HR Metrics and their Formulas

How often does your HR department measure its effectiveness? HR metrics and measurements can be powerful in showing us areas where we could improve and better meet the needs of our organization and its employees. They can also help provide meaningful data to help us make good decisions for our business and department.

There are an endless array of HR metrics you can use spanning payroll, compensation, benefits, engagement, retention, training, and more – all of which can provide incredible insight into how your HR function is performing. But, some measurements are more important than others depending on your organization’s goals, strategy, and the data it can feasibly track, analyze, and use. Four crucial considerations that HR professionals need to consider when using HR metrics include:

• What metrics are most important to the organization?

• What data needs to be gathered or tracked to calculate these metrics?

• How will the data be analyzed and benchmarked?

• How will the analysis be used for action planning, development/improvement, and problem-solving?

Metric	Formula
Absence rate	# days absent in month ÷ (average # of employees during a month x  # of workdays)
Benefit or program costs per employee	total cost of employee benefit/program ÷ total # of employees
Benefits as a percent of salary	annual benefits cost ÷ annual salary
Compensation as a percent of total compensation	annual salary ÷ total compensation (salary + benefits + additional compensation)
Compensation or benefit revenue ratio	compensation or benefit cost ÷ revenue
Cost per hire	recruitment costs ÷ (compensation cost + benefits cost)
Engagement or satisfaction rating	percent of employees engaged or satisfied overall or with a given aspect of the workplace
Percent of performance goals met or exceeded	# of performance goals met or exceeded ÷ total # of performance goals
Percent receiving performance rating	# of employees rated under a given score or rating on their performance evaluation ÷ total # of employees
Revenue per employee	revenue ÷ total # of employees
Return on investment (ROI)	(total benefit - total costs) x 100
Time to fill (average)	total days taken to fill a job ÷ number hired
Training/development hours	sum of total training hours ÷ total # of employees
Tenure	average # of years of service at the organization across all employees
Turnover (annual)	# of employees exiting the job during 12 month period ÷ average actual # of employees during the same period
Turnover costs	total costs of separation + vacancy + replacement + training
Utilization percent	total number of employees utilizing a program/service/benefit  ÷ total number of employees eligible to utilize a program/service/benefit
Workers' compensation cost per employee	total workers compensation cost for year ÷ average number of employees
Workers' compensation incident rate	(number of injuries and/or illnesses per 100 full-time employees ∕ total hours worked by all employees during the calendar year) x 200,000
Yield ratio	percentage of applicants from a recruitment source that make it to the next stage of the selection process

We’ve provided some basic and standard metrics that we find many organizations using to help you get started measuring HR:

Keep in mind that this is merely a sampling of the many metrics you can use to gauge the effectiveness of your HR function. There are dozens more that could potentially be beneficial to track and measure, depending on your organization's unique needs.