6 Essential HR Metrics for any Business

beggers April 30, 2018 0
6 Essential HR Metrics for any Business

When it comes to Human Resources, there are many things you could measure, but not all metrics matter equally when you’re looking at the big picture. In fact, if you’re constantly digging through the data, you could end up wasting time instead of contributing to the productivity of the organization. Here are six essential HR metrics you should be tracking today.


Recruitment refers to the process of attracting and hiring new people. There are a number of metrics you can collect here. One metric to track is “time taken to hire”. From the time you post the job to the time your new hire starts is the “time taken to hire”. This metric is a good measure of how efficient your recruiting process is.

Another metric to track is the offer-acceptance ratio. Of the number of offers you make, how many are accepted? This metric can be seen as a reflection of how desirable your company is. Conversely, if the rejection rate is high, start asking why. Maybe you’re losing people because you aren’t paying enough. Or the company brand isn’t as good as you think it is.

Employee Satisfaction / Engagement

This metric is popular because it is so easy to calculate. How long has the average employee been with the company? A higher number is a reflection of loyalty and satisfaction. A low number reflects very high turnover, though it may be hidden by the fact that you have a few old-timers that pull the average up.

This is why you need to determine the early-turnover of new staff. It doesn’t matter if you hired ten people if half of them leave by the end of the year. In fact, constant turnover among new hires suggests there are problems in HR. Maybe you need to change your recruitment methods. Or, you need to improve employee engagement for new hires.

Don’t forget to look at the turnover of top talent, too. You need to pay attention to attrition of your top talent because this hurts the organization’s prospects. There’s always going to be some turnover as people move or retire, but a high voluntary turnover rate suggests something is wrong. And turnover among your top talent and those flagged as having high potential is proof there is a problem. If turnover is high, look at retention rates per manager to determine which managers or departments are in need of a review.


HR software makes calculations of absenteeism far simpler. You can look at the absence rate of specific individuals and the company as a whole. Now you can objectively tell if a problem employee is missing many more days than average or if a specific manager is the issue.

For example, absenteeism can be compared across departments; one department with much higher absenteeism than average is a sign something is wrong. Absenteeism rates can be used to determine the impact of absenteeism on productivity. A rising absenteeism rate could also tell you that the workplace climate is deteriorating.

HR Cost Analysis

While Human Resources is part of the business’ overhead expenses, that doesn’t mean economics shouldn’t apply. Determine the cost per hire; if the cost is high, you may need to make changes to your recruitment or onboarding process. Also, calculate the turnover costs, the costs incurred when someone leaves. Turnover costs include cost per hire, the productivity loss due to the vacancy, and the cost of training. This data may lead to changes in management to reduce the cost of replacing those who have quit.

You should also look at the costs associated with training. For example, track training expenses per employee. Consider the return on investment for the training instead of just paying for day-long courses and hoping it yields value. The training effectiveness index is a complicated analysis intended to tell you just that.

You don’t poll employees about how much they think they learned from the training. Instead, you track their performance month to month and look for improved performance in the months after they finished the training course. If someone is taking a series of courses, have a training plan. Verify they complete the training and track their performance over time. Effective training should increase their performance and lead to higher revenue per person.

You can gauge the value of specific courses by calculating the training efficiency. This is the ratio of training expenses per employee divided by training effectiveness. The most efficient training gives you the highest ratio; these are the training classes you want everyone to attend and are worth paying for if you have to decide where to allocate limited funds.

Revenue/Profit per Employee

This is a straightforward metric, and it is critical for small businesses. Calculate your profit or revenue on a monthly or annual basis. Divide it by the number of employees. A ratio too low is an indication you’re overstaffed. If the ratio is high, maybe you need to hire more help. Another way to see if you’re under-staffed is to look at overtime costs. If your overtime costs are going up, you need to hire more people.

A similar metric is calculating billable hours per employee. This metric is particularly relevant to businesses that bill clients. Law firms, in particular, use this metric, and they set a minimum number of hours each lawyer is expected to bill.

Timesheet/Scheduling Match

This is one of the difficult HR Metrics to Analyse without software. This data analysis compares the number of hours that need to be worked throughout the work schedule, relative to staffing. Are there shifts that aren’t getting enough people? Are there shifts where people aren’t showing up? This HR metric is useful for restaurants, shops, and other shift-based businesses. You can see where you’re understaffed or overstaffed at certain times of the day or the week. And you have the granular data to handle problems like almost no one coming in before 9 AM or being short-handed at lunch.


You can’t make improvements in Human Resources if you don’t know which metrics to start tracking and how to use them. We’ve addressed some of the most important metrics to collect and check on a regular basis and which metrics to use to narrow down the problem. Once you have the data, you can make the right decisions to get things on track or improve operations.

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