Key takeaways:

• Track HR metrics to measure effectiveness, improve ROI and improve employee support
• Seven metrics to track:

1. Turnover rate
2. Employee satisfaction
3. Absence rate
4. Benefits participation rate
5. Cost per hire
6. Client retention rate
7. Client satisfaction rate

Gathering data about your business and the people it serves can only help you improve. HR metrics in particular help you understand your workforce and customers better. They help you track hiring success, retention rate, job satisfaction and overall HR effectiveness. These metrics impact the success of your business as a whole and can provide key insights into your potential for growth.

What HR metrics should you focus on? Here is your guide to why tracking HR metrics is important and a look at seven basic HR metrics that should always make your list.

Metrics help you understand your customers, your employees and your business. They help you assess the effectiveness of your HR department and how your efforts are impacting the larger company. They help you figure out if your campaigns are paying off. Gathering and analyzing the right data helps you understand where you should be putting more time, energy and money.

Other benefits of tracking HR metrics include:

• Making better decisions based on the facts
• Making more accurate predictions and forecasts
• Improving where you allocate company resources
• Reducing compliance and other business risks
• Improving your return on investment
• Identifying ways to improve employee satisfaction

You can create a more effective and efficient HR department when you track key insights. This allows you to better support your workforce as well as your customers.

Without tracking metrics, you’re really just expending energy and funds and hoping that what you’re doing is working. You need to know what’s actually going on based on the numbers. You can only improve what you measure.

Start with simple metrics that tell you a lot about HR and company culture. Here are seven great places to start, which relate to both your employees and your customers:

1. Turnover rate

Your turnover rate is a crucial indicator of employee sentiment about their jobs and the company. It tells you the rate at which workers are leaving the business over a year or another measured period. Not all turnover is a negative thing since people leave their jobs for a variety of reasons, like retirement. Some turnover is expected and normal. Keeping that rate fairly low, however, especially for new hires, is important to keep morale and productivity high.

You can calculate employee turnover by using this formula:

Number of departures during a specific period / average number of employees in the same period x 100

Make sure you use the same period for figuring each number, like a year. You may also want to break up your rate by measuring only voluntary turnover.

2. Employee satisfaction

Employee satisfaction can make or break a company. Happy workers are more productive and contribute to a positive work culture. They are more committed to the job and the organization. Unsatisfied employees, on the other hand, don’t perform as well, contribute to dwindling morale and are more likely to leave a company.

Start measuring employee satisfaction with surveys. Ask questions about how engaged people are at work and their general happiness levels. Ask them what you could do to improve things if they’re unhappy with something. Your goal should be to help them reduce work stress and feel supported and understood.

3. Absence rate

You should also keep tabs on how often your employees are taking off work, but, usually, you won’t include their allocated vacation or personal time off. Take a given time period, like a quarter or a year, and see how often workers are missing work on average. The rate could be an indicator of satisfaction and can help you identify employees or departments that need additional support.

To get the absence rate, use this formula:

Number of days missed / total number of workdays x 100.

4. Benefits participation rate

Start measuring how many employees are taking advantage of your perks and benefits. The benefits participation rate helps you uncover how many people are utilizing benefits like retirement accounts or health insurance. It helps you determine ROI as well as whether people need more education and support.

Calculate the benefits participation rate with this formula:

Number of employees who have enrolled / number of employees who are eligible for benefits x100.

5. Cost per hire

One of the most important details to know for more efficient HR practices is how much it costs to hire a new employee. The cost per hire metric tells you exactly that. You can assess whether you’re spending too much and identify areas where you could cut back.

To find the cost per hire:

Total hiring costs / number of new hires for a set period.

6. Client retention rate

You should also track customer metrics, which relate back to your employees and HR effectiveness. When clients are satisfied, it could be an indicator that company processes, systems and policies are working the way you want them to.

The client retention rate tells you how many customers you’re keeping over a given period. You want your client retention rate to be high.

To find it, use this formula:

Number of customers you end with in a specific period – new customers in that same period / customers you started with in that period x 100.

7. Client satisfaction rate

Finally, understanding how happy your customers are helps you assess employee effectiveness and potential for business growth. The client satisfaction rate (CSAT) tells you how people are experiencing products and services and can indicate level of performance, helping you uncover issues and gaps. You usually measure the CSAT with a simple survey question, like “How would you rate your overall satisfaction with [products or services] you received?” You want this rate to be as high as possible.

These basic HR metrics help you evaluate employee effectiveness and satisfaction, among other key performance indicators. They ensure you’re making the best business decisions possible based on the facts.

When you need assistance putting better HR processes in place, we’re here to help at StaffLink. We are a national Professional Employer Organization (PEO) that bundles HR services like payroll, benefits, risk management and a lot more. We work alongside your team to find better HR solutions that support your workforce and clients.

Request a proposal or contact us at (954) 423-8262 for more information.