How often does your HR department measure its effectiveness? HR metrics and measurements can be powerful in showing us areas where we could improve and better meet the needs of our organization and its employees. They can also help provide meaningful data to help us make good decisions for our business and department.
There are an endless array of HR metrics you can use spanning payroll, compensation, benefits, engagement, retention, training, and more – all of which can provide incredible insight into how your HR function is performing. But, some measurements are more important than others depending on your organization’s goals, strategy, and the data it can feasibly track, analyze, and use. Four crucial considerations that HR professionals need to consider when using HR metrics include:
- What metrics are most important to the organization?
- What data needs to be gathered or tracked to calculate these metrics?
- How will the data be analyzed and benchmarked?
- How will the analysis be used for action planning, development/improvement, and problem-solving?
We’ve provided some basic and standard metrics that we find many organizations using to help you get started measuring HR:
|Absence rate||# days absent in month ÷ (average # of employees during a month x # of workdays)|
|Benefit or program costs per employee||total cost of employee benefit/program ÷ total # of employees|
|Benefits as a percent of salary||annual benefits cost ÷ annual salary|
|Compensation as a percent of total compensation||annual salary ÷ total compensation (salary + benefits + additional compensation)|
|Compensation or benefit revenue ratio||compensation or benefit cost ÷ revenue|
|Cost per hire||recruitment costs ÷ (compensation cost + benefits cost)|
|Engagement or satisfaction rating||percent of employees engaged or satisfied overall or with a given aspect of the workplace|
|Percent of performance goals met or exceeded||# of performance goals met or exceeded ÷ total # of performance goals|
|Percent receiving performance rating||# of employees rated under a given score or rating on their performance evaluation ÷ total # of employees|
|Revenue per employee||revenue ÷ total # of employees|
|Return on investment (ROI)||(total benefit – total costs) x 100|
|Time to fill (average)||total days taken to fill a job ÷ number hired|
|Training/development hours||sum of total training hours ÷ total # of employees|
|Tenure||average # of years of service at the organization across all employees|
|Turnover (annual)||# of employees exiting the job during 12 month period ÷ average actual # of employees during the same period|
|Turnover costs||total costs of separation + vacancy + replacement + training|
|Utilization percent||total number of employees utilizing a program/service/benefit ÷ total number of employees eligible to utilize a program/service/benefit|
|Workers’ compensation cost per employee||total workers compensation cost for year ÷ average number of employees|
|Workers’ compensation incident rate||(number of injuries and/or illnesses per 100 full-time employees ∕ total hours worked by all employees during the calendar year) x 200,000|
|Yield ratio||percentage of applicants from a recruitment source that make it to the next stage of the selection process|
Keep in mind that this is merely a sampling of the many metrics you can use to gauge the effectiveness of your HR function. There are dozens more that could potentially be beneficial to track and measure, depending on your organization’s unique needs.
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