HR Metrics : Tools to understand how HR is functioning

  • Post author:
  • Post category:HRM Tools
HR Metrics

Human Resource metrics (HR metrics) are the measurements used to determine the effectiveness of various HR responsibilities and initiatives such as hiring, employee retention, training, labor cost etc. HR departments can use those metrics to understand how HR is functioning & improving service quality. 

Some common HR Metrics are

1. Absenteeism

Absenteeism rate is calculated as 

Absenteeism rate = (Number of Absence days/ Number of available workdays) x 100%

Here, we need to consider any type of unplanned absence, i.e. sickness or any other causes be authorized or unauthorized.

During calculating number of available days, we need to ignore weekend, public holiday, voluntary leave etc. 

The absenteeism rate can be calculated as Yearly, monthly, weekly, daily or even hourly and generally expressed in percentage. The absenteeism rate can be measured for an individual, team, or the organization as a whole.  It is a negative HR metric which indicate poor management or poor working environment. 

How much absenteeism rate is tolerable? 

There is no exact answer. But around 1.5% absenteeism rate is a healthy rate. But absenteeism less than 1.5% is not also a good sing.

2. Employee turnover

Employee turnover rate is calculated as

Employee turnover rate = [No. of separated employee in a period/ {No. of employee at the beginning of the period + end of the period)/2}] x 100%

10% of employee turnover is healthy rate. Certain industries report higher employee turnover rates due to the nature of the job.

3. Revenue per employee

It is calculated as 

Revenue per employee = Revenue in last 12 months/ Current number of FTE

This metric shows how effectively the organization or a team is performing. 

4. Cost of HR per employee

Managing workforce costs money. This metric represents on currency (e.g. $). If organization compare this with previous month/ year then organization can determine how much HR are on average. This will help to adjust & lower cost. 

5. Time to hire

The average time taken between job openings to accepting the offer by the candidate is time to hire. This can be calculated as total time taken for all hires in a given period divided by total number of hire. This indicate that how well recruitment function of the organization is working. The time to hire may vary upon Talent Acquisition policy if the organization. 

6.Cost per Hire

Cost per hire is very important HR metric which indicate how efficient the recruitment process is. It can be calculated as 

Cost per hire = [Total External Cost + Total Internal Cost] / Total Number of Hires

Examples of some external cost are 

  • Third party cost such as recruitment agency cost
  • Job marketing cost such as advertisement cost, social media cost, job boards etc.
  • Job fair & campus recruitment cost
  • Travel expenses for recruiting 
  • External assessments such as Background verification cost, drug test, medical check-up, external expert cost, psychometric test cost etc. 

Examples of some Internal cost are 

  • Salary, benefits, bonuses and career development of recruitment team
  • Software & hardware cost, applicant tracking system, interview software cost 
  • Employee referral cost
  • Internal expert (other than recruitment team member) cost such as wage of interview time, interview allowance 

7. Early Turnover 

It is also a very important metric. It indicates how good was the recruitment. A term is commonly known “right people at right place”. If organization hire wrong people, then it can result early turnover which can be expensive as it usually takes 6 to 12 months before employee have fully productive. 

8. Time since last promotion 

This metric is useful to explain why high potentials leave. 

9. Diversity numbers

The diversity of organization could be a key of success. Diversity includes race, ethnicity, gender, sexual orientation, socio-economic status, age, physical abilities, religious beliefs, political beliefs, or other ideologies.

Conclusion of HR Metrics

HR metrics represent quantitative data, hence one needs to be equipped enough to analyze the data. There are some qualitative metrics also which are known as soft HR metrics such as workplace satisfaction, innovation, and morale.


Sponsor an Article 

Like our Facebook page

Share the post