HR metrics are the data that measure the effectiveness of HR responsibilities. They are the Key Performance Indicators of the HR department. It helps to identify if the job is done well and how HR contributes to the success of the organization. It gauges the success in initiatives such as Recruitment, Onboarding, Payroll, Employee Engagement, Productivity, Retention, to name a few.
HR leaders usually gather the data, identify what went right and what needs to be improved, and design their strategies accordingly.
HR metrics are the measure of the success or failure of the HR initiatives. They are merely the numbers that tell whether the HR team has achieved its desired results or not.
HR Analytics is a deductive process of the metrics. It talks about why the HR team could not achieve the desired result and probes further to identify the cause.
After identifying the cause for not getting the desired outcome, the HR team sets new metrics and works towards achieving them.
For example, XYZ Inc. identifies that its employee turnover rates are slightly higher than the industry average. This is indicative of the company’s failure at retaining its employees. Here, the employee turnover rate is the HR metric that measures the company’s success at employee retention.
While probing the cause, the company realizes that it has performed poorly at employee satisfaction rates, another HR metric. The reasons were lack of Learning & Development opportunities and career growth. Having identified the reason, they provide more L&D opportunities and focus on internal promotions. Here the company makes use of different metrics, analyzes the reason, and makes changes to its HR strategy. This is an example of HR Analytics.
The company will now check if the new measures help reduce the turnover metrics. If yes, the deduction has been right, else they would analyze further to identify the cause.
HR metrics tell you how the organization is performing with respect to its human capital. Here are 7 reasons why you should focus on HR metrics and analysis:
It lets you know which sourcing channel is working best for you.
Is it social media, job boards, referrals, or campus recruitment? Identify what is working for you and double your efforts in those areas, focus less on areas with minimal output.
It helps you identify how long it takes for a candidate to assimilate into a new role.
It lets you know if you need to make changes to the onboarding and orientation process or provide additional training to help them become productive at the earliest.
Ensures that your hiring pipeline is well designed
Are candidates dropping out at any stage? If so, where? Identify the conversion rate of your hiring process and optimize it accordingly.
It tells you how diverse and inclusive your organization is.
Are they meeting the industry standards? How is it impacting your organization?
Show you the effectiveness of the onboarding process.
Do you need to increase the frequency of the check-ins? Should you increase the duration of onboarding? Find answers to these questions and a lot more.
Your high-performing employees are leaving the organization at a high rate.
If so, it will let you know the reason for the high turnover rate.
Helps you prioritize employee happiness.
Are employees happy at your organization? If not, is it because of lack of recognition, career advancement, or lack of training? If so, how can you make it better?
Let’s get into some of the essential metrics that every company should keep track of. The metrics are broadly divided into 3 parts:
Hiring efficiency metrics
Employee turnover metrics
Candidate experience metrics.
These numbers tell how exactly your hiring process is functioning.
Candidate callback rate - It tells you whether your offer is attractive to the candidate or not.
Formula: Number of candidates who returned the calls / Number of candidates who were asked to give a callback and express interest in the job.
Time to Hire - It talks about the time taken for a candidate to join a role from the time the role became available.
Formula: Candidate’s date of joining - Date when the position became open
Time to Fill - On average, it takes 36 days to fill an open position. With competition for candidates, the speed of recruitment can make or mar your chances of getting a good hire.
Formula: Candidate’s date of offer acceptance - Date when the position became open
Cost per hire - It helps you identify and plan your hiring costs beforehand.
Formula: Sum of internal and external costs / Total number of hires
Interviews per hire - This talks about the efficiency of your interview process, or about the quality of hires and lets you make changes accordingly.
Formula: Total number of candidates who attended the interviews before the role was filled in.
These numbers tell you whether your company is doing a good job at retaining the employees
Overall turnover rate: It tells you how many employees exited the company in a given period of time. This would also include retired employees.
Formula: (Number of employees who left the company in a given period / Number of employees present in the company at the beginning of the period) x 100
Voluntary turnover rate: Voluntary turnover rates tell you how many employees quit your organization for reasons such as conflicts, compensation, job satisfaction.
Formula: (Number of employees who left the company in a given period / Number of employees present in the company at the beginning of the period) x 100
Candidate experience is crucial because it is more of a precursor of how their work-life would be if they accept the job.
Candidate experience score: Similar to an NPS, you identify the promoters and detractors here and identify the reasons for a poor experience.
Formula: Number of Promoters - Number of Detractors
Assessment Completion rate: It tells you how many candidates complete an assignment given to them.
Formula: (Number of candidates who completed the assignment / Total number of candidates who received the assignment) x 100
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