18 HR Metrics You Should Track for Business Success in 2024

“Know thyself,” said the Delphic Oracle as the key to life, which in business terms could be translated as “Know your organization”—if you want to succeed in corporate life. This mantra is as valuable in our personal life as it is in business. Successful organizations collect data to make informed decisions across all functions. Here's where HR metrics come into play.

HR metrics are data points that help organizations keep an eye on important aspects like employee performance, retention, compensation, and engagement. an HR metrics dashboard, teams can monitor these metrics to make sure their initiatives are successful and make tweaks to improve outcomes.  The better the information, the better the decision.

Despite all these benefits, according to Deloitte's 2021 Global Human Capital Trends Survey, only 3% of over 6,300 executives said they had the information they needed to make well-informed people decisions. Time to revamp those numbers through HR metrics.

In this article, we'll examine why HR metrics matter and how they influence strategic decision-making. We'll also discuss the essential HR metrics you should track to drive your firm's success in 2024. You'll learn how to implement these employee metrics into your business strategy and establish meaningful soft HR metrics and Key Performance Indicators (KPIs). By the end, you'll see how tracking HR metrics can help you make data-driven decisions that align with your company's goals and create a well-performing workplace.

The Importance of HR Metrics

Unless you consider yourself spiritually enlightened or something of that sort, you’ll know that intuition alone isn't enough for strategic decision-making. It’s business 101: You can’t manage what you don’t measure. HR metrics compensate for this gap.

Strategic Decision-Making with HR Metrics

Put yourself in a scenario where you're considering a leadership development program because a manager requested it. The program is focused on stand-up meetings, and when it ends, the manager will have methods to make meetings more useful. But you realize that employee retention rate in their business unit —which you’ve been measuring— is languishing. You can then check reviews for the manager, or check on anonymous reporting tools to see how that business unit feels about the team.  From this information, you might realize you instead need a program to teach that business unit and manager to work async, because that team is spread across time zones and workers can’t make it to wee-hours meetings. The stand-up meeting course would have likely worsened this situation. Thanks to metrics and a bit of uncovering, a company can know where to invest and why.

That is just an example. HR metrics help to plan talent management. By tracking key metrics across the employee lifecycle (recruitment, onboarding, performance, development, and retention), you can identify areas for improvement and optimize HR programs. Let's say your time-to-hire metric reveals a grueling recruitment process. This helps you improve how you hire people, which can help you find new employees faster and save money.

Another simple example of how HR metrics can influence a company is the turnover rate. A company might be thinking, “We’re doing alright” when it comes to employee turnover. But when they measure it, they could see that they’re scoring 3% worse than their competitors. So if they manage to bring down turnover to an industry standard, they’ll be saving money. And that’s only possible because they realized, in the first place, there was something to work on. That’s HR metrics in a nutshell.

HR Metrics, Organizational Growth, and Employee Satisfaction

The success of a business hinges, in great part, on a cheerful, enthusiastic workforce: Gallup found out that the habits of highly engaged employees result in a 23% difference in profitability compared to those less engaged. HR metrics act as a compass, guiding HR professionals toward creating a positive work environment that promotes growth for both the organization and its employees.

Employee engagement metrics can reveal areas where employees feel disconnected or unfulfilled. If you can indirectly know they are not engaged—say, by noticing your turnover is exceptionally high—then you can do something about it. And you know the other side of the coin. Engaged employees are more productive, more creative, and likely to stay with the company—all factors contributing to organizational growth.

Retention metrics, like turnover rate, paint a clear picture of how well your company retains talent. High turnover rates can be costly and disrupt workflow. By looking at these numbers, you can figure out what makes employees leave and make plans to keep them.

In essence, HR metrics create a feedback loop. By measuring key aspects of your workforce, you gain information that helps with strategic decision-making. This could lead to just about any positive outcome—a more engaged workforce, improved employee satisfaction, or, ultimately, organizational growth.

So, Why Are HR Metrics So Important?

Data-driven HR goes beyond intuition. In short, it allows you to:

• Make strategic decisions
• Measure program effectiveness
• Improve employee experience
• Optimize costs

18 Key HR Metrics to Monitor

Now that you know why tracking HR metrics can seriously impact your company’s performance, we’ll present you with 18 key HR metrics categorized by their function within the HR lifecycle: recruitment, retention, diversity and inclusion, performance, training and development programs, and learning.

Metrics for Recruitment

1. Cost per hire: This metric calculates the average cost of filling a single vacancy. It includes internal costs (advertising, screening) and external costs (recruiter fees).

Formula: Total recruitment costs (advertising, screening, interviews, relocation, internal and external costs) / Number of hires.

2. Time to hire: This metric measures the average time taken to fill an open position, from job posting to offer acceptance. A shorter time to hire indicates a faster recruitment process and reduces the time a position remains vacant, saving on costs.

Formula: Average number of days from job posting to offer acceptance.

3. Quality of hire: While not a single metric, quality of hire refers to how well new employees meet performance expectations and contribute to the organization.

Methods: It can be measured through retention rates, performance reviews, and new-hire productivity, among others. Another good way to measure the quality of hire is to check against measurable results for their trade. For example, if a salesperson is bringing in 80% of the sales revenue and the peer reviews are favorable, that’s a quality hire; each company should have its own formula to score that hire. Also, a hire that, for example, stays for more than 3 years could also be considered a high-quality hire in hindsight.

4. Acceptance rate: This metric calculates the percentage of candidates who accept job offers. A low acceptance rate could indicate an unattractive compensation package, a lengthy hiring process, a mismatch between job descriptions and actual roles, or maybe even poor communication during the hiring process. The hardest part is that HR professionals must cope with little information to explain a low score. If the acceptance rate is very low, HR professionals should do a reckoning and check, item by item, to see what they’re possibly doing wrong. It’s highly unlikely that most candidates will expand on their reasons to walk away (or to start ghosting).

Formula:  Number of offers accepted / Number of offers extended.

Metrics for Retention

5. Employee attrition rate: Employee attrition rate refers to the pace at which employees leave the organization voluntarily or involuntarily. It’s not the same as turnover because attrition relates to the freed-up positions that can’t be filled again. A high attrition rate—as a rule of thumb, anything above 20%—will pay a toll on any project because a withering workforce will mean fewer people will take on business-critical tasks. Attrition is expensive as well.  Studies prove that it can cost anywhere from half to twice an employee's salary to find and hire a new employee who can replace them. And that’s a cost you start incurring only once you have filled that gap. Every time your attrition goes above the ideal, the costs are inestimable. 

Formula: (Number of employees who left the company during a period / Average number of employees during that period) x 100.

What is Employee Attrition Rate and How to Calculate it →

6. Turnover rate: This metric reflects the percentage of employees leaving the company within a specific period. It's obvious that high turnover rates cost money and affect a business. Analyzing this metric helps identify reasons for employee exits and develop strategies to improve retention.

Formula: (Number of employees who left during a period / Average number of employees during that period) x 100.

7. Retention rate: The opposite of “turnover rate,” this metric reflects the percentage of employees who stay with the company for a set period. A high retention rate, on the contrary, indicates a positive work environment and engaged employees.

Formula: (1 - Turnover Rate) x 100.

8. Voluntary turnover rate: This HR metric focuses specifically on employees who leave the company by choice. It also provides information about employee satisfaction and potential areas for improvement within the organization.

Formula: (Number of employees who left voluntarily during a period / Average number of employees during that period) x 100.

9. Retention rate per manager: This HR metric breaks down employee retention by individual teams and managers. It allows you to identify managers who excel at retaining talent and pinpoint areas where retention efforts might be needed.

Formula: Calculate the retention rate for each team/manager individually.

Metrics for Diversity & Inclusion (D&I)

10. Diversity demographics: This HR metric tracks the composition of your workforce across various dimensions of diversity, such as gender, age profile, or location. In some states, including California, employees can opt out of providing these facts about themselves. The ideal way to do itis to have a tool that groups employees by a variable and ensures that tool is compliant with the regulatory framework.

Formula: Number of people in a certain demographic / Number of total employees

11. Diversity in leadership: This HR metric focuses specifically on the representation of diverse groups in leadership positions within the organization. Diverse leadership is one of the ways your company can contribute to breaking the glass ceiling.

Track: Percentage of diverse individuals in leadership positions across departments.

12. Employee Resource Group (ERG) participation: This HR metric tracks employee engagement with ERGs, which are employee-led groups focused on specific identities or backgrounds. High participation rates in ERGs indicate a sense of belonging and support for diverse employees, especially when their initiatives—for example, a flexible Friday afternoon so single parents can pick up their children at school—are accepted.

Formula: Number of employees actively participating in ERGs / Number of total employees. Or even: Amount of ERG initiatives successfully carried out / Amount of ERG initiatives proposed.

Metrics for Performance

13. Employee performance: This HR metric can be tracked through various methods, such as cyclical performance reviews or peer-to-peer reviews. It’s a common thing to say, but we’ll re-iterate it anyway: measuring employee performance allows you to identify areas where employees excel and areas for development, ultimately improving overall productivity.

Methods: Performance reviews, goal-setting programs, 360-degree feedback.

14. Goal completion rate: This HR metric tracks the percentage of employees who successfully complete their assigned goals. For example: a business development representative hit their quarterly quota, but three didn’t. Not every team has hard goals, so only divide by the number of employees with measurable objectives. It’s a good idea to split it up into business units.

Formula: Number of employees who achieve goals / Total number of employees with goals.

15. Revenue per employee: This HR metric calculates the total revenue generated by the company divided by the total number of employees. It provides a high-level view of employee productivity and contribution to the bottom line. This is a solopreneur’s favorite formula.

Formula: Total revenue / Number of employees.

Metrics for Development & Learning

16. Training completion rate: This HR metric calculates the percentage of employees who complete a training program. A tool that lets you track completion from a single screen is ideal because training is usually put on the back burner and you'll probably need to enforce completion with a little push.

Formula: Number of employees who complete a training and development program / Number of employees enrolled in the program.

17. Time to proficiency: This HR metric measures the average time it takes for new hires to reach full productivity. It helps identify areas for improvement in onboarding and training programs to accelerate new employee performance.

Track: Average time for new hires to reach full productivity in their roles (can be measured through employee performance metrics, employee satisfaction, etc.).

18. Training effectiveness: This metric looks at the impact of training programs on employee performance. As with many metrics off this list, the basic principle is measuring outcomes before and after a milestone. In this case, the milestone is the training.

Methods:

• Project outcomes: Track the success of projects completed after training to see if there's an improvement in timeliness, quality, or attainment.
• Pre- and after assessments: Test skill levels before and after training to see if learning is working.

Implementing HR Metrics in Business Strategy

This section goes deeper into how HR metrics can influence business outcomes. We'll elaborate on best practices for using this data, along with the tools and technologies that can improve effective HR analytics. Let’s take a peek.

Transforming HR Metrics into Actionable Data

The article shows that HR metrics go beyond just numbers that you can add to a meeting’s slide. Metrics serve up critical information to effectively manage your workforce and achieve strategic goals. Here's a roadmap to transform HR metrics into actionable knowledge:

1. Start with a hypothesis or question

Formulate clear questions about your workforce, such as:

• Is our turnover rate concerning? What is the impact or the cost of this?
• Are we attracting and retaining top talent?
• Is the onboarding process a success?
• Are training programs helping employees learn something that the company will benefit from?

2. Answer those questions and then ask “Why?”

Those guiding questions are not open-ended, but the “why” bit will help you scan through the data and figure out what you can do better. Your HR metrics are now handy and turn into something actionable.

3. Design a policy to do something about that metric

If your turnover is high, and your metric confirms it, then you should check your onboarding experience. Or maybe your compensation package is not as strong as the market demands. HR metrics are straightforward to crack, but are only “actionable” as long as companies do something with them.

4. Communicate

Share HR metrics and data with relevant stakeholders across the organization, because different business units could own the changes. For example, a sales team that gets word of a low training completion rate could go out to seek better instructional services.

HR Analytics & People Analytics Tools

The HR tech scene offers numerous tools to assist with data collection, analysis, and reporting. Popular options include:

HR Information Systems (HRIS): These core systems, among other things, handle employee data (e.g., age profiles, benefits) and can be a reliable source of HR metrics.

People Analytics Platforms: These dedicated platforms offer comprehensive people analytics capabilities, allowing you to drill down into specific workforce data sets, identify patterns, and come up with actionable data points.

Talent Management Suites: These integrated suites offer a range of talent management functionalities, often including features for performance management, learning management, and workforce analytics.

Establishing HR Key Performance Indicators (KPIs)

HR metrics are the raw data points that track your workforce, while KPIs are the most critical metrics that directly link HR activities to achieving your business goals. Think of HR metrics as ingredients and KPIs as the final dish—both are essential, but KPIs show the true impact of HR initiatives on the business.

In this final section, we’ll detail the process of setting up KPIs for HR, guaranteeing they align well with a company’s objectives.

Here's a step-by-step approach to setting up effective HR KPIs:

• Align with business strategy: The foundation of effective HR KPIs is alignment with your organization's overall business strategy. Identify key business goals (e.g., increased revenue in a certain market) and determine how HR can contribute to achieving them.
• Learn what each stakeholder needs: Don't operate in a silo! Collaborate with executives and key stakeholders across the organization. Know what they need to see in their reports and what HR information is important to them. An employee Net Promoter Score is a good starting point.

Examples of HR KPIs Aligned with Business Objectives

Take a look at these HR metrics examples:

Example 1 - Business Objective: Increase Revenue by 10%

Aligned HR KPI: Improve sales team productivity by 5% (measured through sales metrics).

Example 2- Business Objective: Expand into a New Market

Aligned HR KPI: Time to hire for new positions in the new market (measured in days).

Example 3 - Business Objective: Raise Innovation

Aligned HR KPI: Employee participation rate in idea generation programs (measured as a percentage).

Recap: The Relevance of HR Metrics

This article has covered the importance of HR metrics and how they can help organizations succeed. We've discussed the primary HR metrics to track across various aspects of the employee lifecycle, along with the tools and strategies to implement them correctly.

By looking at HR data, companies can learn important details about their workers. This data helps the HR professional to make data-driven decisions, which can lead to:

Excellence in talent management

Companies can become excellent talent managers because they can find ways to improve the employee lifecycle, from recruiting and onboarding to performance management and development.

Better employee engagement

Since companies can indirectly track engagement—by measuring employee turnover or attrition, for example—they can now figure out ways to increase it.

Reduced costs

Now that companies realize their turnover is slightly above an industry’s benchmark, they can find ways to cut it down. 

Also, using HR metrics in business plans turns data into useful information. This process involves asking clear questions about the workforce and using HR analytics tools to look at the data more closely. Communicating these insights helps everyone involved understand and follow the company's goals. This helps create a culture where everyone uses data to make decisions.

Considering HR metrics is not just about tracking numbers. It's about capitalizing on data to create a well-rounded workplace that allows for business success.

Simplify HR Metrics Tracking By Implementing an HR Software Solution

If you haven’t started collecting HR metrics, time is of the essence. One of the best ways to track and address your HR metrics is with an all-around HR software solution that you can set up as quickly as possible.

TalentHR is a comprehensive all-in-one platform that offers a software solution for almost every HR task, from onboarding to time-off management. Additionally, it allows you to keep track of key other HR processes and metrics such as employee performance and people analytics with a particularly user-friendly system. You can even access the platform from your mobile phone.

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To learn more about all-in-one people management solutions for business owners and their HR departments and teams, visit TalentHR.