Just a few short years ago, data-driven HR was looked at with skepticism from many in the industry. Today, it is viewed as essential for maximizing a company’s HR function and uncovering valuable information about an organization and its workforce.
This has led to a greater focus and awareness of HR analytics and metrics
, and the benefits a data-driven approach can have on companies, including small and medium-sized businesses (SMBs).
We recently wrote a blog about HR analytics
and why they are important for small employers. As a follow up to that article, we decided to explore 14 HR metrics that may prove to be valuable for smaller companies to track and analyze, and how to calculate them.
1) Employee Net Promoter Score (eNPS)
Net promoter score (NPS) is a popular metric used to determine customer satisfaction. But did you know it can also be used to determine employee engagement and happiness?
To get an eNPS score, employers must first survey their employees on a routine basis, such as twice per year or once each quarter. The survey should ask employees to rate their willingness to refer their company to a friend or colleague on a scale of 1-10 (or something similar).
The results break down like this:
- Ratings from 0-6 are called detractors
- Ratings from 7-8 are called passive
- Ratings from 9-10 are called promoters
To calculate this metric:
eNPS = % Promoters – % Detractors
eNPS is a great metric for business leaders to measure frequently, and set goals around improving each time the survey is conducted.
2) Turnover Rate
Perhaps one of the most commonly used HR metric, employee turnover rate shows the number or percentage of employees who leave a company during a given time frame, but whose role the company intends to re-fill.
can be beneficial in gauging a company’s culture, recruiting strategy, and much more. High turnover rates could mean internal issues that leadership should address.
One way to calculate this metric is:
Turnover Rate = (Number of Separations / Average Headcount) x 100
3) New Hire or Early Turnover
An important sub-metric of employee turnover rate is new hire/early turnover rate. This HR metric looks at the number or percentage of employees who leave within their first year.
To some HR experts, this metric is even more important to track than overall turnover numbers.
New Hire Turnover Rate = (Number of Employees Who Leave After Less than 1 year / Total Number of Separations During the Same Period) x 100
4) Average Time to Fill
Recruiting metrics are some of the most important HR metrics an organization can measure. Tracking and analyzing these metrics over time can help identify areas in need of improvement, and can help strengthen talent acquisition strategies
One of the most commonly used recruiting metrics is average time to fill
. This metric looks at the number of days it takes from a job being posted to when an offer is accepted.
The formula for the metric is:
Average Time to Fill = Total Number of Days of Open Jobs / Total Number of Open Jobs
Knowing how many days on average your positions remain open can help improve recruiting efforts.
5) Offer Acceptance Rate
Another popular recruiting metric, offer acceptance rate measures the percentage of candidates who accept job offers.
If a company has a low offer acceptance rate, this could mean that there are issues with compensation, job title, employee benefits, or many other factors that would cause a candidate to decline an offer.
Much like time to fill, this metric isn’t too difficult to calculate:
Offer Acceptance Rate = (Number of Offers Accepted / Number of Offers) x 100
6) Absence Rate
Absenteeism can be a problem for companies of all sizes. It could mean there are issues with company culture, compensation, and employee satisfaction.
It’s important to note that absence rate measures how often employees call in sick or don’t show up for work. This metric doesn’t include things like PTO, jury duty, or other planned absences.
Routinely tracking this metric can help identify workplace trends, such as certain times of the year that have higher absentee numbers.
To calculate this metric:
Absence Rate = (Total Number of Days Missed / Number of Workdays) x 100
7) Absence Rate Per Manager or Department
Businesses can drill down further with absence rates by looking at absence rates per manager or department. Doing so can help to pin-point specific areas of a company where absenteeism is a problem.
For example, this metric can help show which departments or managers are experiencing higher absenteeism. This allows leadership to address the issues that are leading to increased absences.
Absent Rate Per Manager/Department = (Total Number of Days Missed by a Team or Department / Total Number of Workdays in a Team or Department) x 100
8) Employee Satisfaction
Many studies have shown that happy, engaged, and satisfied employees are also the most productive. These employees are also much less likely to leave the organization – which lowers turnover rates and saves the company resources for recruiting.
This is why measuring employee satisfaction is commonly viewed as one of the most important HR metrics.
eNPS is one way to measure employee satisfaction. Additionally, other surveys and questionnaires can help employers find how satisfied employees are, and also figure out ways to improve happiness.
9) Training Cost Per Employee
Learning and development is more important than ever for both employers and employees. Many businesses are spending a lot of resources to help train their workforce
It shouldn’t be too much of a surprise that, given the amount of money spent on L&D, business leaders want metrics to justify the costs.
One popular metric is training cost per employee, which breaks down how much money on average the company is spending on L&D per worker.
The formula to calculate this metric is:
Training Cost Per Employee = Total Money Spent on Training / Number of Employees Who Participated in Training
10) Training Time Per Employee
Another useful L&D metric is training time per employee. This number breaks down the average number of training time (generally viewed in hours) per each employee in the organization.
This can help a business determine how many training hours each employee needs to take in order to meet a larger organizational goal.
Here’s how to calculate this HR metric:
Training Time Per Employee = Total Number of Training Hours / Total Number of Employees
11) Cost Per Hire
Often viewed as one of the most important recruiting metrics, cost per hire
helps companies and talent acquisition departments determine how much money is spent on each new hire.
This metric requires some time to accurately calculate, as there is expense data (both internal and external) that needs to be determined first.
But accurately measuring cost per hire can help determine just how healthy a recruiting strategy truly is.
To calculate cost per hire:
Cost Per Hire = ([Total External Costs] + [Total Internal Costs]) / Total Number of Hires
12) Revenue Per Employee
Another organizational metric, revenue per employee can help determine if a company’s staff is at a healthy total number. It can be especially useful when measured and compared over time.
This metric has also been proven to be very beneficial to smaller employers.
To calculate a monthly number:
Revenue Per Employee = Monthly Revenue / Number of Employees
To calculate a yearly number:
Revenue Per Employee = Yearly Revenue / Number of Employees
13) Employee Performance
Measuring employee performance is critical for just about all companies, and there are many ways these types of metrics can be measured and analyzed.
Individual employee performance goals can be set up at a monthly, quarterly, and/or yearly basis. The same goes for team or departmental goals.
While there may not be one “right” way to measure employee performance, tracking performance numbers can assist with promotions, salary increases, business growth, and much more!
14) Promotion Rate
It’s important for employers to have data around promotion and advancement within the organization. These numbers could help explain why turnover rates are high, or why employee satisfaction lowers the longer an employee is with the company.
Tracking promotion numbers can help provide insights into your employee development efforts. Additionally, having impressive numbers can be a great tool for recruiting and retention.
To calculate this metric:
Promotion Rate = (Total Number of Promotions / Total Headcount) x 100
HR Metrics Are Critical to Business Success
It’s important to note that there are hundreds of HR metrics
that organizations and departments can track beyond the ones listed above.
HR data can provide valuable insights into an organization and its workforce that can be used to make significant improvements. Additionally, tracking and analyzing various HR metrics can help business leaders identify where resources should be spent in an organization.
This helps to build a data-driven decision-making culture, which can ultimately result in achieving business success.
What’s the difference between co-employment and employee leasing? Check out our eBook, Co-Employment vs. Employee Leasing: The Differences Brokers (and Clients) Should Know, to learn more about how different they really are!