Historically, organizational experts relied on intuition to tell them how healthy or unhealthy a company was. An organization was considered healthy when it was functioning effectively and responding to change appropriately.
Today, we have the ability to rely on data science instead. Just like a doctor checks our vitals, we should track our HR metrics to tell us how we’re doing.
Below, you’ll find 18 HR metrics, what they mean, and how to use them. Unless otherwise noted, we recommend tracking all metrics at least annually, but no more than once a quarter.
18 HR Metrics Affecting Your Organizational Health
1. Employee Engagement
What it is: Engagement measures how much employees care about their work. Often confused with general job satisfaction, engagement is an aggregate that includes contentment in areas such as relationships with leadership, company programs, and growth opportunities.
Why it’s meaningful: Engagement provides a look at the big picture first — engaged employees stay longer and are more productive. When engagement metrics dip, it’s time to look at the details to find out why.
How to measure and track: There’s not a single right way to measure engagement; what’s important is that leadership solicits feedback from employees consistently. Many companies choose to do this with an employee engagement survey that’s sent to employees and submitted anonymously.
Recommended frequency: Annually, quarterly, monthly or weekly
Recommended range: 80%. While 100% engagement is a great goal to aim for, you should be concerned if engagement dips below 80%.
2. Training ROI
What it is: A training ROI tells you how much value your company training programs are providing to your employees.
Why it’s meaningful: Training is important, but it’s also expensive. When your training isn’t adding real business value, something needs to change.
How to measure and track: Cost of employee training / Value of increased performance
There’s no simple black and white formula here. To calculate your Training ROI, try using targeted pulse surveys to establish benchmarks and measure employee/manager sentiment before and after professional development training.
3. Regrettable turnover
What it is: Regrettable turnover tracks the number of high-performing employees who left because they were unhappy in their job, or found a better opportunity somewhere else.
Why it’s meaningful: There will always be people coming and going within your business; it’s inevitable. Minimizing the turnover that is within your control will save your organization from high employee replacement costs.
How to measure and track: Total # of employee terminations due to unhappiness or lack of career growth / Average # of employees
4. Absenteeism
What it is: Absenteeism measures how often your employees are absent from work over a period of time.
Why it’s meaningful: Everyone needs time off and should be encouraged to take the vacation time they’ve earned. But higher-than-average absenteeism can point to a lack of engagement and is a cause for concern.
How to measure and track: Workdays missed / Workdays scheduled
Recommended range: 2.8%
5. Job satisfaction rate
What it is: Job satisfaction is the proportion of employees who report being satisfied in their job over a period of time.
Why it’s meaningful: While engagement is an aggregate measurement, job satisfaction specifically measures employees’ contentedness with the work itself. Low job satisfaction could point to poorly designed work, weak communication, or bad job fit.
How to measure and track: Total # of employees who report being satisfied / Total # of employees
6. Employee Net Promoter Score (eNPS)
What it is: If a full employee engagement study seems daunting, start smaller with the eNPS. The eNPS asks employees to rate one simple question on a scale of 1-10: “Would you recommend your job to a friend?”
Why it’s meaningful: The eNPS assumes that if an employee would recommend their job to a friend, then, by and large, they are satisfied and productive in their work.
How to measure and track: Average reported eNPS score / Total # of employees
7. Cost of rewards
What it is: Cost of rewards includes investments in employee appreciation events, recognition and rewards software, and employee gifts.
Why it’s meaningful: There’s no doubt about it — rewards matter. Companies that invest in rewards see up to a 50% decrease in employee turnover. Tracking rewards costs, and their correlation with employee happiness metrics will make sure you’re maximizing your investment.
How to measure and track: Total dollars spent on employee rewards / Total # of employees
8. Frequency of 1-on-1s
What it is: A simple yet telling metric for leaders — how often are managers meeting with team members 1-on-1?
Why it’s meaningful: When managers are spending time with their employees, things have a way of falling into place. Communication, job satisfaction, and productivity almost always improve. Setting 1-on-1 goals with company managers — and tracking them — helps keep this habit going.
How to measure and track: # of 1-on-1 meetings in a given period
9. Goal-setting completion rate
What it is: A goal setting completion rate tells you the number of employees in your company who use goal-setting practices.
Why it’s meaningful: The first step in meeting goals is to set them. Yet studies show a whopping 93% of employees are unable to tie their actions to organizational goals. This metric tells you the story of how your business is tackling goals and is easy to track with great goals and feedback software.
How to measure and track: Total # of employees setting goals / Total # of employees
Recommended range: 100%
10. Cost per hire
What it is: Cost per hire measures the dollar amount spent to add a new employee to your organization. When calculating, don’t forget to include all recruiting services, posts to job boards, applicant tracking systems, managerial time spent interviewing, onboarding, and training.
Why it’s meaningful: What you measure gets managed, or so the saying goes. Just being aware of how much you’re investing in new hires can have a big impact on your bottom line alone.
How to measure and track: Total recruiting, onboarding, and training costs / Total # of new hires
11. Time to hire
What it is: Time to hire measures how many days, weeks, or months it takes a job candidate to move through your hiring process.
Why it’s meaningful: Hiring processes that are perceived as too lengthy by candidates run the risk of scaring away top talent. Especially in a tight labor market where candidates may be managing several job offers at a time, it’s important to do your due diligence within a reasonable amount of time.
How to measure and track: Start date — Date of submitted application
Recommended range: For professional industries, 4-6 weeks; For retail/hospitality/manufacturing, 1-7 days
12. New hire fail rate
What it is: The new hire fail rate tells you how many new hires in your company are able to successfully complete their first 90 days.
Why it’s meaningful: A higher-than-average new hire fail rate means an organization is spending thousands or more on new hire costs and never seeing a return on that investment.
How to measure and track: Total # of failed new hires in the past 90 days / Total # of new hires in the past 90 days
Recommended range: Unique to industry, position, and job market. Anything over 30% should be cause for concern.
13. Offer acceptance ratio
What it is: The offer acceptance ratio tells you how many job offers you made are accepted by potential candidates.
Why it’s meaningful: Offer acceptance ratio can alert you to a breakdown in your hiring process, including poor compensation strategy.
How to measure and track: Total # of job offers accepted / Total # of job offers extended
14. Time to productivity
What it is: Time to productivity measures the number of days, weeks, or months it takes for a new hire to become proficient in their job.
Why it’s meaningful: It helps measure the ROI on those hiring and training dollars. The longer it takes a new hire to become proficient in the job they were hired to do, the more they’re costing the organization.
How to measure and track: Date new hire becomes proficient — New hire start date
15. Retention
What it is: Retention looks at the proportion of your employees who stay for a considerable amount of time, versus the ones who leave.
Why it’s meaningful: Presumably, people stick around because they’re happy and productive. Measuring your retention rate against industry benchmarks can tell you how you compare to your competitors in terms of the talent you’re able to hang onto. And tracking that rate over time can alert you to potential employee relations problems before it’s too late.
How to measure and track: 1.00 — (Total # of employee terminations / Average # of employees)
16. Pay equity
What it is: Pay equity is a way to measure that your compensation strategy is … well, equitable (fair and impartial).
Why it’s meaningful: Tracking pay equity alerts you to biases, conscious or not, that so often take place when determining employee salaries. Organizations that compensate employees fairly, based on job performance, are better able to attract and retain top talent.
How to measure and track: Pay equity is hard to quantify; there’s no simple formula. It begins with auditing salaries to ensure that individuals with similar jobs are being paid similarly, regardless of qualities such as race, gender, or sexual orientation.
17. Promotion rate
What it is: Promotion rate is the proportion of employees who are given more responsibility, and more pay, in any given year.
Why it’s meaningful: Career growth and development is one of the top drivers of employee retention and engagement. Tracking your promotion rate helps keep your efforts to provide growth opportunities to your employees in check, and retain your top talent.
How to measure and track: Total # of employees who have been promoted in the past year / Total # of employees
Recommended frequency: Annually
18. Revenue per employee
What it is: Revenue per employee measures — you guessed it — the amount of organizational revenue brought in for each employee.
Why it’s meaningful: In order to run smoothly, companies need enough people to get the work done. But in order to be profitable, they can’t have too many. Tracking revenue per employee helps to determine if your business is operating in that sweet spot.
How to measure and track: Total Revenue / Total # of Employees
Gathering, measuring and tracking business analytics used to require a skilled statistician and a lot of time. Thankfully, we live in a world where gathering and analyzing data is easier and cheaper than it’s ever been. Which means there’s no excuse to not be doing it!
How are you tracking HR metrics?
Cutting edge HR software can take the guesswork out of HR metrics for you, so you can focus on using them to improve your business. So we should talk.
