Key HR Metrics Every Business Should Track (& Why They Matter)
For HR departments, tracking data isn’t just about numbers—it’s about gaining insights that can shape better business decisions, improve workforce management, and drive organizational growth. As companies scale, it becomes essential to monitor the right HR metrics to reduce costs, retain top talent, and identify areas of improvement within the workforce.
Here, we’ll dive into essential HR metrics that help businesses achieve these goals, explaining how each contributes to a more data-driven, strategic HR approach.
Current Headcount
Why Track It?
Headcount is a basic yet critical metric that gives an immediate snapshot of the company’s workforce size. Tracking headcount enables HR teams to monitor growth, maintain budgets, and ensure sufficient staffing for operational needs.
How to Use It:
Beyond understanding workforce size, headcount data can reveal trends over time, helping HR forecast hiring needs and support company growth goals. This metric also aids in budgeting for salaries, benefits, and other employee-related expenses, ensuring the company remains financially healthy as it scales.
Current Temporary Staff (Temps)
Why Track It?
For businesses that utilize temporary staff, tracking the number of temps provides insight into operational flexibility and hiring efficiency. It also highlights areas of the business that rely on temporary labor due to fluctuating demand, seasonal needs, or specific project requirements.
How to Use It:
By analyzing trends in temporary staffing, HR can determine if permanent hires might be a cost-effective solution for certain roles. In addition, a high reliance on temporary staff may indicate the need for additional training for full-time employees or adjustments in recruitment strategies.
Current Leave of Absence (LOA)
Why Track It?
Monitoring employees on leave helps HR teams understand workforce availability and assess how leaves impact productivity. Tracking LOA data also supports compliance with leave policies and regulations, such as the Family and Medical Leave Act (FMLA), and ensures adequate staffing levels.
How to Use It:
By tracking LOA trends, HR can identify recurring patterns, such as a higher-than-average LOA rate in certain departments, which may indicate workplace issues like burnout. This data can be used to implement preventative measures, such as wellness programs or flexible work arrangements, to reduce LOA rates and improve employee well-being.
Number of Terminations in the Last 90 Days
Why Track It?
Tracking terminations is vital for understanding turnover rates, pinpointing retention challenges, and identifying possible causes behind employee departures. This metric highlights the overall stability of the workforce and helps HR respond proactively to potential issues that may be impacting retention.
How to Use It:
Analyzing terminations over specific periods (like 90 days) allows HR to gauge recent trends and assess whether terminations are due to seasonal patterns, business changes, or other factors. A sudden increase in terminations might signal deeper issues, such as declining employee satisfaction or unaddressed workplace challenges, warranting immediate action.
Turnover Rate over the Last 90 Days
Why Track It?
The turnover rate measures how frequently employees leave the company, reflecting the overall health of the workforce. A high turnover rate can be costly, as it indicates that the company is continually investing in hiring and training new employees to replace those who leave.
How to Use It:
Understanding turnover by department, position, or tenure can uncover specific problem areas. For example, if turnover is high among recently hired employees, this could indicate issues with onboarding or recruitment. If turnover is high in specific departments, it could signal management or culture issues. With this data, HR can tailor retention strategies to improve overall workforce stability and reduce hiring costs.
Top Termination Reasons and Exit Survey Responses
Why Track It?
Knowing why employees leave is critical for addressing the root causes of turnover. By tracking top termination reasons and correlating these with data from exit surveys, HR can gain valuable insights into common issues that may be driving employees to seek opportunities elsewhere.
How to Use It:
Analyzing exit survey data provides a clear view of recurring challenges, such as work-life balance, compensation, or career development opportunities. HR can use this information to make data-informed changes to policies, enhance employee benefits, or introduce targeted development programs. Additionally, regular tracking of this data allows HR to benchmark improvement over time, ensuring that any interventions are effective.
Time-to-Hire
Why Track It?
Time-to-hire measures the average time taken to fill a vacant position, providing insights into the efficiency of the recruitment process. A lengthy time-to-hire can result in lost productivity and increased pressure on existing staff, affecting both morale and business outcomes.
How to Use It:
Tracking time-to-hire helps HR identify bottlenecks in the hiring process. If certain positions consistently have long hiring times, HR can refine recruitment strategies, improve job descriptions, or strengthen partnerships with recruiters to reduce hiring times. This metric also enables HR to assess the efficiency of different recruitment channels and prioritize those that yield faster results.
Employee Engagement and Satisfaction Scores
Why Track It?
Engagement and satisfaction scores are powerful indicators of employee morale and productivity. High engagement levels are closely linked to better performance, lower turnover, and higher profitability, making it essential for HR to monitor and improve this metric over time.
How to Use It:
By conducting semi-annual or annual surveys and tracking engagement scores, HR can address issues impacting employee morale before they lead to turnover. Insights from engagement surveys can inform programs such as recognition initiatives, team-building activities, and wellness resources, all of which help maintain a positive work environment. Additionally, this metric helps HR track the effectiveness of existing programs designed to improve engagement.
Diversity and Inclusion Metrics
Why Track It?
Increases in diversity, equity and inclusion (DEI) correlate with improvements in brand image, innovation, and profit. In addition to enhancing reputation and boosting employee satisfaction, research suggests diversity also improves innovation and profit:
A study by Boston Consulting Group showed a 19% increase in profit from innovation in companies with greater diversity in leadership.
The World Economic Forum cites a study by McKinsey showing gender-diversity makes companies 21% more likely to have above-average profit and 27% more likely to have above average value creation. The same study also has findings that suggest companies with more ethnic diversity in executive teams are 33% more likely to generate above-average revenue.
How to Use It:
By setting goals for diversity and monitoring progress, HR can address gaps in recruitment, promotion, and retention among underrepresented groups. These metrics also support HR in developing targeted diversity programs, aligning hiring practices with inclusion goals, and ensuring that all employees feel valued and supported in their roles.
Notes
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