This blog was originally published on July 28, 2021, and updated on May 18, 2023 in line with industry trends and product updates.
Peter Drucker famously wrote, “what gets measured, gets managed”, and in order to manage and improve upon the various initiatives and responsibilities that fall under human resources, there are some key HR metrics that you should consider tracking.
Whether you’re a HR coordinator reporting to your manager, a Chief Human Resources Officer (CHRO) reporting to C-suite, or a HR manager maintaining compliance with Australia’s National Employment Standards, in this post you’ll find the top HR metrics to include in your next report. We’ve categorised the metrics into the following areas:
Key HR metrics to track
Recruitment and attraction
Productivity and performance
Engagement and wellbeing
Training and development
Workforce headcount simply refers to the number of people in your organisation at any one time.
Although this is one of the most essential HR metrics, it’s also one we commonly see organisations struggling to keep track of. With intelliHR, you can easily determine the number of people employed at your organisation at any one time, either as headcount or full-time equivalents, depending on how your organisation reports:
- Headcount: refers to the number of bodies in your organisation at any time. It does not distinguish between full-time, part-time, casual, etc. employees.
- FTE: refers to the number of full-time employee equivalents working in your business. This is often a more accurate representation of the total capacity of your workforce at any time.
In addition to the number of people in your organisation, it’s often important to be able to describe your people across a range of attributes such as age, gender, team, and location, especially to evaluate and report on any diversity and inclusion efforts.
In intelliHR, you can cross filter your people data to gain more specific insight into the structure of your workforce e.g.
- Work type / work class: Shows the distribution of human capital across different employment types. Is your workforce permanent or contingent? What is the ratio of full-time to part-time to casual? How many independent contractors do you have?
- Gender / age: Demographic filters can provide useful insight into the composition of your workforce. What is the gender composition in your leadership teams? How many employees are nearing retirement? What positions do they hold? Is your business compliant with the relevant equality legislation for your region?
- Business unit / business entity: Shows the distribution of human capital across different areas of the business. Where do you have the most capacity? Does this reflect true business needs?
- Pay inequality / gender pay gap: Automatically calculate the gender pay gap in percentage and dollar value across your organisation. You can also apply filters to identify pay inequality in different departments, work classes and seniority levels.
- Ethnicity / ability / other demographics: Use custom fields to gather further demographic information to support your diversity, equity and inclusion (DEI) initiatives. Eg. How much ethnic representation do you have in your workforce? Are your employees with special needs well-supported? Do certain departments have higher education requirements than others?
Recruitment and attraction
There are a number of key HR metrics that can give you insight into the start of an employee’s journey with your organisation. Use the following HR metrics to get a better understanding of your hiring and onboarding processes.
Total recruitment spend is the total amount you’ve spent hiring new employees over a certain time period. With the right setup, you can also break down this information to identify your spend on different recruitment channels, and the most effective channels based on their ROI.
Cost per hire is the average financial cost (or investment) you incur in bringing new employees on board.
This HR metric can be used as a budgeting tool as well as an indication of recruitment effectiveness.
CPH = (All external costs + All internal costs) / Total no. of hires in time period
For more details on calculating CPH and its variations, check out this Society for Human Resource Management guide.
Average time to hire is another important recruitment metric that gives a good indication of the efficiency of your recruitment process. It’s simply the number of days between when a candidate applies for a job and when they accept an offer. Average time to fill captures the number of days from when a job requisition is created, to when the offer is accepted by the candidate. By capturing the admin processes at the beginning of recruitment which can so often slow things down, this metric provides additional insight into your recruitment process efficiency. It is critical to reduce the average time to fill, especially during an ongoing skills shortage where the best talent gets snapped up by organisations that act swiftly, leaving the others to return to square one.
Wondering what a good time to fill a position is? According to the Majer Recruitment, in Australia, the average time is about 82 days. How does your organisation compare?
Time to productivity is the average time it takes a new employee to reach the expected level of performance.
When a new employee starts, depending on their role, it can take up to 12 months to get up to speed. Until this time, the employee isn’t profitable because the organisation is outlaying time, resources, and financial costs that are typically higher than the profit the employee generates (as you can see on the employee lifecycle graph above).
That’s why it’s useful to know the average time it takes an employee to reach this breakeven point, so that you can do what you can to speed up the process to help your employees attain the profitable performing stage earlier on in their tenure.
New hire turnover is the number of new employees who leave your organisation within a certain time period, typically 90 days, 6 months, and 12 months.
This key HR metric can shed some light on important recruitment and retention questions. Is our onboarding process effective? Are we hiring the right people? Are new starters receiving enough support?
Productivity and performance
Productivity and performance can be measured at both the organisational and individual levels. To understand the productivity of your workforce, you can calculate the revenue or profit per employee and human capital ROI. Every organisation uses different metrics and methods to measure individual employee performance, we’ve listed just a few below.
Revenue per employee is the amount of revenue from operations generated per permanent employee, calculated as:
Revenue per employee = Revenue / No. of permanent employees
Profit per employee, on the other hand, is the amount of profit generated per permanent employee. Calculate your profit first by subtracting operating costs from revenues, and then divide that figure by the number of permanent employees:
Profit per employee = (Revenue – operating costs) / No. of permanent employees
These can be calculated either on an employee or FTE basis as per your workforce headcount report.
Human capital return on investment is the rate of return for each dollar invested in employee pay and benefits.
HC ROI = (Revenue – (Operating cost – labour cost)) / (Labour cost) – 1
Note: Your labour cost is equal to the combined total payroll and benefits costs for all employees.
Investigating your absenteeism rates, or how frequently employees use their sick leave doesn’t just reflect the productivity of your workforce but also provides clues to the health, happiness and commitment of your workforce and is another key HR metric to track. High rates of absenteeism can also be an early indicator of turnover. You can calculate your absenteeism rate by:
Absenteeism rate = Total no. of workdays missed due to illness / No. of permanent employees
Dig deeper into your absenteeism rate by looking at the number of sick days per manager. If you start to see a pattern where absenteeism rates are correlated with a particular manager, then you might have a problem.
Average overtime is the number of hours worked overtime by your employees in a time period calculated as an average. With the rising cases of mental health issues and burnout, this is a key metric that can affect other factors like engagement, performance and turnover.
Average overtime hours = Total overtime hours / No. of employees
One easy way to work out if your employees are performing is to measure their goal or KPI achievement rate. If you have goal setting and tracking in your HR software (like intelliHR does!) this makes it super easy. You can even cascade organisational goals down to teams, or employees can set their own.
Want to get a full picture of how an employee is performing? Ask those around them. 360-degree feedback can be collected from peers and co-workers, direct and indirect reports and a score can be calculated from a rating across different areas e.g. collaboration, quality of work etc.
>Learn more about how intelliHR can be used to manage and report on employee performance.
Engagement and wellbeing
A healthier, happier, more engaged workforce means a more motivated and productive workforce. So, if you’re trying to achieve the latter, it makes sense to also pay attention to the former – employee engagement and wellbeing. There are a few different HR metrics you can track to take a temperature check on your people,
Choose a job you love and you will never have to work a day in your life. – Confucious
Whether this is true (or achievable) or not, employee satisfaction has been linked with a whole range of benefits for both the employee and the organisation, including higher sales, productivity, customer satisfaction and lower turnover.
The intelliHR employee satisfaction analytics automatically generates a report that shows the “happiness” of your workforce based on continuous feedback that you collect through check-ins. At intelliHR, we call these “wellness checks”. They appraise staff wellbeing simply by asking “How are you?” with a thumbs up, okay, or thumbs down response options (which are all completely customisable).
In addition to your happiness score, you can quickly explore why happiness might be dropping or increasing through interactive charts and filters. For example, the word cloud indicates “busy” might be a common theme, and you can also click to see who said this.
eNPS or employee net promoter score is a good proxy of employee engagement, which assesses how loyal an employee is by asking: “How likely are you to recommend this company to your friends and family?”
eNPS is typically measured on a ten-point scale where 1 is not happy and 10 is satisfied. Employees are then divided into three groups based on their scores:
- 9-10: Promoters – employees who are more likely to speak positively, or promote the organisation to others
- 7-8: Passives – neutral employees
- 0-6: Detractors – employees who are more likely to speak negatively about the organisation
The organisation eNPS is calculated using the following formula with the final score falling somewhere between -100 to +100.
eNPS = Employee Net Promoter Score = % of Promoters minus % of Detractors
The sentiment of your organisation is the overall “mood” of how they are feeling and can reflect the culture and internal factors as well as broader external factors (i.e. during COVID-19 many organisations saw a drop in sentiment).
intelliHR’s sentiment analysis tool takes all of the inputs across your business, for example from pulse surveys, wellness checks, and feedback, and analyses them using AI to come up with a “mood” indicator.
If this is in the red, or you see it shifting downward over time, you can drill down to quickly identify where issues are occurring.
Training and development
Training metrics can help you understand employee development and put a figure on both the monetary and time costs your organisation is investing into training, so you can answer the all-important question “Are you getting a return on your investment?”.
Total training investment quantifies the indirect and direct costs of employee training in your organisation. That is, the direct monetary cost of the training or course, as well as the cost of the employee’s time.
This can easily be seen in intelliHR’s training investment report, which can then be filtered by training provider, skill type, business unit and more.
Training cost per employee is the total cost of all training and development programs divided by the total number of employees.
To see this figure in intelliHR, simply hover over the chart insights (the “%” sign at the right of the graph) and you can see the average, as well as minimum, maximum and a few other stats.
Training hours per employee is an average of the number of hours of training each employee is completing within a given time period.
If you track all of your training in intelliHR, then we’ll automatically calculate this figure for you. Toggle to the “hours” display on the training investment report and select the chart insights widget again to see the average training hours.
It’s all well and good to conduct training, but how do you know if it’s working? There are a range of ways you can measure training effectiveness, like post-training quizzes or tests, measuring completion rates, or setting and tracking training goals. Check out the Australian HR Institute’s guide to learn more about evaluating training effectiveness.
- 4 Must have tools to track compulsory staff training and qualifications
- 10 Stats that will make you rethink your training policy
- Here’s why you need to be tracking staff training (and how to do it effectively)
>Learn more about how intelliHR can be used to manage and report on training.
Replacing employees who leave your organisation can cost upwards of 30% of their salary, so it makes sense to put your efforts into retaining the talent you’ve got. Here are a few HR metrics that can inform your retention strategy.
Employee turnover, or attrition is defined as the loss of employees who need replacing from an organisation over a period of time. Attrition rate (or turnover rate) is the proportion of employees that have exited the business, divided by the total number of people employed at the beginning of the reporting period:
= No. employees exiting organisation – total employees at start of reporting period x 100
Note: this means that generally, a shorter reporting period will return a lower attrition rate, as there has been less time for employees to leave. A useful tool to compare trends over different time periods is to calculate an ‘Annualised Attrition Rate’. This is calculated by
12 x attrition / reporting period (in months)
It can be useful to further portion out turnover into the following categories:
- Voluntary turnover is when an employee resigns on their own accord.
- Involuntary turnover is when they’re terminated or let go.
Early turnover is the percentage of employees who leave within the first year. This can point to problems in the hiring process, onboarding process, team, cultural fit, or might simply indicate a poor match between the hire and the role.
Average cost of turnover is how much it costs you to hire and replace employees who have left. You’ll want to consider not just the costs of hiring a new employee (e.g. advertising and recruitment), but also the costs of onboarding and training their replacement, including the time costs of the staff who are taken away from their normal activities.
This can be quite a complex calculation, so we’ve created a free employee turnover calculator to help!
These are the reasons why your staff are leaving and will help you to understand and address any issues that may be contributing to turnover. It might be inadequate onboarding, poor company culture, or a managerial issue, but if you don’t ask, you’ll never know, which is why exit interviews are so important.
Employee retention rate is the number of people who remain at an organisation within a given period.
Retention rate = No. of employees staying across time period / (No. of employees at start of time period ) x 100
Note: this formula does not include any new employees hired during the period.
Retention rate per manager gives a more granular view of how many employees stay vs leave for each team and manager. Alternatively, calculating an average retention rate per manager enables you to set a benchmark for how many staff are expected to stay/leave for a manager. Then, you can use this figure to identify if any managers have higher than expected retention (or turnover) and investigate why.
Average tenure is the average length of time employees have worked in your organisation. i.e. how experienced your workforce is. This can be calculated by the following formula (or you can see it automatically in intelliHR’s tenure report).
Average tenure = Total years of tenure / No. of employees
Typically, tenure is correlated with retention. An organisation with high attrition generally will have a higher proportion of less tenured, less experienced employees, whereas one with low attrition will have the opposite pattern. Tenure can also give you an insight into the output potential of your employees, for example, if you have a high proportion of low tenure employees, you can expect that they will still be in their ramp-up phase, and this might be reflected in your training investment.
HR Metrics – what next?
Now that you’ve got an idea of 30 key HR metrics to track and include in your next report, you might want an easier way to do so. intelliHR’s HR analytics software is known for its easy-to-use, intuitive, interface with over 30 standard reports that provide powerful insights into your people data and HR activities. Interested? We’d love to give you a personalised demo.