The Most Important HR Metrics and How to Use Them Effectively

Understanding and utilizing HR metrics is crucial for enhancing various aspects of human resources, including recruitment efficiency, employee engagement, DEI, and beyond.

Discover the essential HR metrics to track. This guide will help your HR team understand how to measure and track these essential workforce, recruitment, performance, and engagement metrics.

1. Workforce metrics

This subsection includes basic information about your overall workforce. This data may not have a ton of use in and of itself, but it can be instrumental for other calculations.

Some key HR metrics about your workforce include:

Average tenure

Calculating average tenure is a simple stat that can provide insight into several other areas. Knowing how long employees tend to hold a position can signal contentment but also stagnation.

How to calculate the average tenure: Add the total number of months or years worked by all employees, then divide that by the total number of employees.

Formula: (Total years of service for all employees) ÷ (Total number of employees)

Headcount

Headcount is simply the total number of employees in your organization. This metric can be broken down into full-time, part-time, contract workers, etc., to gain further insights or apply calculations to specific categories of employees.

How to calculate the headcount: Count the total number of employees in the organization, segmented by full-time, part-time, contractors, or other categories as necessary.

Cost of workforce

The cost of workforce measures the total operational cost of your staff. This includes salaries, benefits, and employee expenses (i.e., coffee) but not operational expenses (like PPE or fuel).

How to calculate the cost of workforce: Add up the total employee compensation, including salaries, bonuses, benefits, and employee-related expenses (e.g., office supplies, company perks), excluding operational costs such as rent and utilities.

Formula: Total compensation + employee-related expenses.

HR to employee ratio

This metric simply measures the ratio between people operations and regular employees. An efficient HR department will require fewer members per employee than a less efficient one. On the other hand, a higher ratio may be more effective at fulfilling HR-related goals.

How to calculate the HR to employee ratio: Divide the total number of employees by the number of HR professionals.

Formula: (Total number of employees) ÷ (Number of HR professionals)

Salary averages

Calculating average salary by department, level, or for the entire company is a good base for many other helpful calculations (pay discrepancies, raise potential, cost per employee, etc.).

How to calculate salary averages:

Simply find the sum of your entire payroll for a set period (recent, past, or current) and divide it by the total number of employees in the group you are measuring.

2. Recruiting metrics

Hiring is one of the most critical duties of people operations, making this data invaluable. Knowing who to hire, how much it will cost, and how long to find them are vital to overall business strategies.

Cost per hire

The total expense per new hire should include the talent search fees, time spent reviewing applications and interviewing, sign-on bonuses, or other new employee expenses. Average this amount by department or level as desired or for the entire company.

How to calculate the cost per hire: Add up all recruiting costs, including advertising, job board fees, agency fees, and interview-related expenses (e.g., travel, time spent by recruiters and interviewers), then divide by the number of new hires.

Formula: (Total recruitment costs) ÷ (Number of hires).

Time to hire

Knowing how long it takes from when a job opening is created to when it is filled is helpful for practical decisions. Also, it speaks to the efficiency of your recruiting process. Average this time by department or level as sensible.

How to calculate the time to hire: Measure the number of days from when a job requisition is posted to when an offer is accepted.

Formula: (Total time from job posting to offer acceptance) ÷ (Number of hires)

Interviews per hire

This metric is related to the two above, calculating the success rate of interviews.

How to calculate the average tenure: Count the total number of interviews conducted, then divide by the number of successful hires.

Formula: (Total number of interviews) ÷ (Number of hires)

Quality of hire

While it is essential to keep the cost per hire and time to hire low, it is more important to keep the quality of hires high.

Hiring the right candidate who is well-suited for their role and satisfied with their position will reduce recruiting expenses (by avoiding situations in which the person will not make it past the probation period or if the employees themselves quit early on).

How to calculate the quality of hire: Use performance reviews or other metrics (e.g., retention rate, productivity, manager satisfaction) to assess the effectiveness of new hires after their onboarding period.

Formula: (New hire performance score + retention rate + productivity) ÷ (Number of new hires).

Vacancy rate

The goal of recruiting is to fill positions. Tracking the number of vacancies at any given time can show how recruitment efforts are stacking up to resignations and promotions. Maintaining low vacancy rates is also an easy performance indicator for people operations.

How to calculate the quality of hire: Divide the number of open positions by the total number of positions in the organization.

Formula: (Number of open positions) ÷ (Total number of positions)

3. Orientation and onboarding metrics

Onboarding metrics measure the performance and progress of your employee onboarding process. Generally, your onboarding metrics will be more operational. Onboarding KPIs, in contrast, measure performance based on key business goals, objectives, and organizational needs. So, your KPIs should be more strategic by nature.

First-year turnover rate

An employee's first anniversary is a major milestone. A low or shrinking new hire turnover rate implies positive trends in recruiting and onboarding. At the same time, a high or growing number is a major red flag that needs immediate attention.

How to calculate the first-year turnover rate: Divide the number of employees who leave within their first year by the total number of new hires within that same period, then multiply by 100 for a percentage.

Formula: [(Number of employees who left within the first year) ÷ (Total number of new hires in the same period)] × 100

Orientation and onboarding completion rates

This metric tracks the percentage of new hires who complete the entire orientation process within the designated time.

How to calculate the orientation/onboarding completion rate: Divide the number of employees who complete the orientation/onboarding process by the total number of employees who began orientation/onboarding, then multiply by 100 for a percentage.

Formula: [(Number of employees who completed orientation/onboarding) ÷ (Total number of new hires)] × 100.

Time to complete orientation and onboarding

Measures the average time it takes for new hires to complete the formal orientation and onboarding processes.

How to calculate the time to complete orientation/onboarding: Measure the number of days from the start of the orientation/onboarding program to its completion for each employee, then calculate the average.

Formula: (Total days for orientation/onboarding completion) ÷ (Total number of new hires)

Knowledge retention

Assesses how well new hires retain critical information shared during orientation, typically measured through quizzes or assessments.

How to calculate new hire knowledge retention: Use assessments or quizzes to evaluate how much information employees retain after onboarding.

Formula: [(Assessment scores of new hires) ÷ (Total number of questions)] × 100

Training completion rate

The training completion rate measures the percentage of people who completed their onboarding training.

Use this metric to gauge how engaging your onboarding programs and materials are and how they relate to new hire time to productivity.

How to calculate the training completion rate: Divide the total number of employees who completed onboarding training by the total number of employees assigned to the training and multiply by 100.

Formula: [(Total numbers of employees who completed their onboarding training) ÷ (Total number of employees assigned to the training)] × 100

Time to productivity

Time to productivity measures the time it takes hires to start generating value for the company or how long it takes them to do the work you hired them for well. Calculating this metric is not as straightforward as others. You first need to determine the KPIs of each role or each task.

How to calculate time to productivity: After assigning a task to a new hire, calculate the days it takes them to complete the task or achieve those KPIs from their start date—not when you assigned the task. Include the days used for revision as well.

How to calculate the average for all the new hires: Add the total number of days for all new hires over a given period and divide it by the total of new hires. You can also multiply it by 100 to find the percentage.

This metric can also reveal if you've included the necessary materials employees need to complete the job and if you've done so in the proper format.

4. Engagement and retention metrics

Retaining employees is more manageable than recruiting new ones, making this one of the most valuable parts of effective HR. Retention metrics include:

Engagement rate

Disengaged employees are unfulfilled employees. By monitoring engagement, you can keep employees active and happy so they don't wonder about the grass being greener elsewhere.

Quantifying employee engagement rate isn't always straightforward, often relying on survey results or subjective observations.

Consider using survey questions such as "How fulfilled are you in your role on a scale of 1-10?" and indirect data like absenteeism for a more complete picture.

How to calculate the engagement rate: Use surveys or tools to assess employee engagement. One method is to ask employees to rate their engagement or satisfaction on a scale of 1–10, then average the results.

Formula: (Sum of employee engagement scores) ÷ (Total number of employees)

eNPS

The employee net promoter score is a measurement of employee satisfaction and loyalty. It is measured by a simple one-question survey rating employee satisfaction on a scale of 1-10.

How to calculate eNPS: Employees are asked how likely they are to recommend the company to others on a scale from 0 to 10. Subtract the percentage of detractors (those who respond 0–6) from the percentage of promoters (those who respond 9–10) to calculate the score.

Formula: (% of promoters) − (% of detractors)

Promotion rate

Upward momentum is a powerful tool for employee satisfaction (especially for ambitious workers). The promotion rate can be calculated in several ways. The most common is the average time between employee promotions (i.e., most employees receive a promotion every four years). In some organizations, it may be more helpful to measure what percentage of employees received a promotion in a given timeframe.

How to calculate the promotion rate: Divide the number of employees promoted in a given period by the total number of employees, then multiply by 100 for a percentage.

Formula: [(Number of promotions) ÷ (Total number of employees)] × 100

Vacation days taken

Employee benefits like PTO are a significant factor when it comes to retention. Tracking how many vacation days are used can be helpful for budgeting, workforce scheduling, and even employee engagement/satisfaction. This data can also help enforce mandatory time off.

How to calculate the vacation days taken: Sum the total number of vacation days taken by all employees over a set period (e.g., annually) and compare that to the total available days or average vacation usage.

Formula: Total vacation days taken ÷ Total eligible vacation days

5. Performance metrics

Performance management metrics are more indirect, suggesting ways people operations can better support employees to reach their full potential.

Positively influencing performance metrics is one of the most value-adding services provided by human resources specialists.

Absenteeism

Tracking the average number of absences per employee for a given time frame can provide many insights for individuals and company-wide. The goal should be to reduce or maintain this number at a healthy level, addressing outlying employees as needed.

How to calculate absenteism: Track the number of days employees are absent and divide by the total number of workdays, then multiply by 100 for a percentage.

Formula: [(Number of absent days) ÷ (Total workdays)] × 100

Productivity rate

A measure of productivity is a direct metric for performance.

How you measure productivity will depend on your organization and the roles of your employees, but this is a key statistic when it comes to worker performance and has a significant impact on company success.

One example of method of calculating the productivity rate: Divide total output (e.g., units produced, projects completed) by total employee work hours.

Formula: (Total output) ÷ (Total work hours)

Revenue per employee

Calculating revenue per employee can be done with averages or on a more individual basis. Calculating the ROI per salesperson, for example, gives a baseline for supporting those behind the curve and learning from those ahead of it.

How to calculate the revenue per employee: Divide the total revenue by the number of employees for a general sense of each member's value and overall operation efficiency.

Formula: (Total revenue) ÷ (Total number of employees)

Goal completion rate

The goal completion rate measures the percentage of assigned goals or objectives that employees successfully achieve within a specified time frame. It's a direct indicator of how effectively individuals or teams are accomplishing their designated tasks and contributing to the organization's broader objectives.

How to calculate the goal completion rate: Divide the number of successfully completed goals by the total number of goals set for the period, then multiply by 100 to get a percentage.

This metric helps in identifying areas where employees may need more support or resources, and it can be instrumental in recognizing high performers.

Formula: (Total number of completed goals) ÷ (Total number of goals set for the period) × 100

6. Leadership effectiveness metrics

Often, companies fixate on tracking the performance of the hands-on workers at the bottom of the totem pole when, in fact, it is often more critical to prioritize management. Managers are a force multiplier, impacting the performance of everyone they oversee. Measuring and enhancing the effectiveness of your leaders will positively affect everyone.

Subordinate satisfaction

A simple survey asking employees their opinions about a supervisor can provide useful information. By crowdsourcing data, you can evaluate consensus in a manager's performance, including their strengths or areas for improvement.

How to calculate the subordinate satisfaction rate: Conduct anonymous surveys asking team members to rate their manager’s performance, then average the responses to get an overall satisfaction score.

Formula: (Sum of subordinate ratings) ÷ (Total number of responses)

7. Training metrics

Training is another critical aspect of people operations and provides plenty of data to learn from. Important training metrics for HR include:

Training cost per employee

Training is an investment in your workforce. As with any investment, it is wise to know the upfront costs before you dive in. Calculating how much you spend on average to train each employee can help with budgeting and identifying opportunities to save money.

How to calculate the training cost per employee: Sum the total cost of training (materials, trainers, etc.) and divide by the total number of employees who received the training.

Formula: (Total training cost) ÷ (Number of employees trained)

Training ROI

The other half of the training investment is measuring the payout. If spending money on training isn't resulting in more success for the company, it may be a reason to question whether that training is necessary or worthwhile. You can also calculate which training methods are most effective this way.

How to calculate training ROI: Measure the performance improvements post-training and compare them to the cost of training.

Formula: [(Performance gain or cost savings − Cost of training) ÷ Cost of training] × 100

8. D&I metrics

Diversity and inclusion metrics ensure a well-rounded and inviting workplace. This not only includes demographic breakdowns but can also be used to cross-reference stats like pay equity and fairness in opportunities such as promotion.

Diversity ratio

Diversity ratios can be calculated for several categories, such as age, race, and gender.

For example, you can calculate the gender ratio as a percentage using an easy-to-understand pie chart.

How to calculate diversity ratios: Divide the number of employees in a specific demographic group (e.g., gender, race) by the total number of employees and multiply by 100 for a percentage.

Formula: [(Number of employees in a group) ÷ (Total number of employees)] × 100

Pay equity

With diversity ratios calculated, you can use that data How to calculate pay equity. This ensures pay and opportunities such as promotion are being fairly distributed.

For example, cross reference pay by age and pay by experience to ensure compensation is duly dispersed.

How to calculate pay equity: Compare the average salaries of different demographic groups (e.g., by gender or race) to ensure fairness.

Formula: (Average salary of Group A) ÷ (Average salary of Group B)

9. HR Automation metrics

Virtually every industry can benefit from automation in one way or another. Despite the focus on people in the HR world, automation tools still have a lot to offer, especially when it comes to more technical or data-oriented tasks. Here are some strategic HR metrics related to automation:

HR automation software utilization

Calculating HR automation software utilization as a ratio can help you identify opportunities or compare your usage with your goals or other companies in your industry.

How to calculate HR automation software utilization: Measure the percentage of HR tasks completed through automation tools compared to the total number of tasks that could be automated.

Formula: [(Number of automated tasks) ÷ (Total number of HR tasks)] × 100

Automation effectiveness

Measuring the effectiveness of automation can be done in several ways and depends on what you are automating.

For example, suppose automation is saving your time on HR tasks. In that case, you can measure effectiveness as a ratio of time saved or efficiency percentage increase. You could go further by calculating the work hours and, therefore, money saved by automation.

How to calculate automation effectiveness: Measure time or cost savings from automation, then compare it to manual processes.

Formula: [(Time saved or cost savings from automation) ÷ (Time/cost of manual processes)] × 100

Key steps for analyzing HR metrics

Effectively analyzing HR metrics is essential for understanding workforce trends and driving organizational success. From employee performance and engagement to recruitment and retention, HR metrics provide valuable insights that can shape strategies and improve decision-making.

However, simply collecting data isn’t enough—you need a structured approach to turn numbers into actionable insights. Below are the key steps to follow when analyzing HR metrics, ensuring you gain the most value from the data you collect.

1. Collect data: Gather accurate and relevant HR data from surveys, HR systems, and performance reviews. Ensure you’re using consistent time frames and metrics
2. Set benchmarks: Compare the data against industry standards, internal goals, or historical data to establish benchmarks and identify where your organization stands
3. Identify trends: Look for patterns and trends in the data, such as rising turnover rates or increasing absenteeism—these trends provide insights into underlying issues that need attention
4. Link metrics to business outcomes: Connect HR metrics to broader organizational objectives, such as productivity, profitability, or customer satisfaction—this allows HR to demonstrate the impact of workforce dynamics on business performance
5. Provide insights: Use the data to identify actionable insights and recommend changes—for example, if the time to hire is increasing, you may need to optimize the recruitment process or improve the employer brand
6. Monitor progress: Regularly track and review HR metrics to ensure continuous improvement and adjust strategies as necessary

Tips for using HR metrics strategically

Collecting HR metrics is a powerful tool, but how you use that data determines its real impact. To truly leverage the full potential of HR metrics, it’s important to integrate them into your overall business strategy and use them to guide critical decisions. By doing so, HR teams can align their efforts with organizational goals and demonstrate tangible value.

Below are a few essential tips to help you use HR metrics strategically and ensure that they drive meaningful outcomes for your company.

• Measurement is just the beginning: Simply recording HR metrics is the first step. How you use that data will make a difference for your company
• Integrate metrics into your overall strategy: Incorporate HR metrics into your overarching people analytics strategy—this helps in tracking progress and determining which tactics yield results so you can allocate resources accordingly
• Let data guide decisions: Base people operations decisions on the metrics. This enhances outcomes and provides measurable proof of achievements
• Ensure accurate data collection: Invest in robust systems to gather data. Use the data to create case studies that showcase results and forecast growth
• Gather feedback regularly: Conduct regular surveys and questionnaires—these feedback tools provide insights into employee satisfaction and behavior changes over time
• Be mindful of collection methods: Sometimes, you will use obvious numbers like attendance records for your calculations; other times, you will rely on subjective information like 360-degree feedback surveys. For subjective data, ensure questions are framed to minimize bias and get accurate responses
• Remember that consistency and transparency are key: Maintain a uniform system for metrics. Ensure the process is straightforward to everyone in the organization, making it easier for everyone to participate or follow along

Measure, map, and improve HR metrics with Deel Engage

Develop a system for recording and monitoring important HR data within your organization with Deel Engage. Our all-in-one talent management system allows you to track key metrics, such as:

• Engagement and satisfaction scores (including eNPS)
• Retention rates
• Management effectiveness
• Training completions
• Training effectiveness
• Performance metrics
• Goal attainments
• Specific competency mastery scores at individual, team, and department levels
• And more

In addition, Deel HR, our truly global HRIS solution, is always included for free. Use it to manage HR for workers compliantly in 150+ countries, including benefits, time off, etc.

Book a demo to see how our solutions will help you implement data-driven people policies.