February 2021

What are HR Metrics

Surprisingly, a brilliant idea is not the key to a successful business. Without people, a really good idea is still only an idea. Therefore, HR decisions are integral to the success of any business. The outcome of HR decisions needs to be fully measurable, with tools from HR metrics dashboards, serving as key indicators in performance measurement, efficiency, and the impact of business processes and changes.

These include, but are not limited to, recruitment speed and quality, development of staff, targeted training and training success, and the success of line managers.

While measuring HR metrics is easy with gulfHR – a HRMS software designed specifically for the Middle East – However, HR metrics only become meaningful when you start interacting with the data, analysing and contextualising it. This process of people analytics is crucial to business strategy and future responses. It is a marriage where one half completes the other half.

Why are HR Metrics and People Analytics Important?

The union between HR statistics and HR analytics is vital in quantifying and interpreting how your business is performing. The key metrics are Xrays of your business, a diagnostic tool that can highlight problem areas in your business and aid you to fix them. A skilled analysis of the data also allows you to pinpoint areas in your business that are particularly successful and analyse why they are successful, giving you specific clues on what to replicate to achieve optimal success in your business.

HR scorecards are specific and can measure an array of people- and workforce-related outputs, relative to different competencies within a business, and in broad strokes include: recruitment; retention and engagement of employees; time tracking and productivity; robust employee skills development and training; and employee value. Our list is not exhaustive, but below are some of the most prevalent, core metrics every business needs to investigate to thrive.

12 HR Metrics to Measure

Recruitment Metrics

Metric 1- Time To Hire

Time to Hire analyses the number of days from when a position opens in the company to the moment the candidate signs the contract. This measures the efficiency of your recruitment process. If your Time to Hire is the same as Time to Fire, you know that your recruitment process needs improving. Faster is not always better.

Time to Hire can be an insightful indicator of how easy or difficult it is to fill a certain role in your company. Within this metric, you can measure the time to fill a position, calculating from the same starting point as Time to Hire, but ending at the moment that the candidate starts at the company.

Metric 2- Quality of Hire

Forbes Magazine published an article in 2012 that stated that close to 50% of all new hires go bad within the first 18 months. That makes the Quality of Hire metric one of the most crucial indicators to pay attention to, addressing the question of how much value new hires add to the long-term success of your company. The metric measures a new hire’s performance, quality of work, and tenure. It is the process of separating “them bad apples” from the good ones.

Metric 3- Cost Per Hire

The Cost per Hire is closely related to Time to Hire, and calculates the cost of new hires to the company. The formula is: (Company’s Spend on Recruitment + Training)/Number of New Hires. It also casts some light on the efficiency of the recruitment process.

Metric 4- Recruitment Process Experience

A positive recruitment experience is especially important when applicants are unsuccessful in their application for a role. The recruitment experience will determine how applicants engage with the business afterwards. This can be measured in a plethora of ways, from surveys asking them about their experience, to monitoring their engagement with the company afterwards, such as social media like and interactions.

Retention and Engagement Metrics

Metric 5- Employee Turnover Rate

A high employee turnover rate can be a key indicator for systemic problems that need to be addressed. However, an HR statistic is only a number without analysis. Context is all-important for this metric to be meaningful, since a 20% turnover rate in a call centre is not bad at all, but in a factory it could be.

Metric 6- Employee Satisfaction (eNPS Score)

In this metric the respective two halves of measuring and interpreting demonstrate their harmony beautifully. The best way in our experience to extract meaningful numbers and pinpoint employee happiness is by building relationships with staff, not anonymous surveys. Regular focus sessions are ideal for individuals to open up and share truthfully about their work experience in your company.

Metric 7- Retention Rate

This can be a money saver for your business. Higher retention minimises recruitment and training costs. Be mindful that here too the context of the numbers changes what it means to your company, depending on your industry and the country of your operations.

Time Tracking and Productivity Metrics

Metric 8 – Tracked Working Hours

For a factory or call centre, the metric to track is useful and constructive. For almost any other type of business, tracked working hours creates bad vibes by pegging employees against one another. It makes for an aggressive environment that is counterproductive.

Metric 9- Absenteeism

The formula is: Number of Absence Days Per Employee/Total Number of Working Days Per Employee. This key HR metric allows you to gauge employee engagement and identify potential problem areas.

Say, for example, Mrs Smith takes a lot of sick leave. Over the past three months, she has called in sick every Sunday at the start of her working week. It is likely that Mrs Smith is not fully engaged in her role at the company.

The flipside of Mrs Smith is Mrs Jones, whose sick leave curve shows she is rarely off sick. This raises a flag because there could be a potentially harmful reason behind this. She could be scared to take sick leave, or jeopardise her health for the sake of the job.

Employee Skills Development and Training Metrics

Metric 10- Training Expenses Per Employee

Employers benefit from upskilling their workforce. Not only are you training a more skilled workforce that can translate into your company’s bottom line, but you are also developing happy, fulfilled people. The industry benchmark for the Training Expenses per Employee metric is 1% of payroll, but this is not set in stone. It can vary based on industry.

Metric 11- Training Completion Rate

Gauge the quality and relevance of skill courses by measuring whether employees complete their subscribed training. This is especially important for online courses. If employees are not completing training, this metric allows HR analytics to investigate why that is.

Employee Value Metrics

Metric 12- Revenue Per Employee

The formula is: Total Revenue/Total Number of Employees.

Revenue Per Employee is a crucial HR statistic. Here you look at a trend over several months or years. The trend will either go up or down, indicating whether your employees are becoming disproportionately expensive. Again, the caveat here is that some companies have people-driven business models, as opposed to products.

If you are a services provider, you might be charging for your employees’ time, billable hours and non-billable hours, all of which can affect your company’s bottom line. If your business is based on a product, the question to ask would likely be whether it might be cheaper to hire a machine to complete the task, as opposed to a person.

Interestingly, according to research by Dylan Roach and Business Insider in 2015, Apple’s Revenue Per Employee came close to $1.9 million, and for Google close to $1.2 million. (See how much tech giants like Apple and Google make per employee – Business Insider) We’re not all tech giants, but it illustrates how powerful the metric can be in measuring the success of your employees.

How to Make Actionable Data Driven Decisions based on HR Metrics and People Analytics

The offspring of the marriage between HR Metrics and People Analytics are the actions based on your findings, and the outcome of the actions. Here are some steps to illustrate how you can make informed decisions from data driven insights.

Step 1: Understand

Understand your environment and industry, your business model and your HR statistics. Understand how the metrics are generated and what tools you have at your disposal to measure and interpret. Make sure your inputs are high quality and clean, so that your results are accurate.

Step 2: Cross reference

Statistics are numbers, but they exist because of people. We can’t separate the numbers from the people. Contextualise and connect your data with real life. For example, if the statistics say the staff in department X are underperforming because manager Z is awful, compare this information to other data, such as performance reviews and focus groups.

Step 3: Plan

Use the HR metrics data to plan. Replicate the successes in other areas of your business. Mitigate risk where you identify it.

The advantage of creating an HR Metrics Report

When creating an HR Metrics Report, ensure you keep your measuring tool consistent to monitor changes effectively. If you do not keep it consistent, you will get different outputs and not understand why they are different. The smallest change in the tool, even just a word or two, can dramatically change the answer.

When comparing apples to apples, you can easily identify where weaknesses are in the business and address these while they are still small and easily corrected.

There are several ways to create an insightful HR Metrics report. One is to create a paper report or emailed format of it. With the gulfHR software for payroll and other HR functions, you can link the HR Metrics reporting capabilities to feed into the gulfHR metrics dashboard, all as it happens.

The gulfHR dashboard offers the possibility to drill down into the data and have more nuanced application. Dashboards are visual tools for quick and easy health checks of your organisation’s HR vitality in real time, enabling quick decisions on the spot.
A dashboard comprises tables, charts, gauges, and numbers, and you can now add advanced analytics tools that involve machine learning through sophisticated algorithms that allows you to predict the future. Now, who wouldn’t want to have a glimpse of that?

Build a HR Metrics Dashboard

You can build your dashboard in a variety of apps, even in Excel, but gulfHR offers a standard HR metrics dashboard alongside our software. If you use gulfHR software for payroll and leave tracking, we have a standard HR Metric Dashboard ready for you to use, with your software modules easily automatically linked to your dashboard.

The beauty of gulfHR is that our software seamlessly integrates with different HR systems. We can build an analytics dashboard that fits exactly around your specific HR needs, and that allows for a comparison dashboard with customised timelines.

If your company uses the gulfHR payroll and leave modules, the main metrics on the standard dashboard include: Salary YTD; Gross Pay; Deductions; and a Leave Summary for insights into absenteeism. You can add more modules to your software package, and the system would report on each of these modules as well.

Below is an example of the look of the gulfHR Metrics Dashboard for Employee Representation and Termination Turnover:

The gulfHR dashboard can further analyse these metrics and display employees’ gross pay compared to their net pay:

This is an example of timeline comparison with New Hire vs Termination:

The gulfHR customised dashboard can drill down into the data to analyse your metrics according to your specific needs. Here, for example, you can do an Employee Representation Comparison and a Termination Turnover Comparison :

These are just a few examples of what you are capable of with the gulfHR Metrics Dashboard. For a full and free demonstration, click here for demo

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