Effective HR can completely transform your organization into a people-centric powerhouse, but how do you know if your initiatives are pushing you in the right direction? 

Well, like any business function, you measure it!

Although increased rates of smiles per employee or laughs per lunch break may be a promising sign, it’s in your best interest to dig deeper. Numerous HR metrics exist to tell the story of your HR efficacy. All you need to do is identify the right ones and track them. 

So which HR metrics should your business track? Of course, that depends on your initiatives and what you’re trying to achieve. With the help of clearly defined goals, people analytics indicate success, failure, or areas for improvement in your HR department.

Positive HR metrics present a promising sign that your organization is healthy and productive. Overall, they help you effectively allocate resources (time and money) and properly plan your workforce. Though you’ll find no shortage of trackable metrics for your HR team, in this blog, we’ll key in on four important HR metrics to add to your rotation. 

1. Retention and Turnover Rate

First, we’ll start with a two-for-one category. Retention and turnover rate tell two sides of the same story. Are your employees sticking around? These two HR metrics help you gauge the strength of your company culture. Seeing as employee retention remains top of mind in 2023, it’s critical that you understand these numbers.

Tracking your retention rate helps HR know when to tweak their recruiting process or whether their employee engagement strategy needs attention. You can measure your retention rate by dividing the number of employees who stayed with your company over a set period by the total number of employees working for you during that same time.

For example, let’s say you had 250 total employees in 2022, but only 225 remained by the end of the year. Divide 225 by 250, then multiply that number by 100 to get a 90% retention rate. Now, ideal retention rates vary by industry, so benchmark your numbers against similar companies.

Then, while you’re measuring retention, you might as well tackle turnover too. Turnover rate is an HR metric covering the other end of retention. Simply divide the number of employees who left by the total number of employees in your organization, and multiply that number by 100. Then, get more granular by measuring voluntary or involuntary turnover rates. Both can reveal different areas for improvement in your HR strategy.

2. eNPS 

eNPS (employee net promoter score) is the HR metric version of NPS. Instead of measuring whether customers would recommend your company, it flips the lens internally to your employees. This is a popular way to track employee engagement, especially because it’s centered around one question: On a scale of 1 to 10, how likely are you to recommend our business as a place to work to your peers? 

Answers to that question break into three categories: promoters, neutrals or passives, and detractors. Promoters select 9 or 10 on the scale. 7 to 8 represent a neutral response, and detractors pick 0 to 6. To determine your eNPS score, calculate the percentage of promoters and detractors among respondents, then subtract the percentage of promoters by the percentage of detractors. Neutral respondents are excluded from the score.

An eNPS over 10 generally indicates that your employee experience is positive. This HR metric is a helpful pulse check when you administer the survey regularly. Find the right cadence for your company, and use it as a jumping-off point to learn more about what’s working and what isn’t. 

3. Cost per Hire

Optimizing your recruiting efforts requires an understanding of the costs involved, which is why you should measure cost per hire. This HR metric presents the average cost of every new hire for your company, and understanding it allows you to forecast your recruiting budget effectively. 

First, add your internal and external recruiting costs over a particular date range, such as a job slot on LinkedIn, internal recruiter salaries, or an external recruiter. Then, divide that number by the total number of hires you made during that same period. From there, you’ll see the average cost per hire for your business. 

4. Internal Mobility Rate

Your company’s greatest asset is its employees, so it’s essential to understand the state of that investment. Internal mobility rate measures all movement in your organization, including promotions, demotions, and transfers. While it’s a somewhat limited HR metric on its own, it tells a fuller story when combined with other factors. 

First, to measure your mobility rate, divide the total number of movements by the total number of employees and multiply that number by 100. Then, see how it compares to, for example, your turnover rate. If your turnover rate significantly outpaces your internal mobility rate, you may be overreliant on external talent to fill your roles. 

By conducting that analysis, your HR team can turn its attention toward addressing internal flaws in employee development. Additionally, internal mobility rates pair nicely with diversity data to help your team address inequity. For example, you may find that women aren’t getting the same opportunities as men in your organization. Equipped with that knowledge, your business can move toward becoming more diverse and equitable. 

Get the HR results you need with ADDA!

Speaking of turnover rate, HR roles have the highest turnover rate of any function at 14.6%. Considering the investment businesses make in an internal HR team, that’s an issue. However, when you outsource HR to ADDA, you get HR expertise that’s here to stay. Our consultants deliver high-quality HR solutions that help your business grow.

Contact us today to learn more.