In the past, businesses tended to ignore HR metrics because they were either “too complicated” or perceived as offering little value to meet company goals.
Luckily, times have changed, and many HR leaders have a seat at the strategic table. The result? HR teams are influencing ideas and driving sustainable change, like boosting retention efforts, enabling cost savings, and developing people strategies.
But as all good leaders know, the best decisions are data-driven, not gut reactions. People metrics have therefore become vital for evaluating and evolving business processes.
To help you drive HR strategy with concise data, our industry experts have developed the following list of the top five people analytics and concrete advice on translating each metric’s results into actions that will help you positively impact the company’s bottom line.
Human Resource Metrics to Track
Maybe you’re on a newly established HR team and are just starting your data-collection efforts. Or perhaps you’re part of a seasoned team with mature data practices and simply want to check if you’re tracking the right metrics.
No matter where you are in your people metrics journey, the following equations and tips will help solidify your HR strategy and increase business performance.
1. Cost-Per-Hire (CPH)
Cost-per-hire is a recruitment metric that calculates the total expenses incurred in hiring a new employee, including advertising, recruitment agency fees, travel expenses, and internal recruiting time. It provides insight into the efficiency and cost-effectiveness of your company’s hiring process.
Why Cost-Per-Hire Matters
According to the Society for Human Resource Management (SHRM), the average cost-per-hire is roughly $4,700.
While costs depend on your recruiting efforts, it’s important to consider this average number as you analyze your own recruiting investments. Is your spending way off base? Are your current efforts working? Take note to discover trends by department, level, and position.
How to Calculate Cost-Per-Hire
How to Improve Cost-Per-Hire
To keep costs down but maintain a solid recruiting strategy, you can:
- Utilize employee referrals: Encourage current employees to refer candidates, which can reduce advertising and agency fees while often leading to higher-quality hires.
- Optimize job postings: Focus on cost-effective job boards and social media channels for advertising job openings, maximizing reach without incurring high costs.
- Invest in an Applicant Tracking System (ATS): Implementing an ATS can streamline recruitment, reduce administrative costs, and improve candidate management efficiency.
- Enhance employer branding: Strengthen your employer brand to attract candidates organically, reducing the need for extensive advertising and recruitment agency involvement.
2. Time-to-Hire
Time-per-hire is an HR metric that measures the average number of days it takes to fill an open position from the initial job posting to the candidate’s acceptance of the offer. It helps evaluate the hiring process’s efficiency and identify areas for improvement to reduce delays.
Why Time-to-Hire Matters
According to a recent Josh Bersin report, the average time it takes to hire for a position is 44 days. Of course, hiring time can vary by seniority, role, industry, and company size, but it usually makes sense to hire quickly (just remember that the more specialized the role, the longer it can take).
Using time-to-hire, recruiters can determine whether they’re spending too much time or not acquiring the right candidates.
How to Calculate Time-to-Hire
How to Improve Time-to-Hire
To help you remove problems that delay hiring, consider taking some of the steps below:
- Streamline the application process: Simplify and optimize it to reduce unnecessary steps and make it easier for candidates to apply quickly.
- Build a talent pipeline: Develop and maintain a pool of pre-qualified candidates, which will allow for faster engagement when new positions open up.
- Improve job descriptions: Write clear and concise job descriptions that accurately reflect the role and attract suitable candidates, reducing the time spent screening unqualified applicants.
3. Turnover Rate
Turnover rate is a people metric that calculates the percentage of employees who leave your organization within a specific period, typically a year.
Why Turnover Rate Matters
Regulating turnover is a key way that HR departments can affect the bottom line. When you consistently track and analyze your turnover rate, you’re better able to assess employee retention and can indicate potential issues in workplace satisfaction, culture, or management practices.
How to Calculate Turnover Rate
How to Improve Turnover Rate
To reduce voluntary turnover, make sure you:
- Use exit interviews to improve your employee experience. Only 54% of organizations conduct exit interviews, which is a missed opportunity to enhance your employee experience. Glean insights from departing employees to determine wins and areas of improvement to help retain remaining talent.
- Offer competitive and equitable compensation and benefits: Ensure that salaries, benefits, and incentives are competitive within the industry to attract and retain top talent.
- Provide career advancement opportunities: Create clear pathways for career progression and offer training and development programs to help employees grow within the company.
- Improve work-life balance: Implement policies that support a healthy work-life balance, such as flexible working hours, remote work options, and sufficient paid time off.
