Over $1 trillion is spent yearly in the US due to employee attrition. That’s a large but real stat. Beyond the financial impact, attrition also affects workplace morale, culture, company outlook, and revenue growth. There are no simple fixes, but a successful retention strategy must start with measuring the most important HR metrics.
Most companies waste time and money tracking biased and obsolete indicators. This article will explain which HR metrics matter and why you should measure them.
Common HR metrics measured in the workplace
This statistic displays the number of employees who quit the organization in a particular year. Turnover can be used with another indicator, like a performance meter, to monitor the difference between attrition rates among high and low performers. Additionally, with the help of this metric, HR teams can learn a lot about the departments and roles that workers enjoy working in and those they want to avoid.
- Total workforce cost
The total cost of workforce, or TCOW, is the entire sum of money a company spends on its workforce. It covers all expenses related to headcount, salary, benefits, workforce overheads, and hiring and training new employees. Calculating your company’s total workforce cost is crucial as it significantly determines how much to charge for your goods and services.
- Cost per hire
Cost per hire is the total amount spent on hiring divided by the total number of engagements. Mathematically, you can calculate the cost per hire by adding up all of the internal and external labor, dividing that sum by the total number of employees recruited over those periods, and multiplying it by 100.
Absenteeism is the number of days employees are absent from work, either because of a vacation, sick days, or other reasons. In either case, gathering attendance information is crucial to HR’s ability to assess the costs and trends associated with missing time and better understand the workforce’s demands.
The absenteeism rate is calculated by dividing the number of unexcused absences by the total number of typical workdays. Once you have the result, multiply it by 100 to get the percentage.
- Time to hire
Time to hire quantifies the interval between a potential employee’s involvement in the hiring process and acceptance of a position. Similar to cost per hire, this is a per-person average used to evaluate the effectiveness of the “talent acquisition” process. For example, investigating a prolonged hiring process may reveal a lackluster advertising campaign or underwhelming hiring teams in charge of selecting candidates. In any case, it indicates that potential employees must be fully engaged and could be lost to rivals or turned off by the company’s hiring procedure.
16 HR metrics that matter (and should be monitored)
There are 16 HR metrics classified under 5 broad groups essential for today’s workforce.
While they can be measured manually, employee retention analytics software makes it easier to measure them at scale. These indicators enable you to look ahead and take early action with employees in danger of attrition, as opposed to traditional metrics, which tend to lag.
Workload refers to the different responsibilities that employees must complete by their level of authority and responsibility. However, high workloads cause stress and burnout in workers, lowering morale and productivity. The good news is that there are quantifiable workload metrics that can detect indications of staff burnout and stop attrition.
- Out-of-office days
- Weekly meeting load
- Absent days
- Number of projects
A company is a network of connections, both personal and professional. Employees who feel emotionally and professionally disconnected are likelier to quit their employment than those who do not. In other instances, a single employee leaving a company could affect all their connections throughout the organization. This is why finding the hidden connectors within your team and departments is crucial.
You can achieve this by looking at the following connection metrics:
- Number of skip-level 1:1s and direct manager meetings
- Manager attrition and increased managerial changes
- Number of meetings with peers
- Increased collaborator and peer attrition
Being praised for a job well done is essential to most people. It increases motivation, shows appreciation, and boosts employee productivity. However, recognizing some employees while ignoring others is much worse because it displays bias, raises turnover rates, and breeds resentment among staff members. Ensuring people receive the recognition and accolades they earned requires intentional effort. The key to reducing turnover is to make employees feel valued for their work.
- Number of peer bonuses given
People’s motivations are greatly influenced by money. This contributes significantly to employee turnover. As a result, employees frequently check online to see if changing jobs could result in a wage raise. When a person’s compensation is lower than that of other professionals in their field because of a racial, ethnic, or gender pay gap, they typically feel mistreated. Businesses need to monitor metrics like compa ratios and point-in-range that assess how fairly their workforce is paid and identify which employees are most likely to depart owing to compensation issues.
- External compa ratio
- Internal compa-ratio
- Pay raises
When there is a clear path for professional advancement, people feel more in control of their jobs and have a sense of long-term reward for the work they are currently putting in. For example, consider a worker who feels stuck in their line of work. If such is the case, they will find a way to advance their career in the organization or look for opportunities elsewhere.
These growth indicators can demonstrate whether a worker is lagging or staying the same. So, measuring them to lower attrition and concentrate L&D and training resources on those who need them the most is crucial.
- Time in role
- Number of job changes
Be a step ahead by measuring essential HR metrics
Companies continue to lose their best employees because they are measuring outdated and biased metrics. Utilize the 16 HR metrics outlined in this article to stay one step ahead and reduce your company’s turnover. Use them to help guide decision-making and planning HR initiatives that visibly impact retention.