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Hr metrics guide


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Supplement to HR Metrics webinar

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Hr metrics guide

  1. 1. HUMAN RESOURCE METRICS GUIDE There are a variety of human resources and business focused metrics that can be analyzed or tracked. Metrics should not be viewed in a vacuum and should be considered with other factors in mind. For example, a higher than average turnover rate for one company might be an industry standard at another business. When a business tracks these data points it can better accomplish its key strategic goals. The metrics below are generally intended for a non-specific time period. Most of these metrics could be tracked over a week, month, year or other time period. Some of the metrics will provide more insight if tracked over an extended time period. Parentheses indicate that the calculation should be completed before the next operation. Some ratios or metrics will result in a decimal format and can be multiplied by 100 to get a percentage value. Metrics related to employee count can incorporate only full-time employees, all employees or employees expressed in values proportional to the percentage of a workweek worked (e.g. Full Time Equivalent Employees). However different employment laws may dictate other terms for employee count and employee classifications. When a business has a problem in a key performance indicator, one of the first steps in addressing it is to evaluate the impact of the issues or progress towards the goal. Organizations that track and evaluate metrics like these are more successful in achieving their strategic goals or vision. Metric Topic How to calculate it Why it is important Benefits Cost per employee Benefits Cost of all, one type or some employer provided benefits divided by the number of employees This can show the total value of various benefits provided to employees Benefits Utilization Rate Benefits Number of employees who report having utilized an employer offered benefit divided by the number of employees offered that benefit Knowing the usage of a benefits can help evaluate whether the particular benefit is valuable to employees Paid Time Off Utilization Benefits Total Amount of paid leave used divided by the amount of paid leave granted during that period This ratio tells how much employees are using the time off that is offered Paid Time Off Liability Benefits Total dollar value of all paid leave accrued by employees Excess accrued time off banks can present a significant liability to an organization
  2. 2. Employee Benefits as a percent of payroll Benefits Value of total benefit costs made by an employer divided by total gross payroll Examines the cost of benefits as a percentage of the payroll Individual Compra-Ratio Compensation A e ployee’s ages di ided by the market rate for their role This is a standard metric that shows how an e ployee’s wages compare to the marketplace Average Compra- Ratio Compensation Sum of all compra-ratios for a group divided by the number of individuals This gives a broader picture of the organization or a group of employees pay rates relative to the overall marketplace Pay Range Compensation Difference between maximum and minimum pay rates for a specific role or set of jobs The pay range is important as it needs to be tied to the type of job, skill level and compensation strategy Range Penetration Compensation (Salary – range minimum) divided by (range maximum- range minimum) The degree to which an e ployee’s pay rate has expanded in their current pay range Prorating Merit Increases Compensation (Number of months actually worked divided by the number of months under the current increase policy) times the increase percentage the person would otherwise be entitled to receive Way to calculate an e ployee’s pay i crease appropriate to the period of time the employee worked Total number of separations Employee Relations Total number of terminations, layoffs and resignations for a specified time period This is important mainly because it is used in other calculations. Average number of employees Employee Relations (Number of employees at start of period plus number of employees at end period) divided by 2 This can also be calculated over multiple periods increasing the 2 to the number of periods included Turnover Rate Employee Relations Number of separations divided by the average number of employees in the period being analyzed This is a metric that can be critical to the success of a business and one that HR may have the ability to greatly influence
  3. 3. Employee Engagement Employee Relations Percentage of employees who report positively or highly to employee engagement surveys or questionnaires There are many ways to calculate this metric with no established formula Revenue Per Employee Finance Total Revenue of the organization divided by the total number of employees This can be a measure of profitability or efficiency of the organization Return on Investment (ROI) Finance (The total gain from an investment minus the cost of the investment) divided by the cost of the investment A high ROI shows the efficiency of an investment in the workforce or business Total Employee Cost per Hour Finance Total cost of all payroll, benefits and other personal costs for a time period divided by the hours worked in that time period This gives the business a better idea of its total average hourly labor costs Human Capital ROI Finance [Company revenue minus (operations expense minus {cost of compensation plus benefit cost})] divided by (compensation plus benefits costs) The return on investment for workforce costs is a human resources focused way to look at profitability Cost Per Hire Hiring and Recruitment (Add together advertising, agency fees, employee referral fees, travel costs from applicants and staff, relocation costs, recruiter pay and benefits) divided by number of hires Provides the total cost of a new hire Time to fill Hiring and Recruitment Number of days spent to fill job requisitions divided by numbered of people hired This calculates the efficiency, time periods and productivity of the co pa y’s recruit e t process. Turnover Cost Hiring and Recruitment Total costs of separation plus the cost per hire plus training and the cost of vacancy Provides the total costs from employee turnover Yield Ratio Hiring and Recruitment Percentage of job applicants from a specific source that proceed to the next stage of the hiring process This compares the number of applicants among different stages of the hiring process
  4. 4. Legal Disclaimer: This document is intended for informational purposes only, and does not constitute legal information or advice. This information and all HR Support Center materials are provided in consultation with federal and state statutes and do not encompass other regulations that may exist, such as local ordinances. Transmission of documents or information through the HR Support Center does not create an attorney-client relationship. If you are seeking legal advice, you are encouraged to consult an attorney. HR to Employee Ratio HR Administration Number of HR employees or roles divided by total number of employees in company Provides a way to compare the amount of HR staffing between organizations HR Expense Factor HR Administration Total HR expenses divided by total operating expenses This supplies where the HR budget falls in relation to other operating expenses of the company Attendance Rate Leaves of absence Total days actually worked by employee divided by the total workdays in that period A business should understand its overall attendance picture, having a baseline average can help assess employee attendance Training hours per hours worked Training and Development Total number of training hours divided by the number of hours worked in that period An organization should understand how much time is spent on training Training Investment Factor Training and Development Total cost of training divided by total headcount of employees This looks at the efficiency of training in conjunction with the product output and functionality Training ROI Training and Development (Total amount of training benefit minus total training costs) divided by training cost Determines the amount of financial benefit and efficiency accrued from a specific training program Career Path Ratio Training and Development Total number of promotions divided by (total promotions plus total number of transfers) This calculates employee mobility and total of promotions within the company juxtaposed with lateral transfers