employees / Total number of employees in the organization
20) Training ROI : Training ROI measures the return on investment (ROI) for training and development initiatives. A high training ROI indicates that the training is effective and provides value to the company. According to a study by Training Industry, companies that measure the ROI of their training programs are 46% more likely to report that their training budget has increased over the previous year.
Formula: (Total benefits of training - Total costs of training) / Total costs of training x 100%
By tracking these top 20 HR metrics, organizations can gain valuable insights into their workforce and make data-driven decisions to improve their HR processes, employee engagement, and overall business performance.