10 HR metrics every employer should track for business success

Performance and efficiency metrics

1. Revenue per employee

Just like it sounds, revenue per employee measures the amount of revenue generated per employee in your organization. To compute this HR metric, divide total organizational revenue by the number of employees. Of course, the higher the number, the better, but this figure will be influenced by factors such as turnover, company age, and more. Calculate and review revenue per employee regularly to determine if that key figure is moving in the right direction and to gain a historical perspective on revenue generation.

2. Quality of hire

Sometimes referred to as the “holy grail” of all HR metrics, quality of hire encompasses performance, turnover rates, employee engagement, and more. While it isn’t a one-size-fits-every-company metric, focusing on quality of hire is a great way to holistically enhance your workforce and your larger company goals. This assessment will address the effectiveness of your recruiting programs and any ongoing training and education you offer to employees.

One formula for measuring quality of hire is: (productivity + client feedback + training time + engagement)/total number of indicators

Workforce movement metrics

3. Turnover rate

Employee turnover rate or ETR measures who is leaving your company. It’s calculated by dividing the total number of employee departures by the total number of employees. While turnover rates vary by industry, the recent separation rate for companies has hovered around 3.5%, according to the Bureau of Labor Statistics. Beyond the basic turnover rate, there are even more related metrics for companies to consider.

You can also take the following into account:

• Predicted resignation rate: Based on past data, how many employees are predicted to leave in the next six months or year? Knowing this can help with employee retention and hiring plans, and ensure you are always ready for what comes next.
• The cost of replacement: What does it cost to replace an employee who leaves? If you know that your cost of replacement is high, it might make sense to negotiate further with employees who are thinking of leaving.
• The drivers of resignation: Via surveys, exit interviews, or other methods, capture employee sentiment when someone decides to move on. Why are they leaving your company? And what might make them stay?

Just like revenue per employee, you should track your employee turnover rate on an ongoing basis to determine trends and potential ways to keep valued employees.

4. Absenteeism rate

How many of your workers are missing work due to illness, injury, or other causes? Your company’s absenteeism rate is another important measure of your business’ overall health and employee wellness. An absenteeism rate can be calculated as follows:

(total number of absent days/total number of available workdays) x 100

While absenteeism soared during the pandemic, the current rate is just over 3%, although most businesses aim for closer to 1.5%. Clearly, a low rate will support the day-to-day operations of your business, so it pays to focus on presenteeism.

5. Employee engagement

We all recognize that engaged employees are more productive and more likely to stay at a company. But you might be surprised to learn that employees who are not engaged cost businesses a whopping $8.8 trillion in lost productivity globally, according to Gallup’s State of the Global Workplace: 2023 Report. And less than one-quarter of employees were reportedly engaged at work as of 2022. Clearly, disengaged employees are costly in more ways than one.

You can measure employee engagement through a variety of methods, such as:

• Employee turnover rate and exit interview feedback, as well as employee retention rates
• Absenteeism rates
• Annual employee surveys as well as performance reviews and feedback sessions

Successful HR teams endeavor to grow engagement through programs such as continued education, rewards and honors for significant achievements, career growth opportunities, and more.

6. Retention rate

Should I stay or should I go? That is the question for many employees at some point in their careers. The benefit of having long-term employees is that they offer wisdom and experience, a connection with corporate culture, and a valuable resource for newer hires. You can measure your retention rate by:

• Counting the number of employees at the start of a given time period.
• Subtracting the number of employees who left during that same period.
• Dividing the remaining number of employees by the initial number and then multiplying by 100 to view this as a percentage.

A retention rate that’s often one employers aim for is typically 90% or higher.

Employee experience metrics

7. Employee satisfaction

How happy and satisfied at work are your employees? While this might sound subjective, employee satisfaction supports productivity, positive work relationships, and overall retention. Similar to employee engagement, employee satisfaction can be assessed through surveys that cover career development, leadership and management, and goals as well as regular meetings and exit interviews. While disgruntled employees can drag a company down, satisfied team members uplift each other, which can contribute to improving your bottom line.

8. Employee Net Promoter Score (eNPS)

A great way to measure employee engagement and satisfaction, an employee net promoter score asks one question: How likely are you to recommend working at this company to one of your peers on a scale of 0 to 10? Employees who respond in the 0 to 6 range are known as “detractors” while 7 and 8 responses are considered “passive.” You want to focus on your employees in the 9 or 10 range, as these are considered “promoters” who can be your true company ambassadors.

9. Cost per hire

In a study from the Society for Human Resource Management (SHRM), the average cost per hire for companies averaged $4,700.00. In a nutshell, this metric lets you know if you are receiving a good return on investment for your hires. It can help you improve your recruiting and hiring processes and identify ways to save and opportunities to grow. You can calculate cost per hire by adding all internal and external recruitment expenses and dividing that by the total number of hires in a given time period.

10. Time-to-hire

Linked to cost to hire, time to hire showcases your company’s efficiency. A shorter time-to-hire cycle not only saves your company money but also provides a better candidate and new-hire experience.