What Metrics Does HR Analytics Measure?

Common metrics measured by HR analytics

Several HR metrics contribute to business value, but the key question when measuring these metrics is this: what does the business need?

This question can be best answered by having a conversation with business leaders. A strategic collaboration between the C-suite and HR leaders will help determine the HR analytics strategy.

Based on the key performance indicators (KPI) of the organization, HR can then propose the metrics that can influence these KPIs.

It is important to note that the C-suite sees a clear connection between the need for analytics and the impact it will have on the bottom line. As an HR practitioner, you will need to build a case for why tracking metrics related specifically to the people of the company is critical.

For instance, the C-suite may not be interested in the number of people who have left the organization voluntarily. What might interest them is how many of these employees were in strategic positions or were highly skilled, the duration of their employment, what led to their exit, the cost of replacing these employees, and finally, how all these events affect company profits.

Here are some common metrics tracked by HR analytics:

1. Revenue per employee: Obtained by dividing a company’s revenue by the total number of employees in the company. This indicates the average revenue each employee generates. It is a measure of how efficient an organization is at enabling revenue generation through employees.

2. Offer acceptance rate: The number of accepted formal job offers (not verbal) divided by the total number of job offers given in a certain period. A higher rate (above 85%) indicates a good ratio. If it is lower, this data can be used to redefine the company’s talent acquisition strategy.

3. Training expenses per employee: Obtained by dividing the total training expense by the total number of employees who received training. The value of this expense can be determined from measuring the training efficiency. Poor efficiency may lead you to re-evaluate the training expense per employee.

4. Training efficiency: Obtained from the analysis of multiple data points, such as performance improvement, test scores, and upward transition in employees’ roles in the organization after training. Measuring training efficiency can be crucial to evaluate the effectiveness of a training program.

5. Voluntary turnover rate: Voluntary turnover occurs when employees voluntarily choose to leave their jobs. It is calculated by dividing the number of employees who left voluntarily by the total number of employees in the organization. This metric can lead to the identification of gaps in the [employee experience that are leading to voluntary [attrition]

6. Involuntary turnover rate: When an employee is terminated from their position, it is termed “involuntary.” The rate is calculated by dividing the number of employees who left involuntarily by the total number of employees in the organization. This metric can be tied back to the recruitment strategy and used to develop a plan to improve the quality of hires to avoid involuntary turnover.

7. Time to fill: The number of days between advertising a job opening and hiring someone to fill that position. By measuring the time to fill, recruiters can alter their recruitment strategy to identify areas where the most time is being spent.

8. Time to hire: The number of days between approaching a candidate and the candidate’s acceptance of the job offer. Just like time to fill, data-driven analysis of time to hire can benefit recruiters and help them improve the [candidate experience ] to reduce this time.

9. Absenteeism: Absenteeism is a productivity metric, which is measured by dividing the number of days missed by the total number of scheduled workdays. Absenteeism can offer insights into overall employee health and can also serve as an indicator of employee happiness.

10. Human capital risk: This may include employee-related risks, such as the absence of a specific skill to fill a new type of job, the lack of qualified employees to fill leadership positions, the potential of an employee to leave the job based on several factors, such as relationship with managers, compensation, and absence of a clear succession plan. HR analytics can be used to measure all these metrics.