HR metrics provide a data-driven approach to managing human capital, offer insights into the effectiveness of HR practices, and ultimately predict the future. This has a direct impact on organizational success.

Let’s take a look at the commonly used HR metrics and how you can track and utilize them in your organization.

This list is by no means exhaustive. Rather, it is a core grounding in the most common metrics used in the field. We discuss this further in our HR Metrics & Dashboarding Certificate Program, where you will learn how to turn data into intuitive reports and compelling stories for decision-makers.

What are HR metrics?

HR metrics are quantitative measures used to track and assess the efficiency and effectiveness of human resource management practices within an organization.

These metrics cover a wide range of areas, including recruitment, retention, training, employee satisfaction, performance, and productivity. They provide valuable insights that help inform strategic decisions, optimize HR processes, and boost overall organizational performance.

Why are HR metrics important?

Making the HR function more data-informed has numerous benefits not only for the HR operations but also for the organization. Here are the key reasons why HR metrics are important:

• Strategically managing talent: HR metrics assist in identifying talent needs and gaps, guiding strategic decisions in talent acquisition, development, and retention. HR can leverage this information to create targeted talent management programs that address specific organizational needs, enhancing workforce capabilities.
• Optimizing costs: By analyzing recruitment, training, and turnover costs, HR metrics help in allocating budgets efficiently and identifying cost-saving opportunities. This allows HR to justify investments in employee development and retention strategies by demonstrating potential cost savings and ROI.
• Supporting strategic planning: HR metrics help uncover trends and make forecasts that are essential for informed strategic planning and organizational growth. HR can use these insights to align workforce planning with long-term business objectives and secure the right talent for the organization to meet future challenges.
• Improving decision-making: Data-driven insights from HR metrics empower HR professionals to make evidence-based workforce decisions. For example, by leveraging data on the impact of employee wellness programs on absenteeism rates, HR can make informed decisions about continuing, expanding, or modifying these programs to maximize their effectiveness.
• Highlighting the impact of HR initiatives on organizational performance: Tracking HR metrics and being able to show how they correlate with key business outcomes enables HR to showcase the tangible impact of its initiatives on organizational performance. This approach not only validates the strategic importance of HR efforts but also helps secure executive support and investment for future HR projects.

Put simply, HR metrics are essential tools for forecasting, planning, and optimizing the workforce for the future. Now, we’ll look at HR metrics examples across different areas of HR and the business.

HR metrics examples in recruitment and retention

1. Time to hire

Time to hire is one of the most widely used metrics for recruitment. It measures the number of days between a candidate applying for a job and them accepting a job offer. Time to hire gives insights into recruiting efficiency and candidate experience.

Here’s how to calculate your average time to hire:

Average time to hire = (1st candidate time to hire in days + 2nd candidate time to hire + nth candidate time to hire) / Total number of jobs

Recruitment efficiency measures the speed at which HR processes a candidate – assessment, interview, and role acceptance. If your organization has a long time to hire, it reflects that your processes are inefficient.

Having a long time to hire might negatively impact the candidate experience. Candidates may drop out of the recruitment process if it is too long, getting hired by a competitor instead.

Time to hire should not be confused with time to fill. This metric typically measures the days between the approval of a job requisition and the candidate accepting the job offer. This definition is in line with the Society for Human Resource Management (SHRM) and ISO 30414. 

2. Cost per hire

The cost per hire is a recruiting metric that shows how much it costs the company to hire new employees. This also serves as an indicator of the efficiency of the recruitment process.

Cost per hire can be time-consuming to work out, as you need to add together internal recruiting costs and external recruiting costs and divide the sum by the total number of hires. The costs and number of hires will both reflect a selected measurement period – such as monthly or annually.

Cost per hire = (Internal costs + External costs) / Total number of hires

Here are some examples of internal and external costs:

Internal costs

External costs

Cost of sourcing

Background checks

Recruitment team costs

Marketing costs

Administrative costs

Singing bonus

Hiring manager costs

Technological expenses

3. Quality of hire

Quality of hire measures the value a new employee brings to an organization. This metric assesses the effectiveness of the recruitment process and the long-term impact of new hires on company performance.

Quality of hire is typically evaluated based on several criteria, including the new employee’s job performance, their contribution to achieving team or organizational goals, how well they fit with the company culture, and their retention rate over time.

4. Early turnover

Early turnover – the percentage of recruits leaving in the first year – is arguably the most important metric to determine hiring success in a company. This early leaver metric indicates whether there is a mismatch between the person and the company or between the person and his/her position.

New hire turnover is also very expensive. It usually takes 6 to 12 months before employees have fully learned the ropes and reach their Optimum Productivity Level. The cost of replacing an employee can be as much as 1.5-2x the employee’s annual salary, especially for more senior roles.

You can calculate early turnover as follows:

Early turnover rate = (# of new hires who have left the organization during period / # of new hires who from that same period) x 100

5. Turnover

This metric, usually expressed as a percentage, shows how many workers leave the company in a given year. When combined with, for instance, a performance metric, the turnover metric can track the difference in departures of high and low performers.

Preferably, you would like to see low performers leave and high performers stay. This metric also provides HR professionals with a great amount of information about the departments and functions in which employees feel at home and where in the organization they do not want to work.

Turnover is very useful data to know when shaping recruitment strategies. Additionally, it could be a key metric in measuring a manager’s success.

Here’s how to calculate employee turnover rate:

Turnover rate = (# Terminations during period / # Employees at beginning of period) x 100

6. Time since last promotion

This rather straightforward metric is useful in explaining why your high potentials leave. It looks at the average time in months since the last internal promotion.

HR metrics examples related to revenue

7. Revenue per employee

The revenue per employee metric shows the efficiency of the organization as a whole. It is an indicator of the quality of the workforce.

The metric looks at the ratio of the organization’s total revenue divided by the current number of employees and is usually calculated on an annual basis:

Revenue per employee = Total revenue / Number of employees

It’s useful for comparing the year-on-year development of your revenue per employee, as well as comparing your organization to your competitors.

Another related metric is revenue per FTE.

8. Performance and potential

There are many qualitative and quantitative ways to measure employee performance. Metrics include Net Promoter Score, management by objectives, number of errors, 360-degree feedback, and forced ranking.

Another useful tool is the 9 box grid, which assists in measuring and mapping both an individual’s performance and potential in three levels. This model shows which employees are underperformers, reliable team players, high potentials, or exceptional talent:

This tool is great for differentiating between, for example, wanted and unwanted turnover.

9. Billable hours per employee

This is the most concrete example of a performance measure, and it is especially relevant in professional service firms (e.g., law and consultancy firms). Relating this kind of performance to employee engagement or other input metrics makes for an interesting analysis. Benchmarking this metric between different departments and managers/partners can also provide valuable insights.

This metric also relates to employee utilization rate, which refers to the amount of working time an employee is spending on billable tasks.

 

Other HR metrics examples

10. Cost of HR per employee

The cost of HR per employee is calculated by dividing the total cost of HR operations by the total number of employees in the organization. It is usually expressed in dollars and calculated per specific period, for example, on an annual basis.

Total HR costs refer to all expenses related to HR functions over a specific period. This includes salaries of HR staff, costs of HR systems and software, training and development expenses, recruitment costs, benefits administration, and any other HR-related expenditures.

Cost of HR per employee = Total HR costs / Total number of employees

11. HR to employee ratio

HR to employee ratio is another measure that shows HR’s efficiency. It indicates the number of HR professionals in an organization relative to the total number of employees.

Our State of HR research showed that the typical HR to employee ratio is around 1:50 or 2%, which means that there are 2 HR professionals for every 100 employees.

HR to employee ratio = Number of HR employees / Total number of employees

The ideal HR-to-employee ratio can vary significantly depending on the industry, the complexity of HR needs, the level of automation in HR processes, and the specific responsibilities handled by the HR department.

12. Ratio of HR business partners per employee

This metric is similar to the HR to employee ratio but looks specifically at HR business partners. This ratio is crucial for understanding how equipped the HR department is to provide strategic support and partnership to the business units it serves.

13. Effectiveness of HR software

The effectiveness of HR software is a more complex metric. The effectiveness of, for instance, learning and development software is measured in:

• The number of active users
• Average time on the platform
• Session length
• Total time on the platform per user per month
• Screen flow, and
• Software retention.

14. Absenteeism

Like turnover, absenteeism is also a strong indicator of dissatisfaction and a predictor of turnover. Absenteeism rate can give information to prevent this kind of leave, as long-term absence can be very costly.

Again, differences between individual managers and departments are very interesting indicators of (potential) problems and bottlenecks.

This is how you can calculate your absenteeism rate:

Absenteeism rate = (Number of absent days / Total working days) x 100

15. Training expenses per employee

Training expenses per employee is a metric that quantifies the average amount of money an organization spends on the training and development of each employee over a specific period, typically a year. This figure is key for understanding the investment an organization makes in enhancing the skills, knowledge, and competencies of its workforce.

You can calculate training expenses per employee as follows:

Training expenses per employee = Total training expenses / Total number of employees

16. Overtime expenses

Overtime expenses refer to the additional costs incurred by an organization when employees work beyond their regular working hours and are compensated at a higher rate, as mandated by labor laws or company policies.

These expenses are a form of direct labor cost and can significantly impact an organization’s payroll budget. That’s why it’s important to keep track of them.

Here’s an overtime expenses calculation formula:

Overtime expenses = Total overtime hours worked x Overtime pay rate