1. HR Metrics: Data Driven Decisions
For the Four Rivers SHRM Regional Conference (9/14/18)
Dr. David Williams
Dean of Graduate Programs at Union College

2. Today’s Outline SHRM’s 8 Tips for Using HR Metrics
What are HR metrics?
SHRM’s 8 Tips for Using HR Metrics
Key HR Metrics and how to calculate them
Metric Examples and how to use them
Roundtable - What HR Metrics do you use?

3. What are HR Metrics?
HR metrics are operational measures, addressing how efficient, effective and impactful are an organization’s HR practices.
Just like Sales Quotas provide measurable targets for the sales department, HR metrics quantify the success and opportunities for an HR department.
HR metrics are a great way to put a quantity behind what is usually a quality or intangible area of the business.

4. SHRM’s 8 Tips for Using HR Metrics

5. 1. Understand the Question First, Then Look at the Metrics
Get past the ‘what’ and fully understand the ‘why.’
The benefit of using metrics is that the decisions are better- informed and backed by facts—rather than hunches—and thus make key people decisions far more ‘sellable’ to the business.

6. 2. Always Build a Business Case
HR has to be able to show how its dollars impact ROI [return on investment]
HR makes mistakes by focusing on a metric and not tying it into the business. For instance, you can’t assume higher engagement leads to less turnover. You have to demonstrate it.

7. 3. Recognize that HR Metrics Alone Offer Limited Value
You can’t look at metrics in isolation. They have to be looked at holistically.
HR measurements by themselves rarely provide much value to the organization as a whole.

8. 4. Identify the Workforce-Driven Components of Business-Driven Metrics
You have to parse the business challenge to figure out where the workforce element comes in.
Senior leaders understand things from the cost and finance perspective. HR has to think much like the CFO thinks about ROI.

9. 5. Learn to Ask the Right Questions
Always ask why, why, why?” Sparkman says. When you get into that habit, you start to ask better questions and learn to challenge the answers.
Help your managers understand how far-reaching their decisions are. Why this location? Why these skills? Why this time frame? It helps you get more clarity.

10. 6. Work Across the Organization
It’s vital to collaborate with people in other departments to get the information you need to develop meaningful measures. Given that many organizations regard the human resource department as more operational than strategic, that means being proactive. HR’s going to have to go and get the numbers.

11. 7. Embrace Measurement
Developing base lines can require a significant investment of time and effort. 
With these numbers in place, trends can be established.
Has the time to hire increased or decreased over time?
Does it vary by month, quarter or season? 

12. 8. Don’t Compromise on Data Quality
The intelligence you glean from analytics will only be as good as the data included in your metrics. Use CARE:
Consistent—The data underlying the metric must be measured steadily over time.
Accurate—Information should be precise, with few to no errors in recording it.
Reliable—Your metrics must be a dependable proxy of what you’re ultimately trying to assess.
Efficient—The cost of collecting the data must be minimal.

13. Key HR Metrics (How to Calculate)
Overall Employee Turnover
Early Turnover (employees leaving within 1 year)
Revenue or profit per employee
Time to hire/average time to hire
Cost per hire/total hiring cost
Cost of HR per employee
Employee Absenteeism
Training spent per employee

14. Overall Employee Turnover
What It Means: How many employees voluntarily leave (aka quit) your company each year.
How You Calculate It: Add the number of employees at the beginning of the year to the number at the end of the year. Divide by 2 to find the average number of employees, then divide the number of employees who were let go or quit during the year by the average number of employees to find the employee turnover rate.

15. Early Turnover (employees leaving within 1 year)
What It Means: How many employees voluntarily leave (aka quit) your company within a year of starting.
How You Calculate It: Same as Overall Employee Turnover, but only use the number of people who have started within the last year.

16. Revenue or profit per employee
What It Means: Another straight-forward metric, this is a truly important one for small businesses. You will want to make sure you aren’t over or under staffed by using this metric, as well as you should have some perspective on your overall bottom line with your employee base.
How You Calculate It: Calculate your yearly or monthly revenue or profit and divide it by your number of employees.

17. Time to hire/average time to hire
What It Means: Recruiting processes can take far too long at some companies and it can mean that you lose talent. Having a recruitment process is around 4-6 weeks to fill positions is desirable in order to save time and money. The time to hire is from when a candidate starts the interview process until they accept your offer.
How You Calculate It: Look up the number of days that each job you offered took to be filled from the time the candidate started interviewing, and then divide it by the number of jobs.

18. Cost per hire/total hiring cost
What It Means: Similar to above, you should be also tracking what you are spending on recruiting, such as applicant tracking systems, recruitment software, or sponsoring job posts. You also should include the man hours it takes for recruiting (i.e. reviewing resumes, phone screens, and interviewing).
How You Calculate It: This may be more of an estimate or an average, especially if you include people’s salaried time on hiring. Do your best to add up all the time and expenses for recruiting in one year, and then divide that cost by the number of hires.

19. Cost of HR per employee
What It Means: If you have an HR person or more than 1 person, this is how much you pay the HR team versus how many total employees you have.
How You Calculate It: The total salary & benefits package of your HR team divided by the number of employees. This is an efficiency metric and your ratio will depend on your style of business.

20. Employee Absenteeism
What It Means: This is how often your employees call in sick or do not show up to work (note: this is NOT for pre-planned vacations or Paid Time Off aka PTO). Employees who are absent a lot are generally not happy with where they work.
How You Calculate It: You can simply add up the number of days or hours missed; if you want, you can then take that number and divide it by the number of employees for an average. You want to see fewer than 5-10 days missed per year (i.e. 5 days sick leave is about normal).

21. Training spent per employee
What It Means: How much money you spent on training for your employees.
How You Calculate It: Take how much money you spent on training and divide it by the number of employees you had that participated in those trainings. This is also an efficiency metric, as well as it can reveal uneven training spend. If you want to get fancy, you could also take it a step further and calculate the ROI of your training costs.

22. More HR Metrics Examples
Company Goal(s) It Could Link To
What You Want to See
Overall employee turnover
Reducing costs Improving morale Improving communications Better employee/manager relationships
Reduced turnover number from year to year; ideally, your voluntary turnover is 10% or less (i.e. people who have to move away)
Above average performance yield ratio
Increasing revenue Increased client satisfaction Improving morale Overall better company organization
More high performers each year (which you could see via performance review scores)
Revenue per employee
Increased revenue Business or financial stability Increased sales
Higher revenue per employee is the goal (without working your people into the ground!)
Environment
Improving morale Reducing employee turnover More teamwork
A continuously “better” or high-functioning environment (hard to measure, but you know if you are in one or not)

23. SHRM’s 8 Tips for Using HR Metrics
1. Understand the Question First, Then Look at the Metrics
2. Always Build a Business Case
3. Recognize that HR Metrics Alone Offer  Limited Value
4. Identify the Workforce-Driven Components of Business-Driven Metrics
5. Learn to Ask the Right Questions
6. Work Across the Organization
7. Embrace Measurement
8. Don’t Compromise on Data Quality

24. Metric Roundtable - What HR Metrics do you use?

25. References
Feffer, M. (2017). SHRM: 9 Tips for Using HR Metrics Strategically. Retrieved from metrics-strategically.aspx
Hopkins, C. 2018). Top 25 HR Metrics – How to Measure HR Success. Retrieved from
SHRM (2016). Advanced Analytics: Using Data to Drive HE Excellence. Retrieved from cs_AA.pdf
Vulpen: E. (2018). AIHR: 14 HR Metrics Examples. Retrieved from