HR Metrics
September 24, 2024
HR metrics are data- and statistics-driven measures of the effectiveness of initiatives and activities that fall under the purview of Human Resources. They provide the raw data needed by data analytics to objectively assess your organization’s recruitment and hiring practices, training protocols, compensation, and so on are working as well as anticipated, or whether change is warranted in these areas.
Metrics are targeted to something specific, for example, measuring the employee participation rate in a particular benefit program, the cost per hire, or the rate of absenteeism. As priorities shift around areas like employee flexibility, DEI, employee retention and attrition, the role of AI, and so forth, assessments derived from metrics enable HR to respond effectively to changes, based on numbers-driven evidence and mathematical formulas, rather than unsubstantiated assumptions and guesses.
Metrics require data, so amassing data in a centralized HR information system allows HR to recognize and track helpful patterns in behavior and outcomes. Much basic data will already exist, like the number of people employed by the organization. But more data might need to be collected to answer questions such as: Did employees who participated in a particular upskilling training program move to a new role in the organization in greater numbers than those who didn’t participate? Did this vary by race, gender, or other characteristic in a statistically significant way?
Forms of data collection can vary a lot. For example, existing information can be compiled so that it’s accessible and useful, or simple employee questionnaires can be used to provide needed information. Data collection shouldn’t, and doesn’t have to, infringe on the privacy of employees. Metrics uses data in conjunction with mathematical formulas that can be more or less complex. Here’s an example of a simple formula to determine cost per hire is:
Internal recruiting costs + external recruiting costs ÷ Number of hires = Cost per hire
The use of metrics should be an ongoing HR activity to ensure an accurate assessment of procedures, and allow for their timely adjustment if and when needed. Metrics can provide insights into whether gender plays a part in rates of compensation. Or which departments have the highest rate of absenteeism. They tell you what needs to be addressed, what requires further study, or what’s working well as is. New strategies must be objectively evaluated in order to measure their success.
HR metrics allow much of HR’s work, which can sometimes fall under the radar, to be seen as tangible and quantifiable. They’re an important component of HR strategy.
Just remember: If you don’t measure it, you can’t manage it.