HR Metrics

Table of Contents

• What are HR metrics?
• What do HR metrics tell you?
• What are the most common HR metrics?
• Can HR software track different aspects of human resources?
• Are HR metrics always reliable?
• Why Net Hiring Score is the best new HR metric

What are HR metrics?

Human Resource (HR) metrics refer to data points that measure the cost and effectiveness of the HR process and specific HR initiatives.

What do HR metrics tell you?

Take it from an expert. According to Ross Sparkman, head of strategic workforce planning for Facebook, “Metrics essentially give us a way of qualifying the health of our organization, and, to that end, HR metrics are now different...They’re measuring how the HR function is doing as a whole and also how we’re leveraging the people in the organization to maximize the performance of the company.”

What are the most common HR metrics?

Inc. & the Society of Human Resource Management (SHRM) have identified 11 essential HR metrics. Those metrics are organized into several categories: talent acquisition, learning and development, performance management, benefits, and organization effectiveness.

Here are what we believe are the most important metrics from their lists, along with original definitions of each metric. If you want to read the lists from Inc. and SHRM, we encourage you to do so!

HR metrics for Talent Acquisition

• Time to Start: refers to the average time it takes to fill a position. Time to start is calculated by taking the total number of days positions remains open and dividing it by the number of positions filled. Time to start offers insight into everything from the reputation and recognition of your company brand, the efficacy of its marketing strategy, and the utility of your application process. High scores in this instance suggest you need to reevaluate your marketing and interview processes.
• Time to Productivity: refers to the average number of days to satisfy a productivity metric. To calculate this metric, take the number of days between a new hire’s start date and the moment they reach targeted productivity. Then, divide that number by the number of positions filled. Time to productivity explicitly indicates the efficacy of your onboarding program. Implicitly, the metric reflects the quality of candidates you’re hiring.
• Turnover Rate: refers to the rate at which employees are leaving your organization. To calculate your turnover rate, divide the average number of employees during a set period by the number of employees who leave your organization in the same period. More accurate turnover rate calculations target employees in specific sectors, demographics, or roles of your business. Turnover rate says a lot about the effectiveness of your management and development, as well as the quality of your corporate work culture.
• Cost Per Hire: calculates the average cost spent hiring a new employee. To calculate average cost per hire, take the amount of money spent hiring a group of new employees (i.e. marketing costs, advertising costs, recruiter costs, relocation expenses, etc.) and divide it by the number of newly hired employees over the same period. Organizations often compare internal vs. external average cost per hire in order to assess the utility and efficiency of each method. Doing so helps organization’s better plan their hiring future.
• Acceptance Rate: refers to the percentage of candidates who receive and accept offers. To calculate this metric, divide the total number of accepted offers by the number of offers extended, and then multiply that number by 100, which gives you a percentage. Acceptance rate gives you a clear idea about how competitive you are with other organizations in your industry. If your acceptance rate is low, it suggests that candidates find some element of your hiring process and/or salary and benefits package, unattractive, or less desirable than those of your competitive.

HR metric for Learning and Development

• Readiness: measures how prepared your organization is executive its business strategy and achieve its goals. To calculate readiness, take the total number of vacant positions divided by the total number of approved positions and then multiplying that number by the total number of employees with desired competency ratings divided by the total number of number of employees who completed a competency assessment.
  • In other words: (Vacant Positions/Total Positions) x (Employees With Desired Competency Rating/Total Assessed) x 100.
  • Readiness is an excellent way to quantify if your organization is prepared to execute its business plan and reach its goals.

HR metric for Performance Management

• Average Performance Rating: to calculate average performance rating, divide the sum of all employee performance ratings by the number of employees you wish to measure (perhaps a specific age group, people who’ve worked for the company for a certain amount of time, workers who share common roles, etc.) then multiplying that quotient by 100.
  • This metric enables you to both identify the most and least efficient areas of your business. It also, if tracked over time, offers feedback regarding the utility of your training and development efforts.

HR metric for Benefits

• Benefit Participation Rate: measure the percentage of employees utilizing particular benefits in your benefits package. (Percentage of employees participating in a particular benefit plan or program). To calculate this metric, divide the number of employees utilizing or enrolled in a benefit by the total number of employees eligible for such benefit. Multiply that quotient by 100, which gives you a percentage.
  • Benefits cost money. When meeting the needs of your workforce, that money is well spent. However, if very few employees are utilizing an expensive benefit, it’s worth revisiting it. This could mean eliminating it and investing those funds elsewhere. It also could mean that you need to do more to inform and encourage your employees to enroll.

Can HR software track different aspects of human resources?

Yes, HR software, often referred to as Talent Management Systems offer a wide range of functionalities to track various aspects of human resource management. You can read more about TMS here.

Are HR metrics always reliable?

This is somewhat of a hotly debated issue. For many folks, HR metrics are an effective way, perhaps the most effective, to measure key aspects of your business operations. For others, HR metrics are often little more than data for data’s sake.

Since we’ve already covered some of the former, let’s look at the latter. Critics of HR metrics typically point to things like the following:

• Analyzing the past has little to do with forecasting the future.
• HR metrics often don’t assign a dollar value to metrics and goals.
• HR metrics often lack clarity as the “why” a particular trend is occurring via metric analysis.
• HR metrics provide no external metrics for comparison.
• They typically are not included in business reports.

Again, this is a subjective issue. The only way to determine whether or not a metric work you your business is to experiment with them, see what they tell you, and figure out if they drive action moving forward. Perhaps the University of Southern California says it best: they key with HR metrics is to understand their limitations.

Why Net Hiring Score is the best new HR metric

Fresh off the presses, the SmartRecruiters' Definitive Guide to Hiring Success outlines why measuring your hiring outcomes with our Net Hiring Score methodology is the key to transforming the understanding of your recruiting and talent acquisition processes.