An expert guide to tracking HR performance metrics
Human resource performance metrics are critical for tracking business goals and objectives, productivity, and the overall efficacy of an organization’s HR function. Deciding what to track and measure will depend on your company-specific goals. However, the insights gained from capturing and tracking this data are critical. They will empower better decision-making and help leaders understand trends happening inside and outside their organization.
Consistent and accurate tracking of HR performance metrics can also inform forecasting efforts, process improvements, and determine the success or failure of programs across your organization.
To understand the impact of accurate performance tracking, let’s first understand the best HR and people metrics to track and how to track them.
What are HR and people metrics?
Broadly speaking, HR departments are responsible for many of the operations that ensure your company grows at a steady pace while operating as efficiently as possible. Hiring, onboarding, employee experience, benefits, and payroll typically fall under an HR department’s purview.
Beyond these day-to-day responsibilities, data and insights collected by an HR department can play a powerful role in driving business growth, boosting employee retention, and streamlining the HR function.
Let’s say, for example, that your organization is growing quickly. You know your company will need to fill a percentage of strategic roles to meet its targets for the upcoming year. Accurate HR metrics can inform time-to-hire estimates, optimize onboarding, and help you stay on top of your diversity and inclusion goals.
Examples of key HR metrics to track
The most common HR metrics to track include ones that can be broken down into a few categories. These categories include:
Hiring and onboarding
Diversity and inclusion
Performance and productivity
Employee wellbeing and engagement
Within these larger categories, you’ll specify and track certain metrics. For example, common hiring and onboarding metrics include:
A metric like headcount, for example, tells us how many people are working at a company at any given time and can be used to measure growth quarter over quarter or year over year.
However, time-to-productivity may be useful in identifying room for improvement in the onboarding process. If it takes a long time for employees to become productive, this may indicate a lack of support or relevant training in an employee's first few days and weeks.
Deciding what metrics to track and measure
Knowing which HR metrics to track and measure will depend on your organization's specific goals and strategic initiatives. These goals are often identified by specific departments or by the HR department itself.
One example of this might include a marketing department that needs to hire for specific roles. Using time-to-fill and cost-per-hire data, they can accurately determine budget and hiring timelines based on previous or comparable data.
These metrics are often used to assess the HR function’s effectiveness and contributions to the organization as a whole. Common types of goals are often ones related to growth, productivity, retention, efficiency, and wellbeing.
When deciding which metrics to track and measure, first ask yourself three questions:
What insights am I looking for?
How will tracking and measuring these metrics allow us to set and reach our goals?
How can the tracked information help the HR team be more efficient?
HR metrics formulas and examples
HR metrics are usually straightforward to calculate. Often, it involves plugging basic employee or hiring data into a formula that's specific to the metric." Let’s look at a few examples.
HR metrics formula example: Time-to-hire formula
Calculate time-to-hire by counting the number of calendar days between when a candidate enters the pipeline and the date they accept an offer.
For example, Zainab applies for an analyst position on January 3rd. After successfully completing several rounds of interviews, she receives and returns her signed offer letter on February 8th. Therefore, the time-to-hire for this position was 36 days.
This information can be used to assess how time-to-hire stacks up when benchmarked against internal and external data. It can also be used to forecast how long it will take to fill similar positions in the future.
This is an important metric that will help an organization to understand the efficiency, speed, and cost-effectiveness of its hiring process.
HR metrics formula example: Employee turnover rate formula
To find your company’s employee turnover rate, you’ll need to know the number of employees at the beginning of a defined period, the number of employees at the end of that period, and how many employees left the company during that same period.
As an example, let’s calculate the quarterly turnover rate at Pearl Corp. Here’s how:
Step 1: Calculate the average number of employees
Find this number by adding the number of active employees working at the start of the quarter with the number of active employees at the end. Then divide that number by two.
At Pearl Corp, there were 250 employees at the start of the quarter and 240 employees at the end of the quarter. Add these two numbers together, divide the total by two, and this means that the average number of employees for the quarter = 245.
Step 2: Factor in the number of employees who left
10 employees left Pearl Corp this quarter.
Step 3: Use the turnover rate formula
Apply your values to the below formula:
10/245 x 100 = 4.08% turnover rate for the quarter at Pearl Corp.
Tracking this number quarterly or annually can highlight internal trends, benchmark against broader industry statistics, and measure the success of employee retention efforts.
Employee engagement metrics
Metrics under the employee engagement umbrella can offer insights into how committed and integrated employees are in their roles and within the broader organization. We know that when employees are happy and engaged at work, this can positively impact performance, productivity, and overall morale.
A clear picture of employee engagement levels within your organization can also offer context for other internal trends like high turnover, poor performance, and decreased productivity.
HR and People Ops teams can also use employee engagement insights to create programs and initiatives that ensure employees feel included, engaged, and connected to their colleagues and workplace in a distributed or remote environment.
There are several metrics for measuring employee engagement levels.
Employee turnover is a fairly straightforward metric for understanding employee engagement and satisfaction. When employees no longer feel connected to their work or workplace, they will often seek out new opportunities outside their organization.
High employee turnover can be an indicator of departmental and organizational friction. It can also point to other factors like stagnant company culture. Employee turnover can be measured and tracked over any length of time, but it is most often measured on a quarterly and annual basis.
Employee net promoter score (eNPS)
Employee net promoter score measures how likely an employee is to recommend or promote their organization to others. eNPS is measured on a scale of 1-10 and can offer a high level snapshot of how employees are feeling about their company.
First, ask your employees to rate their likelihood of recommending your company to a friend or colleague (on a scale of 1-10).
A score of 9 - 10 = Promoters
A score of 7 - 8 = Passive
A score of 0 - 6 = Detractors
To calculate eNPS, exclude passive respondents and subtract the percentage of detractors from the percentage of promoters. If 75% are promoters and 15% are detractors, the eNPs score is 60.
eNPS score = % Promoters - % detractors
This score can be measured on a scale of -100 to 100, with -100 theoretically representing a company made up of all detractors and 100 being one where every employee is a promoter. An eNPS of less than zero generally represents a substantial opportunity for improvement, while an eNPS score hovering near 30 is considered good. A score over 50 is viewed as very good or excellent.
While eNPS can be a good indicator of low or high employee engagement, this score has limitations. For example, if the amount of detractors is being driven up by employees experiencing burnout or overwork due to understaffing or other resource constraints, an eNPS score on its own would not be able to identify or highlight this specific problem.
Absenteeism is characterized by employees habitually taking unscheduled and unsanctioned time off without good reason. Unlike PTO, sick leave, family/caretaker leave, or other types of requested or emergency time off, absenteeism can indicate disinterest, burnout, or low morale. Absenteeism can also indicate that an employee is in need of support by their manager or HR department.
While employee flexibility has become a top expectation for many knowledge workers, frequent unexplained and unsanctioned absences can be disruptive and impact overall team productivity.
To calculate absenteeism, divide the number of unscheduled absences by the number of available workdays. Then multiply by 100.
For example, employee ‘A’ has missed 16 days of work over the last 8 weeks. If there were 5 working days in each of those weeks, then that means ‘A’’s absences are calculated as:
16/40 x 100 = 40% absence rate over a two month period
Absenteeism can be complex, and all physical and mental health-related absences should be viewed with care and compassion.
HR diversity metrics
Measuring diversity is a critical step toward ensuring your organization is a fair and equitable workplace for all employees. As an incredibly diverse generation of Gen Z workers continues to enter the labor market, creating inclusive spaces, hiring practices, and opportunities for leadership and growth has become more important than ever.
Racial, gender, and LGBTQIA+ diversity and inclusion efforts should start with data. This data will allow your HR department to baseline, understand the biggest opportunities for improvement, and monitor the success of your DEI programs.
Representation is the baseline and ideal starting point for DEI planning. You can’t create programs, initiatives, or training for what you don’t understand. Measuring the representation of diverse groups within your organization is often carried out via self-reporting through surveys and questionnaires.
On its own, average tenure can be an interesting data point. Measuring wider tenure data and comparing the same data for monitored groups can reveal whether there is higher attrition among those groups. This is a way of identifying symptoms of wider organizational or departmental issues, but not a solution in itself.
Let us say, for example, that within your organization the average tenure of an employee is three years. However, when you take a look at the average tenure for women within the org, it is roughly two years. And lower still, the average tenure for women of color is just 16 months.
While this data cannot tell you exactly why a group of people within the organization have shorter tenures, it could help identify issues like a lack of support or opportunities for learning or career progression within the organization. One LinkedIn survey found that employees at companies with high internal mobility were likely to stay 2x longer than at companies with lower internal mobility. This could very well apply to the monitored groups in question.
Diving into this data with tools like engagement surveys and exit interviews can help fill in the information gaps needed to create programs that address high turnover and employee attrition.
Promotion rates can help uncover disparities in progression between the wider organization and specific, monitored groups. For example, if a company has a pretty even gender split but the promotion rate for men is 10% and only 3% for women, that may signal a need to address low engagement and potential biases in the promotion process. Here, there may even be need for inclusive training and mentorship programs.
To calculate the promotion rate, take the total number of promotions given within a certain period and divide this number by the total number of employees, then multiply that number by 100. If tracked by monitored groups, this can paint a picture of progression and equal opportunities by demographics within the organization.
Setting, tracking, and measuring diversity goals
Gathering baselines and identifying areas for improvement is a solid place to start. The next step is establishing thoughtful goals. This can be accomplished by setting OKRs. Setting strong OKRs means that an organization can take meaningful action in its efforts around diversity, equity, and inclusion.
For example, if your talent acquisition team sets the general goal of attracting more diverse applicants to specific roles, they might consider the following OKR.
Attract a more diverse applicant pool for engineering and product roles
1. Establish inclusivity and diversity as a core part of our employer brand; craft a DEI statement; hold ourselves publicly accountable to our diversity goals by collecting and publishing our internal demographics data.
2. Partner with at least five professional networking organizations this quarter that create, find, and amplify career opportunities for specific groups such as women, people of color, and LGBTQIA+ individuals.
3. Implement anti-bias software and measures including bias training for hiring managers and a process for screening job descriptions for gendered and non-inclusive language.
Hiring and onboarding metrics
Hiring and onboarding are both critical aspects of an HR department’s purview. Ensuring that an organization is able to efficiently source and hire strong applicants for valuable roles is important for growth, innovation, and competition.
To keep an eye on the effectiveness of hiring processes, consider the time-to-hire and cost-per-hire metrics.
As previously mentioned, time to-hire measures the amount of time that passes between the date a candidate applies for a role and when they sign an offer letter. Slow time to hire can uncover inefficiencies in the hiring process, issues with candidate sourcing methods, and potential resource-related blockers.
Cost-per-hire is another metric that helps assess the quality of your recruitment process. Cost per hire factors in the costs of job boards, applicant tracking systems, background and reference checks, travel expenses, and more. Your cost per hire will differ between departments, industries, companies, and roles.
To calculate cost per hire, first add internal costs to external costs and divide that total figure by the number of hires. For example, if quarterly recruitment costs totaled $30,500 during the last quarter and 10 new hires were made, the cost per hire for that period was $3,050.
This information is critical for setting budgets and identifying potential areas of waste and inefficiency.
On the onboarding side, ensuring that these new hires are adequately trained and have the resources they need from the outset is essential to their success and longevity within the organization.
Early turnover rate
Early turnover is typically a metric that measures the number of new hires who leave their role within the first six months of starting. Early turnover in certain departments can indicate issues with onboarding or organizational culture.
To calculate early turnover, find the number of employees who left within their first 6 months and divide that number by the total number of people hired within the same period. So, if 20 people were hired in the first half of the year and 4 left before their six-month mark, the early turnover rate would be 20%.
This data can be further segmented by additional demographics or even used to monitor internal trends like remote-first workers leaving earlier than their in-office counterparts.
Setting, tracking, and measuring goals for employee onboarding
Research shows that standardized and thorough onboarding can improve employee retention and productivity in a big way. Creating strong foundations for new employees sets them up for success in their new roles.
To set onboarding OKRs, consider the key results that create opportunities for new employees to have the best chance at success.
Deliver a higher standard onboarding process for new employees
1. Have all managers create a 90-day plan for new employees joining their team
2. Achieve 80% completion for “employee standards” training within the first 6 weeks
3. Have 95% of new employees rate their onboarding experience as “very good” or “excellent” at the end of their probation period
Tracking a variety of metrics enables HR departments to optimize processes, effectively contribute to wider organizational goals, and care for employees at all stages of their journey within an organization.