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When it comes to putting a successful HR strategy in place, it is important to know which metrics to track. After all, you can’t improve what you don’t measure.
By tracking key statistics such as employee retention rates and turnover costs, you have a way to measure the effectiveness of your HR initiatives such as a formal onboarding program or employer-funded health benefits.
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HR metrics are sometimes overlooked by small organizations that assume they are too complicated or time-consuming to deal with. The hassle is assumed to be larger than it really is, while the benefits of having this data are undervalued. Don’t make this mistake at your organization.
Choosing a few key HR metrics to track will help you uncover strengths and weaknesses within your organization and give you the tools you need to understand which areas need improvement.
HR metrics help you:
Now that you know you need to be gathering and tracking HR data and why it’s important, the next step is figuring out what to track. Different data provides different insights. It helps to identify your goals so you know what data to gather and track so you can measure performance against those goals.
Here are 10 HR data points any business can track that will give strategic insights to HR trends, costs, efficiencies, productivity, and success.
Track your employee retention rate to understand how your employee retention strategies are working and gauge company morale. Pair this metric with the cost of employee turnover to get a sense for the amount of money your organization is spending on replacing employees who leave.
Tracking HR data helps any organization make data-driven decisions about recruiting, hiring, onboarding, retention, and HR policy. This section covers how to calculate specific return on investment (ROI) measurements, and tips for how to track HR data.
Employee retention rate is a helpful statistic for an employer to calculate – both as a benchmark and periodically (ex: quarterly or bi-annually). The formula is simple. Divide the number of employees who left during a period by the total number of employees at the end of a period to get the percentage.
| Sample Inputs | Sample Calculation |
| Period of Time: Fourth Quarter Total Employees at Beginning of Q4:24 Total Employees Terminated in Q4: 4 |
24 – 4 = 20 20 / 24 = .83 .83 x 100 = 83% |
Standard employee retention rates are anywhere from 70% - 85% but vary greatly by industry and calculation method. For example, you may choose to measure only voluntary turnover or all terminated employees.
Knowing and tracking the cost of losing an employee will help you make more strategic decisions about benefits and retention activities.
The cost of losing an employee varies by industry and role at the company.
Here are estimates based on a Center for American Progress (CAP) study you can use to estimate your costs:
Now, calculate costs of employee turnover for a period. In the example below, the company has 24 employees (EEs) and had four employees leave during Q4.
Of course, each company is unique. With the right data, you can calculate your specific cost of employee turnover by taking into account the following factors:
Track compensation data to ensure you are meeting the minimum wage requirements in your area in addition to overtime pay compliance; and to understand employee growth within the company. In addition, it is helpful to know what other organizations pay for comparable positions so you stay competitive.
To track historical and current compensation data, collect and analyze the following information:
Calculating your new employee training and onboarding expenses is one piece of understanding your cost to hire, and is important for budgeting. Successful onboarding will reduce your hiring costs and ongoing employee training will help reduce turnover.
To calculate training and onboarding expenses, include the following:
This data can be collected in a budgeting spreadsheet, or flagged in accounting software for easy tracking and analysis.
Your recruiting expense is the other piece of your cost to hire. You can also track which platforms your eventual hires find you on to see which ones produce quality candidates and which ones don’t.
To calculate training and onboarding expenses, include the following:
This data can be collected in a budgeting spreadsheet, or flagged in accounting software for easy tracking and analysis.
Employee satisfaction data, typically collected through employee surveys, are an important indicator of morale and company culture. Satisfied employees stay longer, are more productive, and do better work.
An easy way to measure employee satisfaction is with a simple employee survey. Free survey tools are available online, or you can use a printed survey or more sophisticated survey software.
When creating a survey, keep it simple. Include a few targeted questions about satisfaction, culture, growth, pay, advancement, etc. Use a number scale so results are quantifiable, and only ask about metrics that matter to your business. Survey employees monthly to calculate satisfaction over time.
Employee absence rate is a simple measurement that helps you understand how many days employees are missing (no call, no show), and can be an indicator of employee dissatisfaction.
Absenteeism is defined as employees missing work due to personal illness, personal time off, or other reasons (usually excluding paid vacation). These absences may be avoidable or unavoidable. Employee absence rate is a simple measurement that helps you understand how many days employees are missing.
Absence Rate = Workdays Lost Due to Absence ÷ ( Average Employee Population x Number of Work Days Available per Employee )
Revenue per employee shows you how much revenue each employee generates for your organization. A higher number means that your employees are more productive and your organization is more efficient. This metric mostly applies to for-profit organizations, though not always.
Each company has a unique package of benefits and perks.
To calculate benefit and perks expenses, include the following, as applicable:
This data can be collected in a budgeting spreadsheet, or flagged in accounting software for easy tracking and analysis.
Tip: Many of these benefit expenses can be offered as a tax-free fringe benefit.
Calculating your benefits and perks expenses helps you budget, and helps you understand how much your benefits package costs you per employee.
Similar to recruiting and hiring expenses, knowing your time to fill a position will help you understand the true cost of employee turnover. Keep in mind that this is heavily affected by current economic conditions and the public perception of your organization. The longer it takes to recruit for a position, the more it costs to fill a position.
Time to fill a position (or time to hire) can be measured with a simple calculation:
Time to Fill = Average days a job is open before it is filled
For this calculation, track the following inputs:
This calculation can be tracked using spreadsheets, or using recruiting software that tracks applications and hiring.
HR metrics should be simple, clear, and connected to your company’s goals and priorities. Here are six tips for tracking HR data as you consider which data points matter to your business.
As you collect and track HR data, keep in mind why you’re collecting the data and why it’s important to your organization. If the data is not connected to an organizational priority, don’t spend the time tracking or analyzing it. Knowing your return on investment (ROI) is key to making strategic decisions for your organization.
ROI is a performance measure used to evaluate the efficiency of an investment.
To calculate ROI, the payback (return) of an investment is divided by the cost of the investment, and multiplied by 100 to get a percentage.
ROI = [(Payback - Investment)/Investment)]*100
HR metrics should not be complicated. If the metric is not simple, clear, and easily gathered and calculated, it likely will not be used. Track and collect simple, straightforward information that will provide useful insights to your HR and organizational objectives.
From spreadsheets to comprehensive Human Resource Management Systems, there are a variety of tools available to track HR data. An important step is to identify which data you will collect and how.
As you collect HR data, some information will be more insightful to HR and some information will be more insightful to other stakeholders like the owner or CFO. As you present information, keep in mind the metrics that matter most to your audience.
The most powerful and useful HR data connects HR metrics to business objectives.
You’ve collected a lot of great HR data. Don’t just file it away. Analyze it, learn from it, and share it with your leadership team. Then create a plan with actionable next steps that will get you to your goals.
When it comes to HR ROI calculations, the goal is to use the information to make smarter HR decisions, spend company money more wisely, and create a high-performing and productive workplace.
Data without analysis and action is just numbers on a screen. Use your HR data to understand trends, issues, and opportunities. Then, take action to make changes based on your learnings.
To make the most of your HR ROI calculations:
An important step in tracking HR data is developing a system to track and record information. How you track and analyze the data will depend on what you are tracking. Don’t worry, the data management system you choose doesn’t need to be overly complex. But it does need to be consistent, time-efficient, and scalable.
Use Excel, Google Sheets, or another spreadsheet program to track your HR data points.
There are numerous HR software solutions on the market to help with employee management, hiring, personnel, benefits, and compliance administration.
A human resource management system (HRMS), also known as human resource information system (HRIS), is a comprehensive system to store and analyze HR data, as well as track job applicants, performance management, attendance, compensation and benefits management, workforce analysis, and scheduling.
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Disclaimer: The information provided on this website is general in nature and does not apply to any specific U.S. state except where noted. Health insurance regulations differ in each state.
See a licensed agent for detailed information on your state. PeopleKeep, Inc. does not sell health insurance. Read our privacy policy to learn more. Visit our sitemap
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