10 Key HR Metrics Every Company Needs to Know

HR is an organization's vision that keeps an eye on the internal vibes and external trends to steer the business in the right direction. But without the right HR metrics, it's like trying to see the world with foggy glasses—everything's a blur. Get the right metrics in place, though, and the data snaps into focus, revealing patterns, trends, and those pesky discrepancies you didn't even know were there! With these insights, decision-making becomes a whole lot clearer. So, let's explore ten HR metrics that are a must-have for a sharp, data-driven talent management strategy!

Metrics for Recruiting and Onboarding

1. Cost per Hire

This HR hiring metric, the Cost per Hire (CPH), is as practical and relevant in 2024 as it’s ever been. It tells you how much it costs, on average, to snag a new employee. Consider it the “price tag” for hiring—just take the total hiring expenses and divide it by the number of new hires in a given time frame. The result? A practical and no-nonsense view of your recruitment ROI!

HR pros have relied on CPH for ages to measure the efficiency of their hiring processes. It’s more enlightening than simply adding up the bills–who wants to do all that? What makes CPH especially important is that it factors in all the costs of wooing potential candidates, even those who don’t make the cut. It might sound counterintuitive, but it actually provides a more consistent and insightful look at cost-effectiveness—and it’s a breeze to calculate!

Cost per Hire = (Internal Recruiting Costs + External Recruiting Costs) / Total Number of Hires

For those who prefer consistency, the Society for Human Resource Management and the American National Standards Institute have laid out standardized definitions for what counts as internal and external costs in the CPH formula. This includes the obvious stuff like recruiter salaries, recruiting software, and ad spending, but also sneaks in things like health screenings, drug tests, sign-on bonuses, and relocation expenses. According to SHRM, in 2021, U.S. companies spent roughly $4,700 per hire and over $28,000 for executive-level hires. Not exactly pocket change!

2. Time to Hire

Another vital HR metric to keep tabs on is “Time to Hire,” which measures the time it takes from when a possible candidate initially engages with your recruitment process to when they accept the job. Similar to cost per hire, this is calculated per person and serves as a solid indicator of how efficiently your talent acquisition process is functioning. If your time to hire is stretching out, it might point to ineffective job postings, weak advertising, or a hiring team moving at a snail’s pace. Either way, it’s a sign that quality candidates could be slipping away to competitors or getting frustrated with your drawn-out process.

Time to Hire = Day of Hire - Day of Applicant’s First Contact

The tricky part with time to hire is defining when the clock starts. Some count from the moment of first contact between the candidate and employer, while others begin when the candidate submits their application—two points that don’t always align. No matter where you begin, it’s important to note that time to hire is different from “time to fill,” which tracks the time from when a job opening is posted to when a candidate accepts the offer. ‍

3. Quality of Hire

“Quality of Hire” is like the Swiss Army knife of HR metrics—broad, versatile, and packed with valuable tools. It's a super-metric that wraps up various employee metrics, or “indicators,” all tailored to your specific goals.

Unlike cost per hire and time to hire, which are all about the nuts and bolts of the hiring process, quality of hire (QoH) focuses on the bigger picture: the value an employee brings to your company. Think of it as the ultimate ROI check on your recruitment efforts. SHRM even calls it the “holy grail” of recruiting metrics, and for good reason—it digs deeper into employee value than those narrower metrics ever could.

The basic formula for quality of hire is simple: sum up the scores from your chosen indicators and then divide by the number of indicators you used.

Quality of Hire = (Indicator 1 % + … + Indicator N %) / N

So, what goes into this magic number, exactly? A 2017 SHRM survey observed the most popular indicators include “performance appraisal scores,” “retention rates,” and “360-degree feedback scores.” Other usual suspects are “customer service scores,” “rate of salary increase,” and “profit contribution.” While there are different ways to calculate the quality of hire, it’s common to express these indicators as percentages, giving you a final score that’s also a percentage!

Metrics for Employee Satisfaction

4. Employee Net Promoter Score (eNPS)

Employee satisfaction can be abstract, but an excellent way to get a read on it is by eNPS. eNPS measures how much a group of employees would recommend or not recommend a job candidate to join your organization. This can be done by running a survey and asking employees on a scale from 0 to 10 how likely they are to recommend your company as a workplace to others. Respondents who choose a 9 to 10 are considered “promoters,” those indicating 7 - 8 are “passives”, and those with 6 or below are considered “detractors”. To calculate eNPS, you subtract the number of detractors from the number of promoters, then divide the results by the total number of respondents and multiply this figure by 100

eNPS = [ (# of Promoters - # of Detractors) / Number of Respondents ] x 100

A score of 40 - 50 is considered “excellent,” any score above 20 is “good,” and a score between 10 and 20 is “fair.” A score below 10 indicates serious workplace satisfaction issues and is a good place to start further investigation into why employees are dissatisfied.

5. Absenteeism Rate

Absenteeism, the fancy term for those unexpected days off, can pop up for all kinds of reasons. It might point to health and well-being issues rather than a lack of dedication or job dissatisfaction. Whatever the reason, HR needs to keep a close watch on attendance data to gauge the costs of missed days and get a better read on what employees need.

To figure out your absenteeism rate, just divide the number of unexcused absences by the total expected workdays for any given period. Multiply that by 100, and voilà—you’ve got your percentage. The closer it is to zero, the happier everyone is!

Absenteeism Rate = (Number of Absent Days / Number of Total Working Days) x 100

This calculation works like a charm whether you’re looking at the whole company, a single employee, or even just one department. Just make sure you adjust the inputs accordingly. When you’re crunching the numbers for a group, remember that the “expected workdays” add up fast—if ten people work five days, that’s 50 expected workdays, not just five. So, keep your calculator handy!

6. Turnover Rate

The turnover rate is like your company’s revolving door—it tells you how many employees are heading out each year. If that door is spinning faster than usual, it’s time to hit pause and figure out what’s driving people away. A high or rising turnover rate is a big red flag, whether job satisfaction, career development, or leadership woes.

Here’s how you calculate it:

Turnover Rate = (Number of Employees who Left within Time Period) / (Average Number of Employees During Time Period) x 100

When that number starts climbing, it’s more than just a headcount issue—it’s a warning sign that your company culture might need some TLC.

Turnover costs give you the cold, hard cash value of what it costs every time someone leaves. Spoiler alert: it’s more than you think! From the apparent expenses like severance pay to the sneaky ones like lost productivity, it all adds up.

Here’s what you’re looking at:

• Costs of separation: Severance packages, exit interviews, and the admin headache of offboarding.
• Vacancy costs: While you’re hunting for a new hire, the work piles up, and deadlines get missed.
• Hiring costs: Recruitment fees, job ads, and all those interviewing hours.
• Training costs: Your shiny new employee needs time to adjust, which temporarily dips your productivity.

Put it all together: turnover is like a money pit you don’t want to fall into. Reducing it isn’t just good for morale—it’s good for the bottom line.

Tenure is the average time your employees stick around before they decide to move on. Think of it as a loyalty score—if people hang around for years, you’re doing something right! If they’re leaving in a hurry, it might be time to rethink what’s keeping them (or not) at your company.

By monitoring turnover and tenure closely, you can spot trouble before it snowballs and create a work environment that keeps your team happy, engaged, and staying for the long haul.

Compensation Metrics

7. Salary Averages

Salary averages are like the Swiss Army knife of compensation metrics—versatile and handy for slicing through data across various categories. Whether you're comparing pay by job levels, departments, or demographic groups, salary averages offer a quick snapshot of how compensation is distributed. To calculate it, just add up all the salaries within your interest group and divide by the total number of individuals. For instance, if a department of 10 people earns a total of $750,000 annually, the average salary would be $75,000.

Salary Average = (Salary 1 + … + Salary N) / N

These averages aren’t just an internal tool—they’re also great for benchmarking against the competition. For example, if your mid-level managers earn an average of $85,000, but industry data shows their counterparts at similar companies are making $95,000, it might be time to reassess your pay scales! Salary averages are also helpful for comparing your company’s pay structure to local or national standards. For example, if the national average salary for software engineers is $110,000 and your team is averaging $100,000, you might risk losing talent to competitors.

However, salary averages are important for spotting potential pay disparities, but they’re only the conversation’s beginning. They can highlight gaps—such as a 15% difference in average salary between departments—but they don’t explain why those gaps exist. Are the discrepancies due to differences in job responsibilities, experience levels, or market demand? Salary averages will give you the headline, but you'll need to dig deeper into the data to understand the full story and take the proper steps!

8. Salary Range Penetration

This metric shows how an employee's current pay compares to the salary range set for their position. Employees might land at the high or low end of the range for various reasons, but from an HR perspective, the real task is making sure those reasons are fair and square.

Here’s how to do the math: First, grab the minimum and maximum values of the salary range for the position. Subtract the minimum from the employee’s current salary, then divide that number by the difference between the range maximum and minimum. Finally, multiply by 100.

Salary Range Penetration = [ (Employee Current Salary - Minimum Value of Salary Range) ] / [ (Maximum Value of Salary Range - Minimum Value of Salary Range) ] x 100

The result? A nifty percentage that tells you how deep the employee has “penetrated” into the salary range—0% means they’re at the bottom, and 100% puts them at the top. For example, if the salary range is $80,000 to $100,000 and someone’s earning $90,000, they’re sitting at 50% penetration; bump that up to $95,000, and they’re at 75%.

HR can use this percentage to compare salary range penetration across different groups within the company or against industry standards. This helps identify and address pay equity issues. For example, looking at the average salary might show a gender pay gap, but combining salary range penetration with demographic data gives a clearer look at pay disparities in your organization!

DEI Metrics

9. Diversity Ratios

When we talk about a “diverse” group of employees, it usually means a mix of different genders, races, and cultural backgrounds. As companies embrace “Diversity, Equity, and Inclusion” (DE&I), it’s crucial to back up those words with data. For HR, understanding this starts with calculating diversity ratios!

Diversity ratios offer a quick snapshot of your workforce. For instance, a 3:1 ratio means three employees in one group for everyone in another. To simplify, you reduce the numbers by their greatest common factor, sometimes with a bit of rounding.

Diversity Ratio = Number of Employees Group 1 : Number Employees Group 2

Let’s say you have a total of 200 employees and 40 of those employees identify as persons of color (POC). Instead of sticking with the clunky 200:40 ratio, divide both by 40, giving you a 5:1 ratio—five “white” employees for every POC.

These simplified ratios help HR set clear goals, but be cautious not to oversimplify. Lumping all POC employees into one category can miss important nuances. And remember, diversity is just the start—true DE&I requires ensuring equity and inclusion beyond just the numbers.

10. Equity

Diversity is about having different people in the room, while equity is about making sure every person's voice is heard and valued equally. It's not just about filling seats; it's about making sure everyone has a fair chance at success, no matter where they come from. Equity further recognizes that different people may need other resources or support to do well. It's not about giving everyone the same thing; it's about giving everyone what they need to succeed.

For HR, promoting equity means digging into the data to find and fix pay, opportunities, and resource disparities. For instance, a 2023 study by McKinsey discovered that companies in the top quartile for gender diversity on executive teams were 25% more likely to have above-average profitability. Still, equity is what ensures those numbers aren’t just a fluke. Pay equity, for example, involves comparing salaries within similar roles across demographic groups to make sure factors like gender, race, or age aren’t causing unfair pay gaps.

The gender pay gap in the U.S. still stands at around 18%, meaning women earn, on average, 82 cents for every dollar earned by men. Equity efforts aim to close that gap. And it’s not just about pay—equity also means ensuring everyone has the same chance to climb the ladder. This could mean launching mentorship programs, offering targeted professional development, or making sure promotions are based on merit, not bias.

Equity involves leveling the playing field so everyone has an equal opportunity to shine. It’s the secret sauce that makes diversity matter and inclusion real, turning your DE&I initiatives into a powerhouse for positive change and driving real business results.

How to Use HR Metrics

For HR teams, collecting employee metrics is just the beginning. If your company lacks data, it’s time to get resourceful. You don’t need to be invasive—sometimes, organizing data on employee bonuses in one place, like Lanteria HR Compensation can reveal valuable patterns. And don’t underestimate the power of a simple employee survey; a few well-crafted questions can provide surprising insights.

Focus on areas where your company needs clarity. Hiring, productivity, and retention are key spots to explore. Many companies are in the dark about what keeps employees around or drives them away. A data-driven approach replaces guesswork with informed decisions. This is where reporting tools can come in handy.

The real value comes from layering different HR metrics to see the whole picture. For example, salary averages and salary range penetration offer a snapshot of who’s earning what. But when you combine this with employee satisfaction scores or turnover rates, patterns start to emerge. You might find that lower salary penetration correlates with higher turnover or that satisfaction dips where pay lags behind industry standards. This cross-analysis turns raw data into strategic insights, guiding decisions on compensation, retention, and more!

Benchmarking against industry standards also helps you see where you stand and where improvements are needed. In short, gathering data is just the start—the real power lies in using it to drive your company forward!

Final Thoughts

Having accurate data is just the start, but the real magic happens when you spin that data into actionable HR metrics. The success of your analysis depends on how creatively you can slice and dice the numbers. For savvy HR teams, the trick is to squeeze every drop of insight from your existing data and scout for new opportunities where untapped info can be transformed into game-changing metrics. Today’s tech and data tools make turning raw numbers into accurate results easier than ever.