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10 HR KPIs you should know

Published on 14 March 2023
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In all areas of a company, there are important figures that can be measured and calculated to make work even more efficient and cost-saving. One important department that you should not lose sight of is the Human Resources department. Because here, too, there are important HR key figures that you should track. You can find out what these are in this article.

What do you need to look for when selecting your HR KPIs?

When selecting HR KPIs (Key Performance Indicators), it is important to consider factors such as the organisation's objectives, desired outcomes and available resources. It is also important to ensure that the chosen KPIs are measurable and trackable over time so that they can be compared in HR reporting.

For example, larger companies should focus on HR KPIs such as turnover rate, number of training hours per employee and average length of hire. Smaller companies may be more interested in metrics such as employee satisfaction, job performance ratings and number of disciplinary actions taken. Regardless of the size of the company, HR KPIs should be regularly reviewed and updated to ensure they are in line with the company's goals. In addition, it is important for the HR department to track its HR KPIs over time and produce HR reports to identify areas for improvement or to recognise successes.

What are the 10 most important HR key figures?

So you want to measure the performance of your HR to make it even more effective. The following HR KPIs can give you more insight:

  1. Fluctuation rate

  2. Time-to-fill rate

  3. Costs per hire

  4. Employee engagement rating

  5. Total compensation costs per employee

  6. Training completion rate

  7. Absenteeism rates

  8. Diversity

  9. Working hours

  10. Seniority

These HR metrics allow HR managers to get a picture of their team's performance and identify areas for improvement.

1. Fluctuation rate

It is a metric that measures the percentage of employees who leave an employer in a given period of time. This HR metric can be used to identify trends in employee departures and develop strategies to retain top talent.

How to improve it:

The HR team can take a number of steps to reduce employee turnover and improve attrition rates. These include:

  • Improving job satisfaction and engagement,

  • clear career paths,

  • competitive salaries and benefits,

  • Investing in training and development opportunities,

  • creating a positive work environment,

  • introducing flexible working arrangements,

  • promoting work-life balance; and

  • Promoting an inclusive workplace culture.

Otherwise, Human Resources should ensure that employees have access to resources such as psychological support and provide them with feedback on performance.

 Fluctuation
 

2. Time-to-fill rate

The time-to-fill rate is one of the recruiting key figures. It measures the average time it takes to fill a vacancy. It can help recruiters identify areas where the recruitment process is inefficient. Time-to-fill is not to be confused with time to hire.

How to improve it:

The HR Team can improve this rate by streamlining the recruitment and hiring process, using technology such as applicant tracking systems and leveraging social media to reach a larger pool of potential candidates. Similarly, Human Resources management can focus on building relationships with key talent pools and developing more efficient onboarding processes.

 time-to-fill rate
 

3. Cost per hire

These are the total costs associated with hiring and onboarding a new employee. These can help the HR department understand the return on investment of their recruitment efforts.

How to improve them:

The HR team can reduce the cost per hire by streamlining hiring processes, using applicant tracking technology and using employee referrals to find candidates. In addition, Human Resources should focus on optimising their hiring strategy to find qualified candidates who are more likely to stay in their positions longer.

 Costs per hire
 

4. Employee engagement rating

This is a measure of employees' satisfaction and engagement with their work and the environment, which can provide insight into company culture and morale.

How to improve it:

Employee engagement rating can be improved by implementing HR strategy such as:

  • offering meaningful rewards

  • providing regular feedback and recognition

  • calculating the employee net promoter score

  • improving communication between managers and staff

  • creating an environment that encourages collaboration and innovation

Surveys can also be conducted to gain insights into staff attitudes towards their work and the company as a whole.

 Employee engagement rating
 

5. Total compensation costs per employee

This refers to the total costs associated with providing wages and benefits to an employee. These HR metrics allow a comparison of costs between departments or locations.

How to improve them:

Total compensation cost per employee is the total amount a company spends on each employee, such as wages, benefits, bonuses and other types of compensation. To reduce these costs, the following actions can help:

  • benchmarking against other companies to set wages

  • additional rewards for employees who stay with the company longer than usual

  • bonuses that depend on employee performance

 Total compensation costs per employee
 

6. Training completion rate

This can be used to measure the success of a company's Human Resources in delivering training programmes. It is calculated by dividing the number of training programmes completed by the total number of training programmes offered within a given period.

How to improve it:

The training completion rate can be improved by creating a supportive environment and highlighting the importance of training. This can include incentives for completing training, such as bonus points or awards, and ensuring that employees have access to the resources and support they need to complete their training. In addition, HR manager can ensure that training is tailored to the needs of individual employees. Finally, HR should regularly track progress and provide feedback to staff on their performance.

 Training completion rate
 

7. Absenteeism rates

Absenteeism is a KPI that measures how often employees are absent from work and is usually expressed as a percentage. It can be used to identify areas where staff engagement and attendance can be improved. It can also be used to compare attendance across different teams or locations.

How to improve it:

HR can improve employee absenteeism by implementing a comprehensive attendance policy. Additional incentives can be offered for good attendance and the causes of absenteeism can be identified and addressed. The policy should clearly define attendance expectations, including acceptable reasons for absence and deadlines for reporting. Incentives could include rewards such as gift vouchers or additional paid leave.

HR managers should also address the causes of staff absence, such as work-related stress, personal problems or lack of job satisfaction. By addressing these issues through measures such as flexible scheduling, improved communication between managers and staff, and additional training opportunities, HR can reduce absenteeism in the workplace.

 Absenteeism rates
 

8. Diversity

This HR metric is used to measure the diversity of their workforce. It is usually measured by gender, race, ethnicity and age, as well as other demographic factors. The purpose of this metric is to ensure that the company's workforce reflects its customer base and that everyone has equal opportunities for employment and career advancement.

How to improve it:

HR can improve diversity in the workplace by creating a workplace culture that promotes and celebrates diversity. This includes fair and transparent recruitment procedures and training opportunities that help staff understand different cultures and backgrounds. It should also actively seek diverse candidates for open positions.

HR managers can foster an inclusive environment by developing policies that protect against discrimination based on race, gender, age, religion, sexual orientation, etc.

Finally, the HR department should provide resources to support employees from diverse backgrounds. This can ensure that they feel welcome and valued in the workplace.

 Diversity
 

9. Working hours

Working time measures the amount of time employees spend at work. This KPI can be tracked in various ways, e.g. time sheets, terminals or HR software. In Germany, time recording is mandatory. It can be used to assess the effectiveness of staff scheduling and identify areas for improvement. For example, the "labour productivity formula" can be used for this. It also allows HR departments to identify whether their staff are working too many or too few hours and adjust staffing levels accordingly.

How to improve it:

Improvement can be achieved by reducing unnecessary overtime, encouraging breaks and providing flexible working arrangements. Similarly, communication between managers and staff should be improved and technology introduced to automate certain tasks. In addition, HR managers can look for ways to reduce stress levels in the workplace, as this can lead to better performance and better use of time.

 Working hours
 

10. Seniority

Seniority is calculated by taking the length of time from the employee's entry date to the current date and then dividing that number by the total time of employment with the company. This HR metric helps employers assess employee productivity and retention and identify areas for improvement.

How to improve it:

Improving tenure can be achieved by implementing strategies such as competitive salaries, professional development opportunities, a positive work environment and attractive benefits packages. In addition, employers should focus on maintaining open communication with their employees and addressing any concerns to increase job satisfaction and loyalty.

 Seniority
 

How do HR KPIs help in decision-making?

HR metrics provide insight into how effective HR strategies are and help decision-making by providing insight into areas for improvement or success. Through HR analytics, managers can make informed decisions about their workforce that lead to positive outcomes for the organisation. For example, if turnover rates are high, HR can investigate what is causing it. Changes can then be made to lower it. In addition, analysing diversity data can help managers identify areas where recruiting may need to devote more resources to attracting and retaining talent from diverse backgrounds. By using HR metrics, companies can ensure that their HR strategies are effective and successful.

Starting to measure HR Key performance indicators

To begin collecting HR KPIs, it is important to first determine which metrics are most relevant to your organisation's goals. Consider factors such as employee engagement, hiring and retention rates, training costs, labour law compliance and diversity initiatives. Once you have identified the most important KPIs for your company, create a plan for collecting data on these metrics on a regular basis. This may include employee surveys or questionnaires, analysis of payroll or other administrative documents, or interviews with HR teams. Finally, create a system for analysing the data collected to assess how well your company is achieving its HR goals.

Future perspective

Measuring HR KPIs will help them stay competitive in a rapidly changing work environment. Tracking HR KPIs can also help identify potential issues before they become problems so that companies can take proactive steps to address them. In the future, tracking HR KPIs will become increasingly important as companies strive to stay competitive and ensure their employees are productive and engaged.

The use of AI (Artificial Intelligence) is also becoming increasingly important in the world of work, as it can help companies track and analyse their HR KPIs. AI-based systems can collect data from a variety of sources, such as employee surveys, performance reviews and job postings. This data can then be analysed to identify trends and areas for improvement. Because AI provides a comprehensive understanding of current HR practices, it can help companies make informed decisions about how to improve their recruitment process, retention strategies and other aspects of their business. AI can also provide managers with insights into the effectiveness of their team's performance and highlight areas where additional training or coaching could be beneficial.

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