In this blog post, we have collected the most common and helpful HR KPIs each HR professional should use in management. These metrics are important for properly valuing the recruitment and HR processes and further improvements. Learn top KPIs for HR!

What is HR KPI?

Key performance indicators are used in various fields, and HR isn’t an exception. They describe long-term and strategic objectives. HR KPI metrics are a part of the whole HR strategy, which flows from the overall company strategy. 

HR key performance indicators and data assist HR specialists in deepening the understanding of their companies and identifying the weaknesses or problem areas before they bring extra costs or time spent.

In general, key performance indicators in HR are those metrics that show how HR contributes to the company's success, how successfully the HR strategy is being implemented, and how much HR work brings the achievement of business objectives closer.

What are KPI reports?

KPIs for HR department play a vital role in the understanding of their productivity. A KPI report is a business-performance tool allowing top management to quickly measure human resource performance. You can automate them with the different recruitment tools and present the results with catchy well-designed graphs. 

These human resources performance measures are handy in analyzing the effectiveness of the company’s recruitment policy and employees’ engagement, as well as making strategic planning for the future.

TOP 15 KPIs for HR

There are hundreds of key performance indicators in HR that can be used to measure all the HR processes. However, not all of them are necessary. Therefore, when developing the HR strategy, focus on the top priority measurement fields (such as recruitment, employee engagement, diversity, and inclusion, etc.), and define the most relevant KPIs to assess their performance.

 We have gathered the most common HR KPI examples:

1. Average Time per Hire

Category: recruitment

Hiring time is a standard recruiting factor. It measures the number of days between the date a candidate responds to a job (or a recruiter's response to a job seeker's CV in a self-search) and the date that candidate accepts the job offer. Thanks to this indicator, you can identify gaps in the recruitment process or set up a recruiter’s KPI for different vacancies. 

How often to calculate: monthly or quarterly

Formula: To calculate the average time per hire, take the total number of hours or days needed to fill vacancies throughout a certain period (f.e. month) and divide by the total number of vacancies.

Healthy rate: 20 days

Average Time per Hire Formula

2. Cost per Hire

Category: recruitment, cost management

Cost per hire is a metric that shows a company's costs to hire one employee. Tracking this KPI helps HR managers create budgets and stick to them. Considering the average cost of hiring, you can allocate the budget efficiently.

To track the cost of hiring, you need to assess the internal and external costs of hiring staff and the total number of employees hired over a certain period. 

  • Internal recruiting costs are the internal costs of filling a specific position: in-house talent acquisition staff salaries, recruiter salaries, talent acquisition program costs (such as an employee referral program), etc.
  • External recruiting costs are any costs to external vendors during the recruitment process: external recruiting agency fees, job postings on job boards, candidate background checks, employer branding events (such as job fairs), employee relocation costs, etc.

How often to calculate: monthly or annually

Formula: To calculate the rate, take the sum of the internal and external recruiting costs and divide it by the total number of employees hired within a specified period (f.e. a month).

Healthy rate: depends on the corporate management

Cost per Hire Formula

3. Job Offer Acceptance Rate

Category: recruitment

Accepting a job offer is the most crucial point in the hiring process. It determines the efficiency of the whole recruiter’s work. The job offer acceptance rate (JOA) is a helpful recruitment data trick after receiving a candidate's reply to an offer. This is a handy recruitment metric to assess the effectiveness of a recruiter’s job.

How often to calculate: annually

Formula: To calculate the rate, divide the number of offers accepted by the number of offers and multiply the result by 100%.

Healthy rate: above 90% 

Job Offer Acceptance Rate Formula

4. Recruiting Conversion Rate

Category: recruitment

Recruiting conversion rate means the share of successful candidates employed among all the vacancies opened during a specific period. This KPI for HR department is a perfect way to determine whether the recruitment team copes with its duties. If recruiters cannot fill the majority of the vacancies with qualified candidates, the chosen recruitment strategies are failing, and a company doesn’t get a return on investment.

How often to calculate: monthly or quarterly

Formula: To calculate the recruiting conversion rate, divide the number of newly hired employees by the total number of opened vacancies and multiply this by 100%.

Healthy rate: above 75%

Recruiting Conversion Rate Formula

5. Training Costs per Employee

Category: recruitment, cost management

When a new employee is hired, the onboarding process is the first stage of their work. They have a kind of training, during which they don’t develop skills, but receive introductory information and are acquainted with the culture, traditions, and corporate ethics of the company. All these pieces of training don’t take place overnight or during weekends but take the working hours of HRs, team leads, etc. Thus, it brings considerable expenses to the company. As an HR, you should assess the return of the company’s investments.

How often to calculate: quarterly or annually

Formula: To calculate training costs per employee, divide the training budget by the number of employees you have to train.

Healthy rate: depends on the corporate management

Training Costs per Employee Formula

6. Trial Conversion Rate

Category: recruitment

The trial conversion rate shows how many employees stay in the company after the trial period. This indicator is an excellent chance to evaluate the quality of the recruiter’s work. Of course, a candidate may have internal incentives not to continue work in the company. However, usually, it depends on improper communication during the interviews. 

How often to calculate: quarterly or annually

Formula: To calculate the trial conversion rate, divide the number of trial-to-employed staff by the total number of trial staff and multiply this by 100%.

Healthy rate: above 90%

Trial Conversion Rate Formula

7. Employee Turnover Rate

Category: employee engagement

The employee turnover rate indicates how many employees leave the company. It is usually expressed as a percentage of the total number of resigned employees within a given period, a month, or a year.

How often to calculate: monthly or annually

Formula: To calculate the employee turnover rate, take the total number of resigned employees divided by the total number of employees and multiply by 100%.

Healthy rate: lower than 10%

Employee Turnover Rate Formula

8. Employee Retention Rate

Category: employee engagement

Employee retention is the ability of a company to retain its employees. Therefore, this is one of the most critical metrics for your HR department. As an owner or top executive, you need to understand how well the company retains its employees. This is especially true if you plan to scale your business - you must be able to quickly respond to all internal and external changes to adjust your talent acquisition strategy and then retain them subsequently.

How often to calculate: annually

Formula: To calculate the employee retention rate, take the total number of employees at the end of the year divided by the number of employees at the beginning of the year, and multiply the result by 100%.

Healthy rate: above 75%

Employee Retention Rate Formula

9. Dismissal Rate

Category: employee engagement, recruitment

The dismissal rate is the percentage of involuntary terminations of employment. This indicator is an excellent tool to track and assess the performance of your recruitment processes. If the calculation results are disappointing, it is a sign that you should take measures to reconsider the recruitment policy.

How often to calculate: quarterly or annually

Formula: To calculate the rate, take the total number of involuntarily fired employees divided by the total number of employees and multiply by 100%.

Healthy rate: lower than 10%

Dismissal Rate Formula

10. Absenteeism Rate

Category: employee engagement

The absenteeism rate indicates the unplanned absence due to sickness or other causes. It helps to analyze the time employees were absent from work or engaged in personal matters. The higher it is, the more time employees waste. Inefficient use of employees' working time leads to a decrease in productivity and a reduction in the company's financial performance.

Absenteeism has a seasonality: in summer, for example, an employee's absence is more common than in winter due to the holiday season.

How often to calculate: quarterly or annually

Formula: To calculate the absenteeism rate, take the total number of absences divided by the total number of working days and multiply by 100%. You can calculate the coefficient for a single employee and an entire department or company.

Healthy rate: 1.5%

Absenteeism Rate Formula

11. Employer Net Promoter Score

Category: employee engagement

The indicator shows how willing employees are to recommend your company as an employer to their friends. To gauge employee satisfaction with HR performance, measure NPS solely for your department. Depending on the company's strategic goals, NPS can be a great KPI for HR.

How often to calculate: annually

Formula: To find out the employee satisfaction index with the company, you need to prepare a questionnaire with answers in the form of a score on a scale from 0 to 10 or a free-response.

Sample questions:

  • How likely would you recommend our company to your friends on a scale of 0 to 10?
  • Why did you rate it this way?
  • How could we improve HR processes for better evaluation?
  • What do you lack in working with us?
  • What did you like most about working with us?

Do not make the questionnaire too long and complicated. After receiving the answers, divide the answers into categories: detractors, promoters, and neutrals. These categories are distributed according to the points given by employees.

  • Promoter (9-10 points): the most loyal employee.
  • Neutral (7-8 points): indifferent to your company, may recommend your company or go to competitors. They don’t speak negatively about your company but don’t praise either.
  • Detractor (0-6 points): a critic unsatisfied with your company. They can go to competitors or even ruin the employer's brand with bad reviews.

The Employee NPS is calculated as the difference between the number of promoters and detractors divided by the number of survey participants, then the result is multiplied by 100%.

Healthy rate: above 30% 

Employer Net Promoter Score Formula

12. Salary Competitiveness Ratio

Category: employee retention, cost management

Understanding the relative level of salaries in your organization compared to competing companies helps you determine your organization's competitiveness as a potential employer and your employees' motivation level. If the competitiveness decreases, staff will leave your company for higher-paying jobs. Therefore, this KPI can be important in reducing employee turnover.

How often to calculate: quarterly or annually

Formula: To calculate the salary competitiveness ratio, choose a particular position and divide the salary offered by your company by the average salary offered by your competitors.

Healthy rate: 1.0 or 1.1 

Salary competitiveness Ratio Formula

13. Average Time Stay

Category: employee engagement

This HR KPI measures the average time employees stay within a company. It is a helpful instrument for estimating both retention and employee engagement. The long stay of employees in the company is the factor showing how pleasant it is for employees to work in this company under this management. In addition, long-term employee time stay reduces recruitment costs and allows the organization to achieve its strategic goals.

How often to calculate: annually

Formula: To calculate the average time stay, divide the sum of months worked by all current staff by the number of existing staff.

Healthy rate: 4.1 years (average time stay, according to the U.S. Bureau of Labor Statistics)

Average Time Stay Formula

14. The Cost of HR per Employee

Category: cost management

This KPI is not used often but can be extremely helpful when cutting costs or automating processes in a company. When measuring this metric, you can separate the HR and recruitment departments to identify the costs of each one. If the results are unsatisfactory, this signals to cut HR staff, change recruitment strategies or think about recruitment automation software to reduce costs.

How often to calculate: annually

Formula: To calculate the cost of HR per employee, take the number of your HR team members multiplied by their annual salary and divide by the total number of full-time employees.

Healthy rate: depends on the corporate management

The Cost of HR per Employee Formula

15. Gender Diversity Rate 

Category: DE&I (Diversity, Equity, and Inclusion)

The Gender Ratio metric gives insights into a company’s approach toward diversity in the workplace: the female to male employee ratio. Also, the poor results of this indicator can signal the prejudice of the recruiter. You can apply this KPI to measure other DE&I issues, such as employee ratio by age, disability, race, religion, belief, etc.

How often to calculate: annually

Formula: To calculate the gender diversity rate, divide the number of male employees by the number of female employees.

Healthy rate: above 0,6 (where 1 is perfect gender diversity)

Gender Diversity Rate Formula

How to use the HR KPIs?

Today, key performance indicators are a powerful tool for assessing the entire company's performance and the HR department in particular. However, they have to make processes simpler and not create an additional burden on the HR and recruitment teams. 

To use HR KPIs efficiently and consequently improve them, we offer you to use Axterior - an online recruitment system. This software manages all the recruitment processes and assists in finding the most qualified candidates in a few clicks. Moreover, Axterior online recruitment platform can improve the accuracy of your data by identifying inaccurate or incomplete records and the cleanup process. Therefore, it will help you to manage your KPIs correctly.

Conclusion

KPIs are necessary for the HR strategy and setting long-term goals. With these metrics, you can estimate your company's success in employer branding and employee engagement. Also, these KPIs are an integral part of HR and recruitment processes - you can track the strengths and weaknesses of your team performance and plan growth areas. Use top KPIs for HR and develop your business!