Measuring and analysing results has become a crucial part of the personnel department’s work, as it has an increasingly strategic role within the company. And the conclusions drawn can play an essential part in business growth. Find out which are the most common KPIs for human resources to evaluate the department’s performance and detect possible improvements. We’d like to share 15 essential metrics with you.
Talent attraction, especially in large companies where there are usually ongoing recruitment processes, is a time-consuming task which requires significant investment by the company. Carrying out measurement and analysis is the only way to optimise these processes.
1- Recruitment costs
This indicator measures the amount of resources a company invests for every new recruit.
This includes total recruitment costs (advertising, subscriptions to employee portals, cost of the time invested by the team...) through to the training and preparation of new recruits.
Recruitment costs = (Total costs of internal recruitment + total costs of external recruitment) / (total number of employees recruited over a period of time).
2- Recruitment conversion rate
This conversion rate will enable you to determine the efficiency of your selection processes, and which are the most appropriate methods. This KPI measures the proportion of candidates that advance to the next stage of the process or are actually recruited. With this information you can optimise your processes and reduce, for example, costs associated with recruitment.
Conversion rate = (No. of candidates selected / Total No. of candidates) x 100.
3- Average recruitment time
This KPI measures the time it takes to recruit a candidate from the moment you publish the job advert. The objective is to determine the level of efficiency of your recruitment process. While it’s important to keep this figure low, it should not be used as the main criteria as it’s also important to recruit the right person for the job.
Average recruitment time = total number of days invested in X selection processes / number of selection processes in question.
There’s little point in attracting the industry’s best talent if we aren’t able to offer them a working environment in which they feel comfortable, motivated and productive. Talent management is also an important aspect that should be considered in any company strategy.
4- Abandonment rate
The abandonment rate measures the average number of employees that leave the company within a certain period of time, whether they do so voluntarily or not. This figure shows the company’s success when it comes to attracting and retaining talent. A high rate, in addition, represents costs for the company in terms of loss of knowledge and the investment in selection processes.
Abandonment rate = number of employees that leave the company over a period of time / average number of employees in the company during the same period.
5- Employee turnover rate
Another of the most interesting indicators for human resources is the employee turnover rate. The objective is to discover the average number of weeks, months or years that an employee stays in the organisation. The longer the period, the higher the return on the money you invest in hiring them.
Average time employees stays in the company = total number of days that X employees stayed in the company / total number of employees in question.
6- Rate of employee absenteeism
The rate of employee absenteeism should also be included in the HR dashboard as it’s a metric that calculates the percentage of an employee’s contracted working hours that are not fulfilled. It includes all types of absences, whether authorised or not. This information is very useful in predicting absences and detecting operational problems.
Rate of employee absenteeism = (total number of hours not worked / total number of contracted working hours) x 100
7 - Salary competitiveness ratio
Offering a fair salary that’s in line with the job market will help the company to retain talent, but how do we know if we are within this range? The salary competitiveness ratio is the metric that can answer this question. It can be calculated in relation to the competition, or by sector.
Salary competitiveness ratio = average salary offered by the company / average salary offered by an industry competitor.
8- Benefits satisfaction
This KPI shows us whether employees are satisfied with the benefits the company offers. This is usually measured through employee engagement surveys where they are asked to rate their satisfaction with overall incentives, or rate them one by one. The answer is derived by calculating the average score from all of the answers received.
9- Internal promotion rate
Professionals are often concerned about their growth potential in a company and this is a decisive factor when accepting an offer from the competition. Encouraging internal promotion and investing in it is key for retaining talent.
Internal promotion rate = number of employees promoted during a certain period of time / total number of employees in the company during the same period.
10- 90-day failure rate
This KPI measures the percentage of new recruits that stay in the company for less than 90 days. It’s useful to help you understand the efficiency of your recruitment processes and the benefits the organisation offers.
New recruits that leave within 90 days = (total number of recruitment failures during the first 90 days / total number of new recruits during the same period) x 100.
11- Voluntary turnover rate
Another interesting HR indicator is the percentage of employees that voluntarily leave the company during their first year of employment. This tell us something about the success of onboarding processes, as well as the work climate.
Employees that leave the company during their first year = (total number of employees that leave the company during their first year/ total number of new recruits during the same period) x 100.
Training is another way of boosting team productivity and performance.
This involves offering the appropriate tools and knowledge to carry out a task. Encouraging this kind of activity also makes employees feel a stronger connection to the company and increases their commitment and motivation.
12- Training participation rate
Is the team really interested in the training the company offers? The training participation rate is the most useful way to discover this. It will tell you how many employees are attending the sessions and take action to encourage their participation.
Training participation rate = (total number of employees attending a training programme / total number of employees invited to attend the training programme) x 100.
Measuring employee efficiency or performance is another important task in the human resources department. It’s becoming increasingly common to work towards objectives, so it’s vital to monitor and control these objectives. These KPIs will reveal your team’s level of performance, detect workload peaks and enable you to better manage your company’s human capital.
13- Employee productivity rate
Besides personalised monitoring of each worker, the overall labour effectiveness is also an area of great interest for HR. This is usually obtained by dividing the number of sales by the number of employees in the company. Nevertheless, if you wish to perform a more in-depth analysis, other factors can be considered, such as performance, hours worked, etc.
Productivity = total number of sales during a certain period / number of employees in the company.
14- Overtime hours worked
Overtime is an extremely interesting indicator as it can reveal important information when organised in a specific context. A sudden increase can result from a temporary spike in demand, higher employee commitment or inefficient management of processes. This, in turn, could directly affect another KPI we’ve looked at: absenteeism rate.
Overtime hours worked = total number of extra hours worked by all employees / total number of employees in question.
Culture and employer branding
The culture and image a company transmits externally is a key factor in attracting new talent. HR strategies often include actions focussed on improving this area. What are the KPIs that help you measure these results?
15- Employee satisfaction index
If the team is satisfied, then the company culture and actions are positive. This also means that employees will also be ambassadors, therefore improving the company’s external image. The best way to discover this is through surveys, where employees rate their satisfaction in the company. The next step is to calculate the average from the total obtained.
These are just 15 of the most commonly used KPIs in human resources. Yet there are many more metrics that can reveal information of interest to your department.
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You may also be interested in our article about the most important KPIs of an human resources department.