HR KPIs and metrics are crucial for your team to stop wasting time and resources into something that brings no results. How else can you make sure your efforts are working and yielding the progress your company needs? It’s important to understand how to measure employee performance, compensation, and more, enabling data-driven decisions and increasing predictability.
Modern HR is strategic and is rapidly becoming one of the most important parts of any company, especially in service-based models (including SaaS). It is a company’s beating heart, ensuring the blood flows in the right direction to move the company forward. And because HR is so important, it is necessary to be able to measure your efforts’ results to make arrangements, if necessary.
HR KPIs and metrics: Recruiting
- Average Time to Find a Hire: Helps track how efficient the hiring process is;
- Candidates Interviewed per Hire: This is determined by calculating the total number of candidates interviewed by the total number of hires in a particular hiring period;
- Percentage of Job Candidates Who Meet Job Criteria: Used to evaluate how effective the job postings are, in reaching top candidates;
- Yield Percentage: The percentage of how many candidates remain after each hiring process round. If your percentage is low, maybe you need to update a job posting that is confusing or unclear;
- Acceptance Rate: Dividing the number of acceptances by the number of offers allows organizations to get a sense of how successful their recruitment strategies are;
- Hiring Process Satisfaction Rate: Provides a perspective on how well the process works, from the employee’s perspective;
- Cost per Hire: Acknowledges the number of resources invested in acquiring the best talent;
- Performance of New Hires: The performance of new hires can be compared to that of other employees. Typically done by evaluating performance reports;
- Rate of Internal Job Hires: Shows the effectiveness of organizational talent development.
- Rate of Internal Referral Hires: Allows managers to see the value added when current employees help to identify and acquire talent.
HR KPIs and metrics: Skills and training
- Employee Productivity Rate: Helps to measure workforce efficiency over time. It can be determined by taking the total company revenue and dividing it by the total number of employees;
- Suggestions per Employee: Evaluates employee engagement in improving business processes, and reflects on the openness of a company to employee input;
- Internal Promotion Rate: Internal promotions indicate successful retention and growth of top performers. It can be determined by dividing the number of promoted individuals by the total number of employees;
- Internal Promotions Vs. External Hires: This ratio measures how many people already working at a company are considered for internal promotion versus the number of externally attracted people. It can be particularly effective when looking at organizational succession planning.
HR KPIs and metrics: Turnover and Retention
- Employee Satisfaction Index: This is a key metric underlying talent retention. Using a company-wide survey can be helpful in gauging employee happiness;
- Diversity Rate: Keeps track of how successfully the organization is in creating a diverse environment and community;
- Average Tenure: The average length of time that an employee spends with the company.
Attrition Rate: Determined by dividing the number of employees who left the company by the average number of employees;
- Turnover Rate For Highest Performers: Helps indicate the success of retention efforts. It can be determined by dividing the number of high performers to leave in the past year by total high performers identified;
- Voluntary Termination Rate: Determined by taking the number of employee-led resignations from the company over the total number of terminations in a given time period;
- First Year Voluntary Termination Rate: Reflects how welcoming the company is to new employees;
- Involuntary Termination Rate: Determined by taking the number of employer-led resignations from the company over the total number of terminations;
- Retirement Rate: It can be calculated by looking at the number of employees who retired as a percentage of the headcount;
- The Average age of Retirement: The summed age of all retiring employees divided by the number of retiring employees.
HR KPIs and metrics: Payroll and Benefits
- Percentage of Cost of Workforce: The cost of the workforce as compared to all costs can be measured by summing all salaries and dividing by the total company costs within a given period;
- Salary Competitiveness Ratio (SCR): Used to evaluate the competitiveness of compensation options. This can be determined by dividing the average company salary by the average salary offered from competitors (or industry standard);
- Number of Contractors: Examines the growth in associated workers over time. It can be compared to the number of full-time workers to better understand workforce trends;
- The number of Full-Time Employees: Keeps tabs on the growth of the company workforce over time;
Percentage of Vacation Days Used: Helps show the company attitude toward a healthy work-life balance. Determined by observing the number of vacation days used as compared to those unused.
- Absenteeism Rate: Gives perspective on the amount of labor and productivity lost due to sickness and otherwise unpredicted leave. Formula: (Total number of lost workdays due to absence) / (Number of available workdays in an organization) = (Absenteeism rate);
- Return on Investment (ROI): The profit per dollar invested in social compensations/wages.
HR KPIs and Metrics: Training and retaining
- Cycle Time To Process Payroll: Shows timeframe of the process, giving projection if assistance/updated process is needed. This is the number of business days in the payroll process from start to finish;
- Cycle Time To Resolve Payroll Errors: The number of business days it takes to resolve payroll error reported by employees. A high number of days could indicate the need to review your payroll process.
With the main HR KPIs and metrics in mind, take time to identify which ones bring the most value to your company and department – and turn them into action. Create a Balanced Scorecard: a cluster of data that helps your leadership team analyze the effectiveness of the HR strategies.
How Ubiminds can help you achieve your people management goals
By partnering up with Ubiminds as one team, we take on most of the legwork necessary for tech recruiting, providing HR only the best candidates. This allows HR to redirect energy into more pressing strategic matters.