Human Resources KPIs – best practices

What is a human resource KPI?

HR KPIs analyze how efficient an HR team is in achieving its HR strategy. The HR strategy follows the organizational strategy. In other words, HR KPIs mirror organizational performance for HR, as they are defined based on the HR outcomes that are relevant to achieve business goals. These business goals are often formulated in the Balanced Scorecard.

Retention Rate

Employee retention metrics provide a granular view of why employees stay at organizations. Metrics can be used to monitor employee retention, identify at-risk employees, and look at trends for what you might expect in the future. This analysis can help companies and their human resources departments improve their employee retention strategies and minimize attrition costs.

HR-to-FTE ratio

The HR-to-employee ratio is an expression of the number of HR employees needed to support 100 full-time employees. It is used to provide a roadmap on when to scale the HR team along with the company workforce.

Duration in position

Average interviewing cost

How high are your average costs for setting and conduct an interview?

Time to Fill

Time to fill in the time it takes to identify a candidate and fill an open position in your organisation. Tracking Time to fill is imperative because it directly impacts your ability to onboard the most lucrative talent.

Average length of service

This metric calculates the average length of service, or tenure, that your workers have within your business. You can further dive into details like team or age ranges with this metric for comparisons.

Answered Requests %

How many requests are answered?

The measure simply indicates what amount of all requests have been answered and if the work for their resolving has been started.

Average salary

The average salary of KPI Concepts jobs will vary according to location, department, and job description.

Employee metrics

Further important metrics that are each very self-explanatory, but can give you important insights are

Average number of training hours per employee – measures the number of hours existing employees (does not include new employees) spend in training in relation to the number of employees undergoing training over the same period of time
Average number of vacation days per employee
Average number of unpaid leave per employee
Average retirement age

Compensation cost as a percentage of revenue

The compensation-to-revenue ratio compares the amount of money a company spends on paying its employees to the amount of money it makes in net sales. Compensation usually includes benefits — such as health care insurance — and the employer’s part of mandatory taxes, such as Social Security and Medicare, and of course take-home pay.

Absence rate

Employee satisfaction is measured via employee attitude and engagement surveys. Dissatisfaction is a common cause of employee turnover.

Employee productivity rate

Although this metric is hard to calculate, it says something about the capacity of growth in terms of production of human capital. It often relates to speed, or could reflect accuracy.

Absence cost

The total cost of absence is calculated by including employee pay, the cost of managing absence, and replacement cost. This KPI is especially relevant for European countries with strong labor unions and a high degree of employee protection.

Benefits satisfaction

Satisfaction with employee benefits is usually measured through an employee engagement survey. These can be very helpful in reducing employee turnover.

Employee satisfaction index

Employee satisfaction is measured via employee attitude and engagement surveys. Dissatisfaction is a common cause of employee turnover.

Employee engagement index

Employee engagement is also measured through attitude or engagement surveys. High employee engagement predicts higher productivity, better customer service, lower turnover, and many other relevant and positive outcomes.

Employee innovation index

Innovation is also measured through attitude or engagement surveys. Innovation is more and more often a key driver of business success. It’s the role of HR to enable this innovation.

Internal promotion rate

This KPI is measured by dividing the number of senior functions that were filled through internal promotion by the total number of senior positions filled. Internal hires are often up to speed faster, reduce the risk of a bad hire, and stay longer in the role.

Turnover rate

Turnover is a very common metric and also an important KPI, as high turnover can be very costly.

Involuntary turnover rate

Not all turnover is voluntary. This is the number of employer-led resignations as a percentage of the total resignations.

Turnover rate

Turnover is a very common metric and also an important KPI, as high turnover can be very costly.

90-day quit rate

Or the 360-day quit rate. This is the number of hires that leave within 3 months or a year. A double-digit percentage is already very bad. It’s HR’s job to recruit the right people. Failing to do so will have a negative, measurable impact on organizational effectiveness. This is a key recruitment KPI.

Net Promoter Score

A Net Promoter Score (NPS) is an excellent way of measuring to what degree someone would recommend a service or business to another person. To find out how satisfied employees are with HR’s services, you can measure the NPS of HR. Using the NPS, you can also measure to what degree people recommend working for the organization. Depending on your strategic goals, NPS can be a solid HR KPI.

Percentage of cost of the workforce

This is a metric that takes the cost of the workforce and divides it by the total cost faced by the organization. This KPI, although not often employed, could be used for cost reduction purposes or to help improve automation/robotization in an organization.

Quality of hire

The quality of hire is the percentage of new hires that are given a good rating by their manager during their performance review. Quality of hire indicates how effective HR is in recruiting and selecting candidates. Consistently maintaining a high quality of hire rating enables the organization to reach its strategic goals.

Voluntary turnover rate

This is the number of employee-led resignations as a percentage of the total resignations.

Unwanted turnover rate

Not all turnover is bad. It’s usually positive when bad performers leave. This is the number of good performers leaving as a percentage of all performers.

Training effectiveness

Training has to be effective to reach its goal(s).