The Best HR Metrics to Track

Human resources departments are responsible for much more than hiring employees and managing payroll. They also play an important role in improving workforce productivity, reducing employee turnover, and supporting business growth.

But how can employers determine whether their HR strategies are working? That's where HR metrics come into play.

Understanding the best HR metrics to track can help businesses identify workforce challenges, measure progress, and make more informed decisions.

Quick Summary:

• HR metrics help businesses measure workforce performance, identify challenges, and make more informed decisions.
• The six best HR metrics to track include employee turnover rate, time-to-hire, cost-per-hire, employee performance, employee engagement (eNPS), and revenue per employee.
• Tracking HR metrics can help employers improve employee retention, streamline recruitment, reduce costs, and increase productivity.
• To effectively track HR metrics, employers should establish baselines, collect accurate data, monitor trends, and use their findings to make improvements.
• HR software solutions like PeoplePro HCM can simplify HR reporting and analytics by centralizing employee information and workforce data.
  

What Are HR Metrics?

HR metrics are measurable data points that businesses use to evaluate the effectiveness of their human resources processes, workforce performance, and overall employee experience.

These metrics can help employers understand everything from recruitment costs and employee retention to workplace productivity and engagement.

HR managers and HR departments are typically responsible for collecting and analyzing this information. However, business owners, executives, and department managers can also use HR metrics to guide important decisions.

The real value of HR metrics comes from turning data into action. Simply knowing that employee turnover is increasing isn't enough. Employers should use that information to investigate potential causes, improve retention strategies, and create positive changes within their organization.

The Best HR Metrics to Track

While there are dozens of HR metrics businesses can measure, some provide particularly valuable insights into workforce management and organizational performance.

Here are six of the best HR metrics to track.

Employee Turnover Rate

Employee turnover rate measures the percentage of employees who leave an organization during a specific period.

Turnover Rate = (Number of Employee Separations ÷ Average Number of Employees) × 100

Tracking turnover helps employers understand how effectively they're retaining employees. A high turnover rate may indicate issues with compensation, management, employee satisfaction, or workplace culture.

By monitoring turnover trends, businesses can identify retention challenges and take steps to address them before they become more costly.

Time-to-Hire

Time-to-hire measures how many days it takes for a candidate to move through the recruitment process, typically from entering the hiring pipeline to accepting a job offer.

Employers can use this metric to identify delays in recruitment, improve hiring efficiency, and reduce the risk of losing qualified candidates to competitors.

It's also helpful to measure how long new employees take to complete onboarding requirements and become fully integrated into their roles, as a slow onboarding process can drag down a business's productivity and bandwidth.

Employers should consider leveraging modern recruitment software as well as employee onboarding software, which can help speed up both processes and improve metrics in both categories.

Cost-per-Hire

Cost-per-hire measures how much an organization spends to recruit and hire new employees.

Cost-per-Hire = (Total Internal Recruitment Costs + Total External Recruitment Costs) ÷ # of Hires

These costs may include job advertisements, recruiting software, agency fees, employee referral bonuses, and internal recruiting expenses.

Tracking cost-per-hire allows employers to evaluate recruitment spending and determine which hiring strategies deliver the best results.

For example, if one recruitment channel consistently produces qualified candidates at a lower cost, businesses may choose to invest more resources in that channel.

Employee Performance

Employee performance metrics help employers evaluate how effectively employees are meeting expectations and contributing to organizational goals.

Common performance indicators include:

• Absenteeism: How frequently employees miss scheduled work.
• Goal Progress: Whether employees are meeting established objectives and deadlines.
• Skills Development: New skills, certifications, or competencies employees acquire.
• Job-Specific Performance: Productivity, work quality, customer satisfaction, or other role-related measurements.

Tracking these metrics can help managers recognize strong performers, identify training opportunities, and provide more meaningful feedback.

Modern performance management software can simplify this process by centralizing employee goals, evaluations, and performance records.

Employee Engagement Score / eNPS

Employee engagement metrics help businesses understand how motivated, satisfied, and committed employees feel toward their organization.

One common measurement is the Employee Net Promoter Score (eNPS), which asks employees how likely they are to recommend their employer as a place to work.

eNPS = Percentage of Promoters − Percentage of Detractors

Regular engagement surveys can help employers identify concerns surrounding leadership, workplace culture, communication, and employee satisfaction.

Tracking these results over time also helps businesses determine whether workplace improvements are having a positive impact.

Revenue per Employee

Revenue per employee measures how much revenue a business generates relative to the size of its workforce.

Revenue per Employee = Total Company Revenue ÷ Number of Employees

This metric provides a high-level view of workforce productivity and operational efficiency.

Employers can monitor revenue per employee over time to understand how staffing changes, investments in technology, or operational improvements affect business performance.

However, this metric should be considered alongside other indicators, since revenue can also be influenced by pricing, market conditions, and business models.

HR Metric Equations

Here are the equations for some of the metrics we discussed:

• Turnover Rate = (Number of Employee Separations ÷ Average Number of Employees) × 100
• Cost-per-Hire = (Total Internal Recruitment Costs + Total External Recruitment Costs) ÷ # of Hires
• Employee NPS (eNPS) = Percentage of Promoters − Percentage of Detractors
• Revenue per Employee = Total Company Revenue ÷ Number of Employees

How to Track HR Metrics

Tracking HR metrics effectively requires more than simply collecting workforce data.

Employers should start by identifying the metrics most relevant to their business goals. From there, they should:

1. Establish Baselines: Understand current performance before setting improvement targets.
2. Collect Consistent Data: Use reliable information from payroll, HR, recruitment, and performance management systems.
3. Monitor Trends: Review metrics regularly to identify changes and potential problems.
4. Take Action: Use findings to improve HR processes, establish goals, and measure results.

Businesses should also consider using HR software to centralize information and reduce the time spent collecting data manually.

Tracking HR Metrics with PeoplePro HCM

PeoplePro HCM helps employers simplify workforce management by bringing important HR processes and employee information together in one system.

Through its reporting and analytics capabilities, businesses can gain greater visibility into workforce trends, evaluate HR performance, and make more informed decisions.

PeoplePro HCM also supports key functions such as human resource management and performance management, helping employers organize employee records, monitor performance, and access valuable workforce information.

Rather than relying on disconnected spreadsheets and manual reporting, employers can use centralized HR technology to turn workforce data into meaningful insights.

Ready to make better decisions with your HR data? Explore PeoplePro HCM and discover how the right HR technology can help your business track important metrics and improve workforce management.