What Are Some Examples of HR Metrics?

What are some examples of HR metrics?

HR metrics are systems or tools used to measure the performance of elements of the human resources function. 

Why HR metrics are important

Any goal – whether personal or professional – should be measurable. Goals are relatively meaningless if there’s no way to objectively evaluate progress toward achieving those goals. A company that invests tens of thousands of dollars into a new employee training program but lacks effective metrics on the relevant performance indicators doesn’t know whether that money was a worthwhile investment or a waste of resources. Similarly, the company won’t know if it makes sound business sense to repeat that investment in the future on the same or similar initiatives. A company lacking effective HR metrics might not even be aware that it even has any HR issues in the first place.

Examples of HR metrics

There are many, many metrics that can be used to evaluate the performance of a company’s HR function, but a few stand out as perhaps the most relevant examples:

Revenue per Employee

Businesses hire people to help the business make money. Revenue per employee gauges how much money a business takes in divided by the entire workforce. Alternatively, it can be calculated by individual revenue centers – i.e., business units.

Turnover

Turnover is expensive. It costs a lot of money to recruit, hire and train new staff. Companies want to retain employees for as long as possible, thereby reducing turnover. Turnover represents the number of employees who leave (for any reason) divided by the total number of employees. So, for example, a company with 100 employees that loses 10 over the course of the year would have a 10 percent turnover rate.

Engagement

Employee engagement refers to how dedicated and enthusiastic an employee is with respect to their work. This is a more qualitative metric than turnover or revenue per employee, because it’s hard to put a hard number on how committed someone is to their job. For this reason, measures of employee engagement often rely on surveys where employees (typically anonymously) rate their level of engagement based on a series of questions.

Skill Shortage

Skill shortages are gaps in capabilities between a company’s needs and its current workforce. Measuring a skill shortage involves defining the skills needed by the organization, evaluating the current workforce on those skills, and then determining the difference between the two.

Each company will identify the HR metrics that are most important for it to monitor the ROI of its human resource investment. Those covered here are some of the most common metrics used by companies of all types.