HR performance metrics are a set of quantitative measures that track the efficiency and effectiveness of an organization's human resource management practices. HR metrics cover all aspects of managing people, from recruitment and retention to training, satisfaction, performance, and productivity.
The core reason organizations use HR performance metrics is to measure how well they're doing at managing their most important asset — their employees. In other words, these metrics help managers understand whether their human capital strategy is working. They also give insight into which HR practices are effective and which ones need improvement. Ultimately, if you can measure HR performance well enough, you might be able to predict what will happen with your workforce in the future.
HR metrics vs. HR performance metrics vs. HR KPIs
If you're not familiar with HR performance metrics, it's easy to get confused by the related terms "HR metrics" and "HR KPIs". Let me clarify the distinctions between them:
HR metrics is a general term for any kind of measurement used to evaluate HR functions. This includes metrics covering recruiting, onboarding, training, employee satisfaction, performance, time management, turnover, compensation, etc.
HR performance metrics is a subset of HR metrics. These are the backbone of a data-driven approach to managing human capital. While HR metrics as a whole can be very broad, performance metrics are more focused on measuring how effectively HR departments achieve their goals.
HR KPIs is another subset of HR metrics. KPIs are key performance indicators — that is, a specific subset of metrics focused on the most strategically important targets. KPIs may include metrics like employee productivity, payroll processes, organizational health, etc.
Major categories and the most important HR performance metrics
HR performance metrics span a wide range of categories, each focusing on a different aspect of managing human resources. Here's a list of the major categories that HR performance metrics fall into:
HR Administrative
Recruiting
Onboarding
Training
Performance
Employee Satisfaction
Time Management
Retention
Salary Grade
Financial Metrics
Some of the most critical HR performance metrics to track include:
Turnover rate (how many employees leave)
Time to hire (how long it takes to fill open roles)
Cost to hire (the cost associated with filling open roles)
Retention (how many employees stay with the company)
Productivity (how much output per employee)
Engagement (how committed employees are to the company)
Performance and productivity metrics have the most direct impact on business outcomes, so it's especially important to track those. Some examples of performance and productivity HR metrics include:
Goal Attainment Rate (how often employees reach their performance goals)
Performance Rating Distribution (how well employees are performing overall)
Revenue per Employee (how much revenue each employee generates)
Recruiting and staffing metrics
There are a number of metrics you can use to assess how efficiently your organization fills roles. Some common examples include:
Avg Time to Fill – The average number of days it takes to fill an open role. This is calculated by dividing the total number of days it took to fill all open roles during a given period by the number of open roles filled during that same period.
Avg Time to Hire – The average number of days it takes to hire someone. This is calculated by dividing the total number of days it took to hire all new employees during a given period by the number of new employees hired during that same period.
Avg Days Hire to Join – The average number of days it takes for a new hire to start work. This is calculated by dividing the total number of days it took for new hires to join the company during a given period by the number of new hires who joined during that same period.
Percent of All Hires – A metric showing the share of hires that came from a particular source, such as an application source or job board.
You should also track metrics like time-to-hire, retention, compensation, and performance over time.
Training and development metrics
In addition to tracking metrics about how quickly your organization fills roles, you should also track metrics about how well your organization develops its employees. There are several metrics you can use to assess how effectively your learning infrastructure meets the needs of your workforce:
Count of Trainings – The number of trainings that your employees attend.
Training Seats (booked and available) – How many training seats are booked versus how many are still available.
Available Training Seats – The number of training seats that are still available for employees to attend.
Overbooked Training Seats – The number of training seats that have been booked but aren't actually needed.
Enrollments – The number of employees who enroll in training programs.
Underskilled Employees – The number of employees who don't have the necessary skills to perform their jobs.
Underskilled Employees / Skill Needed Employees – The ratio of underskilled employees to the number of employees who need to develop those skills.
Quantitative and qualitative HR performance metrics
While there are plenty of quantitative HR performance metrics to track, some HR performance metrics are qualitative. Soft/qualitative HR metrics measure intangible things like workforce attitudes, behaviors, and perceptions. These types of metrics are usually more subjective than quantitative metrics, but they’re still valuable because they tell us about the culture of our workplace.
When developing a balanced set of HR performance metrics, it’s important to make sure that we include a mix of both quantitative and qualitative metrics. That way, we can measure both the outputs and results of HR practices, as well as the process and efficiency of those practices. We should also measure quality and customer impact, as well as people and culture.
Here are three starter HR performance metrics that I recommend everyone starts with:
Employee engagement – This measures how committed employees are to the company. You can measure this through surveys and other methods.
Productivity metrics relevant to your role – Productivity metrics vary depending on the role, but you can find a list of commonly used productivity metrics here.
Quality metrics – Quality metrics can include things like error rates, customer satisfaction ratings, etc.
Financial and organization-specific metrics
A good place to start when creating a set of HR performance metrics is to think about the financial and cost-related aspects of HR. There are a few different financial and cost-related HR metrics that you can track, including:
Overtime expenses – This is calculated by multiplying the total overtime hours worked by the overtime pay rate.
Revenue per Employee – This is a performance and productivity HR metric that shows the impact of HR decisions on business outcomes.
Financial Metrics
Salary Grade Metrics
When creating a set of HR performance metrics, it’s important to consider not only the financial and cost-related metrics, but also the metrics that are specific to your organization. For example, you may want to track metrics like turnover rate, time to hire, cost to hire, retention, productivity, engagement, etc.
It’s also important to create a set of HR performance metrics that are tailored to your organization’s unique needs. For example, you may want to track metrics that are specific to your industry, or that are relevant to your company’s goals.
Finally, it’s important to remember that HR performance metrics should be tracked over time. This means that you should track metrics like turnover rate, time to hire, cost to hire, retention, productivity, engagement, etc., over a period of time. This will allow you to see how your HR performance changes over time.
Example, baselines, and dashboards
I recently saw an article about how an organization emphasizes diversity metrics. Their goal is to “tell the full story around outcomes for underrepresented talent at every stage of the employee lifecycle, from hiring through exit”. This is a great example of how targeted metric tracking can translate HR data into actionable insights.
Establishing baselines and benchmarks is necessary before you can start using HR performance metrics as a decision-support tool. Once you’ve established baselines and benchmarks, you can use real-time dashboards to monitor your HR performance metrics and make adjustments as needed. Dashboards managers can access in real time make metrics part of regular conversations, rather than just an annual review exercise. Data-driven HR decisions improve hiring, retention, and cost management, while accurate HR metrics enable smarter decisions that lead to positive business value.