HR Metrics are a key component of any business's overall strategy. A huge majority of business leaders understand the importance of these metric reports, with over 82% believing them to be extremely useful for their organisation.
HR metrics, after all, are instrumental to understanding how employees, company culture, benefits, and more all work towards improving business performance.
HR metrics are key to helping managers and business owners understand how they can get more out of their employees to maximise impact and results. The metrics that are measured range from data sets like cost per hire all the way to productivity rate.
1. Time to Hire
Calculating how many days it takes between a new position opening up in your office and when you make your hiring offer is a key metric you will want to know. By understanding this metric, you can figure out how efficient the recruitment process is, as well as identify new opportunities to improve the process.
2. Time to Fill
It isn't just hiring someone that can take time. By measuring how long it takes between hiring someone and when they finally start, you can work to improve the onboarding and admin process as necessary.
3. Cost Per Hire
It costs money to hire new employees. From the time it takes for your HR team to bring someone in to the loss in productivity. This metric can help you understand how efficient the recruitment process is and is an important metric alongside time to hire and time to fill.
4. First-Year Turnover
Though there is a probation period for every new hire, it is still costly for new hires to leave in their first year. Early turnover or first-year turnover is a metric you will want to know. It takes between six months to a year for a new employee to get into the swing of things and for their productivity levels to increase. By calculating this metric, you can improve future hires and the recruitment process as a whole.
5. Turnover Rate
Turnover rate as a whole is one of the most important Key HR metrics and KPIs to investigate. High turnover is costly. Recruitment costs, training costs, onboarding costs, and lower productivity will all impact your business's efficiency and profitability.
6. Training Return on Investment
This metric helps you understand the value of your training program. To measure it, you will need to use performance metrics to calculate employee productivity. You should also calculate net promoter scores. Once you have these, you can understand the value of the employee and start to work out how much of their performance and productivity were due to your training investment.
7. Training Cost Per Employee
This is an easy metric to calculate. Simply total the costs of the training – include travel, course fees, and even the cost of materials and management systems. Divide that number against the number of employees on your payroll or the number of employees you have trained, and the answer is your Training Cost per Employee. HR metrics for onboarding can help you improve your training investment and strategy.
8. Profit Per Employee or Revenue per Employee
This metric can help you understand how efficient your business is. How you score on this metric will depend on your industry and personal interests. HR performance metrics are a great way to do this, as it allows you to understand the value of each employee and their overall potential. Overall it can be an essential tool to help you understand the quality of the people you hire and how much they add to your business.
9. Engagement Rating
An engaged employee is a productive employee. This metric can help you understand where employees are engaged, especially if you have multiple teams and departments. A/B testing in this instance can allow you to understand the value of different benefits, training, and other similar initiatives.
10. Cost of HR per Employee
HR costs per employee are another great metric to understand, especially as HR software can greatly impact your HR department. Improving efficiency and reducing costs is possible, so quantify costs before a big change is made and after to understand the true value of your new management tool.
Frequently Asked Questions (FAQ)
1. How to Calculate HR Metrics
Every metric requires its own calculations. You cannot measure employee experience the same way as you measure the cost-per-hire. The HR metrics formulas can range from simple math to creating a scorecard to quantify traits and potential. There are a variety of HR metrics scorecard examples online to help you get started.
2. Difference Between HR Analytics and HR Metrics
HR metrics and analytics are siblings, but not the same. HR metrics can be seen as the raw data in this instance. They work out the cost and extract information from factors like onboarding costs or training costs.
HR analytics takes the information from the HR metrics and analyses the data to come up with new strategies and to make better business decisions. Think of metrics as the data, and analytics as understanding the data.
3. What are HR Analytics and Metrics?
HR Analytics are the process and solutions found by analysing the information of certain HR metrics. Metrics are the components of your HR that you wish to quantify. Both are important.
4. What HR Metrics are Most Important to the Organisation?
Common HR metrics that are arguably the most important to any organisation are as follows:
- Benefits participation rate
- Employee satisfaction
- Total turnover rate
- Talent turnover rate
- Retention rate
- Time tracking
5. What are HR Metrics?
HR Metrics, or human resource metrics, allow you to keep track and quantify human capital. You can also understand how effective and valuable your initiatives are. They allow you to understand in simple terms the impact of your initiatives and the employee experience. With metrics, you can understand issues like employee engagement and retention, employee value, employee performance, training value, and productivity levels.
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