The Importance of Tracking HR Metrics

The Importance of Tracking HR Metrics

Human Resources (HR) metrics are key figures that help determine the value and effectiveness of various aspects of a business. They are quantitative measurements that are used to assess how a business is doing and are the starting point for determining the changes needed to be made to improve a business’ performance. HR metrics can be used to assess things such as turnover, training, pay, and morale, etc.

If your company is large enough to have an HR department, chances are you already rely heavily on HR metrics. For smaller businesses, HR metrics may be less of a concern – you may operate more on assumptions rather than detailed quantitative data. Maybe you don’t see the use for it, or you don’t have the programs to generate the data you want. Either way, we’re here to help you understand the value of HR metrics and help point you in the right direction on where to get started on this type of reporting.

As mentioned, HR metrics are used to assess various aspects of a business such as turnover, training, pay, morale, and the list goes on. There is no shortage of metrics that can be tracked in HR. It’s understanding what your company can benefit from now and in the future that will determine the HR metrics that are critical to measure. The size of your company and its priorities also plays a critical role in the metrics you may want to track and the reporting strategy you want to develop.

The number of HR metrics that can be used by a company can be quite exhaustive, so below is a list of some of the more important HR metrics that you should consider tracking and the formulas needed to do so.

Turnover Rate

Turnover is the rate in which employees leave a company and are replaced. A company’s rate of turnover can be calculated by using this formula:

A company’s goal is to retain as many motivated and engaged employees as possible. Calculating your company’s turnover rate helps to assess how well your company is retaining people. If the rate of turnover seems high, this could mean that there are underlying issues that may need to be addressed within your company. Additionally, this metric can be adjusted to evaluate turnover in certain departments or assess other demographics such as age, reason for leaving, time spent with the company, etc. Trends in factors such as these may help point to why turnover among certain demographics is higher than others. See our article titled, “Understanding Turnover: What Your Turnover Rate May Be Trying to Tell You”, for more information on this topic.

Training Participant Rate

A training participant rate measures the amount of people who participate in company-funded training out of all eligible employees. A company’s training participant rate can be calculated by using this formula: 

This metric helps assess how successful training programs are within a company. High participation rates may mean your employees are engaged in the training; low participation rates may suggest that your company needs to rethink its training initiatives. Training is a great way to motivate staff by giving them the opportunity to develop new skills sets that may help advance them in their careers. By measuring your training participant rates, you can get an idea of how engaging the training is and how useful it seems to be for your staff. 

Average Performance Rating

An average performance rating evaluates the mean performance rating of a selected group of people who received performance assessments. An average performance rating can be calculated by using this formula:

This metric helps to assess the overall performance of the employees included in the rating. This measurement can be helpful when evaluating the performance of a certain group of employees or a department of the company. It can also be a great comparative tool when assessing the performance of one group over another.

Compensation Ratio

A compa or compensation ratio analyzes current salaries versus average salary rates. A compensation ratio can be calculated by using this formula:

This metric is helpful when comparing the salaries of your employees against average salary rates. This measurement can help determine whether your employees are paid fairly in comparison to other average salary rates. If your company offers competitive wages to attract and retain staff, then this would be a great tool to use.  

Accident Ratio

An accident ratio provides a concrete measure of workplace safety by assessing the total number of accidents among the total number of employees. An accident ratio can be calculated by using this formula:

This metric not only assesses the safety of a workplace but can also be used to indicate the likelihood of incurring high workers compensation costs.

This is just a small fraction of a much larger list of HR metrics that are commonly used by companies. To learn more about other metrics that exist, visit this link to download a list of HR metrics compiled by BambooHR.



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