HR metrics examples: What to track and how to action the data

To review the performance of your human resources (HR) department, it’s important to decide which metrics to measure and how to action the data you collect. 

Tracking the right HR metrics helps you identify and address inefficiencies within your business. It also helps you determine whether you’re achieving HR goals that align with your business strategy.

In this article, we discuss why measuring HR metrics is important. We'll also take a look at HR metrics that professionals should track to make informed decisions.

What are key HR metrics?

Key HR metrics are measurable criteria that track and evaluate an HR department’s performance. HR metric examples determine how well HR team members are achieving their goals and contributing to the business’s success. 

HR metrics also help HR professionals optimize their approach to hiring, onboarding, engaging with employees, and managing training costs. Backed with data, HR managers can identify strengths and weaknesses in their existing strategy. 

HR metrics often include employee satisfaction, absenteeism, gender diversity, and overtime hours. Talent retention is another important HR metric — in fact, it's one of the biggest challenges for HR leaders.

Why should you track HR metrics?

Measuring HR metrics helps HR professionals see how well they are supporting employees. Think of it as a pulse check. You get a clear sense of what’s working and what could be done better to improve HR functions.

Here are reasons why you should start measuring HR metrics in your company.

Address small problems before they grow

59% of worldwide employees are psychologically disengaging from their work.

It's important to listen to team members and address problems before they escalate. Giving employees the chance to voice their concerns — without fear of retaliation — can go a long way to improving employee morale.

Measure the effectiveness of your company’s HR department

Does your onboarding experience prepare new employees for their roles effectively? Do employees feel consistently engaged in their work and with their colleagues and customers? How often are your high-performing employees leaving the company, and what are their reasons for doing so? 

Tracking and measuring the right HR metrics can help you answer these types of questions to continuously meet company objectives.

Improve your company culture

Tracking HR metrics can do more than measure employee performance metrics. It can also improve company culture, including employee satisfaction and morale. By knowing which areas need improvement, you have the information to reshape your company.

Better recruitment processes

HR metrics provide a data-driven approach to boost recruitment and hiring processes. Companies can identify inefficiencies and areas for improvement by looking at metrics like time to hire and cost per hire.

This enhances the quality of new hires since hiring managers can target their recruitment efforts more effectively. It also reduces the overall time and cost to bring new talent on board.

Important HR metrics to track

Ideally, you should track HR metrics that are specific to your HR department and business objectives. 

Let’s say your company is struggling to retain valuable employees. You can measure metrics like employee satisfaction, turnover rates, and overtime hours worked. You may discover many employees feel undervalued and overworked, causing them to seek better opportunities.

While there’s no one-size-fits-all approach to choosing key HR metrics, the following are a great starting point.

1. Absenteeism

Absenteeism rate tracks the frequency at which employees go on unplanned absences at work. Frequent unexcused absences can signal underlying issues such as poor job satisfaction, workplace stress, or health problems in the workforce.

To calculate absenteeism, simply divide the total number of days an employee was absent by the total number of their scheduled work days, as below.

(Total Number of Absences / Period of Time) x 100

For example, if an employee was absent six days over the last 30 working days, then that employee’s absenteeism rate would be 20%.

2. Cost per hire

Cost per hire is the amount of money a company spends to fill a job opening. The average cost per hire is a hefty $4,700.

Cost per hire encompasses all steps in the recruiting and onboarding process, including the following.

• Writing job advertisements

• Paying fees for job platforms

• Narrowing down and interviewing candidates

• Performing background checks

• Providing training resources for new members

If you know your cost per hire, you can determine your average return on investment per employee. Are you getting back more than what you’re putting in? If not, how can you optimize your recruitment and onboarding company strategy so that you do?

To calculate the average cost per hire, divide the total recruitment and onboarding cost by the total number of hires over a given period.

(Internal recruitment costs + External recruitment costs) / Number of hires

For example, if a company spends $5,000 on internal recruiting and $10,000 on external recruiting to hire 10 workers, then the cost per hire is $1,500.

3. Time to hire

Time to hire calculates the average duration between posting a job opening and acceptance of the job offer by a candidate. The average time to hire in the US is around 44 days. This HR metric is a good way to determine the effectiveness of your recruiting procedures. To calculate time to hire, subtract the date that a new employee accepted an offer by the date that the job opening was posted. 

Date of Acceptance – Date of Job Posting

For example, if a job posted on January 1st is filled on January 30th, then the time to hire is 29 days.

To calculate the average time to hire, divide the total time to hire by the number of roles. Let’s say you filled three roles in a given year, with respective fill times of 20, 30, and 40 days. The calculation for average time to hire is:

20 + 30 + 40 / 3 = 30 days

4. Retention rate

Retention rate is the percentage of employees who stay with the company over a given period, usually a year. It an indicator of the company’s ability to maintain workforce stability. Retention should be a priority, considering that 48% of US employees are actively seeking a new job.

Measuring retention can help you determine how effective your company is at keeping valuable employees. Poor retention may be a sign of low morale, not enough career growth opportunities, and unreasonable salaries and benefits. You can identify the reasons for low retention to increase HR metrics.

For example, if poor salary and benefits packages are the problem, you can use Remote’s Global Benefits portal to compare local plans and offer more attractive packages.

To calculate retention, divide the number of remaining employees in a set period by the number of employees who were present at the beginning. Then, multiply that number by 100.

(Number of employees who stayed / Number of employees at start of period) x 100

For example, if 90 out of 100 employees stay over a year, the retention rate is 90%.

5.  Early turnover

Early turnover is the percentage of new hires who depart from the company within a predetermined initial period, often within their first year of employment. A high early turnover can suggest that employees had a bad experience during onboarding or probation periods.

To calculate early turnover, use the below formula.

(Number of separated employees who worked less than 1 Year / Total number of separations in the same period) x 100

For example, out of the 10 employees who left a company within a fiscal year, 6 were new hires. You’d divide 6 (number of separated employees who worked at the company for less than 1 year) by 10 (total number of separations) to get 0.6. Then, you’d multiply 0.6 by 100 to convert it into a percentage, making the early turnover rate 60%.

6. Quality of hire

This metric evaluates how new employees contribute to the business, considering their performance and how well they align with the company culture. 

A high quality of hire indicates that the recruiting process identifies candidates with the right skills and, at the same time, chooses those who end up contributing positively to the company’s goals.

To calculate the quality of hire, use the below formula.

Quality of Hire = (Indicator 1 + Indicator 2 + Indicator 3…) / # of Indicators

For example, a company rates each new employee on a scale of 1 to 10 for their technical skills, teamwork, and attitude. Team member A received a score of 8 for their technical skills, 9 for their teamwork, and 7 for their attitude. The employee receives a quality of hire score of 8 via the formula above, indicating that they are a high-value addition to the team.

7. Diversity, equity, inclusion, and accessibility

Diversity, equity, inclusion, and accessibility (DEIA) assesses the extent to which an organization represents and includes diverse groups across all levels. This metric is vital for fostering a workplace environment that values and leverages diversity as a strength.

Statistics underscore the financial impact of DEIA initiatives. For instance, companies ranking in the top 25% for gender diversity are 25% more likely to surpass their financial peers, and those in the top 25% for ethnic diversity are 36% more likely to outperform their competition financially.

Measuring DEIA involves a comprehensive approach than a headcount. To start, you can calculate your company’s gender diversity.

Gender diversity evaluates the ratio of male, female, and non-binary individuals who work at your company. Gender disparities exist between entry-level and C-suite positions. Globally, 48% of women assume entry-level roles, while only 28% assume C-suite roles.

One way to measure gender diversity quantitatively is to use the diversity index. With this calculation, you divide the number of underrepresented employees (e.g., women and non-binary individuals) by the total number of employees in the company and then multiply that number by 100. The formula is:

(Number of underrepresented employees / Total number of employees) x 100

For example, let’s say a company has 35 female or non-binary employees out of 150 employees in total. This company’s gender diversity index is 23.3%.

8. Employee engagement

Employee engagement reflects the degree of commitment and connection employees feel toward their organization.

Organizations that have remote team members need to make an effort to engage all team members. Effective communication can help all team members feel valued regardless of their location.

You can use a survey to calculate employee engagement metrics. Employees usually respond to statements about their work experience. Responses are usually on a Likert scale (e.g., 1 to 5, where 1 = strongly disagree and 5 = strongly agree). You can then calculate the average score for each question.

For example, if your survey has 10 questions and the total average score for all questions is 40, then the overall engagement score is 4. This suggests a relatively high level of engagement if 5 is the maximum score.

9. Employee Net Promoter Score

Employee Net Promoter Score (eNPS) gauges employees’ loyalty and likelihood to recommend your company as a great place to work. A high eNPS indicates a healthy, positive work environment where employees feel engaged and valued.

This score is derived from eNPS surveys, which ask employees a single question: “On a scale of 0 to 10, how likely are you to recommend our company as a place to work?” Responses from participants are categorized into three categories: promoters (9 to 10), passives (7 to 8), and detractors (0 to 6). 

The formula to calculate eNPS is:

% of Promoters – % of Detractors

For example, if 70% are promoters and 10% are detractors, then the eNPS is 60.

10. Performance and potential (9-box grid)

The 9-box grid is a talent management tool used to assess employees’ current performance alongside their potential for future growth. This framework divides employees into nine categories, creating a matrix based on levels of performance and potential.

Managers can use this HR metric to make informed decisions in talent management and succession planning. The 9-box grid is not based on a quantitative formula; rather, it’s more of a qualitative tool. Still, you can use data from performance reviews and other HR metrics for the 9-box grid.

11. Training effectiveness

People feel more engaged at work if they are learning new concepts or skills. Training effectiveness is a metric that evaluates the impact of training programs on enhancing employee performance and skills.

To measure training effectiveness, organizations can get feedback from employees on the training they received. This can include content quality and trainer proficiency. They can also measure key performance indicators (KPIs) that are directly affected by the training by comparing pre-training and post-training data.

For example, in a sales training program, you can measure the KPI of sales revenue and compare participants’ performance before and after the training. In this way, you can determine whether your training program is effective or not.

12. Revenue per employee

Revenue per employee is a financial metric that assesses the amount of revenue each employee generates. This can indicate the organization’s overall efficiency and productivity. 

A higher revenue per employee suggests that the company is using its workforce efficiently, maximizing performance and output. A lower revenue per employee can indicate staffing issues or productivity problems.

The formula to calculate revenue per employee is as below.

Revenue per employee = Total revenue / Total number of employees

For example, if a company with 100 employees generates $1 million, revenue per employee is $10,000.

13. Billable hours per employee

Billable hours per employee is an important HR metric in service-based industries. This is because it measures the average number of hours an employee works that can be directly billed to clients. 

This metric is instrumental for HR professionals to gauge the productivity and efficiency of their workforce in generating revenue. By comparing billable hours against an employee’s compensation, companies can assess the profit that the employee contributed.

The formula to calculate billable hours per employee would be:

Average billable hours per employee = Total billable hours / Number of employees

For example, a firm tracked a total of 9,000 billable hours across its 30 employees (9,000 hours / 30 employees). This means there were 300 billable hours per employee during this period.

14. Employee satisfaction

Employee satisfaction reflects how content employees are with their job roles, work conditions, and the overall environment. This metric is measured through surveys that include questions about various aspects of their job, work environment, relationships, and overall experience.

For example, you can conduct an employee satisfaction survey to measure overall satisfaction on a scale of 1 to 5. You can also include a section for open-ended comments to gain insights into specific areas that may need improvement. Look for recurring themes, such as concerns about workload or communication gaps.

Based on survey results, HR leaders can improve workplace practices. For example, you can launch wellness programs for remote employees to increase employee satisfaction.

HR metrics for best practices

Now that you have an idea of key HR metrics, let’s cover a few best practices to follow.

Conduct periodic reviews

17% of US workers say insufficient feedback is a primary reason why they might search for another job. 

Conducting regular check-ins and employee reviews is an effective way to gauge employee satisfaction, identify various issues early, and offer additional training programs and support. Periodic reviews can also help employees proactively voice their needs.

Review scorecards with leadership

A great way to improve HR functions is to create and use balanced scorecards (BSCs). BSCs can help measure the intellectual capital of a company. HR professionals can identify their department's strengths and weaknesses based on these metrics.

Create a BSC that reflects your company’s mission and vision. Then, review the results with leadership to identify growth opportunities.

Use Remote HR Management solutions

Whether you manage a local or global workforce, measuring HR performance without a single truth source can be challenging. Consolidating employee data from multiple, disconnected types of HRIS systems is time-consuming. Even worse, you are also prone to compatibility issues and potential data loss or manipulation.

With Remote HR Management, you gain full visibility of your employee data and HR metrics. You can hire, manage, and offboard both local and remote employees in one place. By harmonizing your HR processes, you can gain more actionable insights and manage everything with just one login.

Remote HR Management can help you track key HR metrics with the below features.

• Employee Self-Service: Put the power in your employees’ hands with one place for them to access pay slips, manage benefits, request time off, submit expenses, and more. You can use this information to track metrics like billable hours per employee.

• Talent Management: From onboarding to offboarding, hire and manage global talent through one convenient platform. You can use data from this platform to measure time to hire.

• Compensation Explorer: Offer more competitive job offers by optimizing your average salary and benefits packages to match (or even exceed) average localized plans. You can use this information to track revenue per employee.

Measure HR performance with ease

Measuring the performance of your HR department can be difficult if you don’t know the right HR metrics. Remote can help manage your global workforce with tools to onboard, manage, and offboard employees from a single platform. Powered by data, you can use information from the platform to measure key HR metrics to strengthen your HR strategy.

Contact us to find out how we can help empower your HR staff.