Top 12 KPIs to Track by Every HR Manager in 2024

Workforce management and optimization are complicated aspects of human resource management, it is about understanding your employees, assessing their performance, and making informed decisions so that your workforce is always efficient. Human Resource KPIs (key performance indicators) can be very effective tools in decoding employee data, gaining valuable insights, and channeling the true potential of your team.

Organizations look forward to attracting and retaining their top talent more than ever these days and the way they treat their employees impacts their performance. That’s why taking stock of where you stand by measuring your progress is crucial. To get a better idea of your performance as an employer, you must know what drives, motivates, and inspires your employees, make them productive and engaged, and identify policies that they dislike and bring them down. Human Resource KPIs can help you identify the shortcomings, and unique opportunities and showcase your value proposition to potential candidates. In this blog, we will understand 12 key KPIs to track for every HR manager in 2024 that will help you optimize your workforce’s efficiency.

1. Employee Retention

Employee retention is one of the critical metrics that every organization must keep a check on. Through the employee retention rate  KPI, HR managers can measure the ability of an organization to retain its employees over a specific period. A high employee retention rate denotes a healthy workplace culture, robust employee engagement, and effective talent management.

The calculation of the employee retention rate is pretty straightforward, you need to divide the number of employees who stayed with the company over a given period by the total number of employees at the beginning of that period and then multiply the result by 100 to get the percentage. Keeping this KPI in check on a regular basis helps HR managers estimate the success of retention strategies and identify areas for improvement.

Burnout and a lack of support are some of the most prominent causes that affect multiple industries and teams. And they almost always play a role in employee turnover. It is important to pay attention to this KPI to identify threats and opportunities. The average turnover rate for any industry is less than 20%, and voluntary attrition accounts average about 13%. Your mileage may vary based on the industry you are in. Read more about the employee retention stats and strategies in this insightful blog.

2. Time to Hire

Time to hire is a recruitment metric that helps HR managers measure the duration from when a candidate applies for a position or is sourced until they accept the job offer. This Key Performance Indicator shows the efficiency of a company’s hiring process and provides insight into how quickly a company can identify and onboard suitable talent. Across industries, the average time to hire hovers around 42 days.

To calculate time-to-hire, subtract the date a position was filled from the date it was opened. Do this for all positions filled within a specific period, then calculate the average. A more concise time-to-fill exhibits an agile recruitment process, ensuring the organization attracts top talent and fills the vacant positions promptly.

This KPI also helps assess if your recruitment team is well equipped if there are hiring contingencies like a layoff or if someone has quit the job without warning. These situations may happen unexpectedly at times.

If you are struggling to reduce time-to-hire, here are some tools and strategies that you can use to improve your numbers.

Map Out the Hiring Process

Identify and outline each step from job posting to candidate accepting the offer letter. This will help you identify bottlenecks and streamline the process for better results.

Ensure Efficient Candidate Screening

Candidate screening is a critical step and companies can save significant time by utilizing screening tools or AI recruiters such as Qureos. Setting up clear criteria for evaluating candidate qualifications can also expedite the screening process.

Optimize Interview Process

Standardize the interview process and reduce unnecessary interviews. A well-structured interview process can help quickly identify suitable candidates.

You can also leverage social media and effective job advertising to attract qualified candidates and fill the job quickly.

3. Employee Satisfaction

A happy workplace is one where the majority of employees are satisfied and productive. Employee satisfaction KPI (Key Performance Indicator) is the metric that helps you gauge how content employees are with their jobs and workplace environment. It gives you insights into various aspects of employee experience, including job fulfillment, work-life balance, and organizational culture.

How to measure Employee Satisfaction

Employee Satisfaction Surveys: Comprehensive surveys that assess multiple aspects of workplace experience. Typically include open-ended as well as multiple-choice questions to gather qualitative and quantitative data about sentiments of the employees.

Pulse Surveys: smaller frequent surveys/ feedback forms focused on specific issues, activities, or concerns within the organization. Ideal to capture real-time feedback and workplace trends.

Employee Net Promoter Score (eNPS): This single-question survey asks employees how likely they are to recommend the company as a place to work on a scale from 0 to 10. Responses categorize employees into promoters, passives, or detractors, providing a quick snapshot of overall satisfaction

One-on-one meeting: Regular check-ins between managers and employees can provide qualitative insights into employee satisfaction, allowing for open discussions about concerns and suggestions

Absenteeism and turnover rates: Monitoring these metrics can indirectly indicate employee satisfaction levels; high turnover or absenteeism may signal underlying dissatisfaction within the workforce.

4. Turnover Rate

Employee turnover is an industry-wide metric that almost all organizations are keen to measure in order to know how the employees feel on the job and how quickly they leave the organization. A high turnover rate indicates some problems at the workplace like poor job satisfaction or ineffective management. The turnover rate is measured by the number of employees who left voluntarily divided by the average number of employees and multiplied by 100 to get the percentage.

Understanding the reasons and addressing them is vital to enhancing employee retention, reducing hiring costs, and maintaining a stable experienced workforce. Let’s take a look at some of the factors that influence turnover rates:

Job Satisfaction

A significant reason affecting employee turnover is job satisfaction. A higher job satisfaction usually attracts lower turnover, as employees are more likely to stay longer with the organization. Factors such as work responsibilities, working conditions, support, and recognition affect job satisfaction levels.

Organizational Commitment

When employees feel a strong commitment to the organization’s values and mission, they are less likely to jump the ship. Factors such as leadership support, company culture, and value alignment play an important role in influencing organizational commitment.

Work Environment

A positive work environment that cultivates healthy relationships and promotes collaboration among coworkers enhances job satisfaction and reduces turnover intentions. On the contrary, a toxic work environment can attract higher turnover rates.

Compensation and Benefits

Competitive remuneration and benefits are pivotal for work satisfaction and employee retention. Insufficient compensation always leads to employees seeking better opportunities elsewhere.

Career Development Opportunities

Ample career development opportunities for advancement and professional development can make employees stick with an organization. When employees see no opportunities for growth, they tend to move on, leading to high turnover.

Work-Life Balance

Employees are now considering work-life balance a crucial aspect of their professional journey. Organizations that have flexible working arrangements and provide the right work-life balance tend to have lower turnover rates.

Management support and organization’s Reputation

Leadership and management practices that are efficacious also play a pivotal role in employee retention. Adequate support from management can improve employee loyalty. Whereas, an organization’s reputation plays a significant role in its ability to retain employees. The more reputable the brand, the more employees will tend to stick to the brand name for long.

Though a general benchmark for many organizations is around 10% or below, turnover rates fluctuate highly across multiple industries owing to numerous factors. As per this report, the average turnover rate for 2023 was 41%. You can also check the employee turnover rates on a yearly basis in this blog.

5. Recruitment Costs

Recruitment cost assesses the expenses incurred to recruit and hire a new employee. This includes advertising, agency fees, and other associated costs. These costs can significantly impact the company’s budget and overall financial health. To calculate recruitment costs per hire, add internal recruiting costs plus external recruitment costs and divide it by the total number of hires within a specific period of time. As per SHRM, The average cost per hire is approximately $4700.

Strategies to optimize hiring expenses

Leverage employee referrals: Motivate current employees to refer candidates, often leading to faster and more cost-effective hiring.

Streamline Interview Processes

Try reducing the number of interview rounds and utilize tools like Zoom to cut down on travel costs and time spent in interviews.

Invest in Technology

Technologies like Applicant Tracking System (ATS) and automating repetitive tasks like resume screening and scheduling can save you loads of time and money.

Enhance Employer Branding

Develop a strong employer brand that attracts candidates organically and refuses reliance on paid job advertisements.

6. Absenteeism Rate

The absenteeism rate refers to the percentage of employees who are not present at work during a specific period, measured against the total number of scheduled workdays. A key metric for any organization, it directly impacts productivity, morale, and overall operational costs. This also provides insights into the overall health and well-being of employees.

To calculate the absence rate, divide the total hours of absence by the total scheduled work hours and multiply by 100 to get the percentage. A high or regular absence rate may highlight burnout or dissatisfaction, leading HR managers to identify and address the issues.  As per an article published by Investopedia, unscheduled absenteeism costs roughly $3,600 per year for each hourly worker and $2,650 each year for salaried employees

Some strategies to keep absenteeism in check

Understand the cause behind it: Try identifying the root cause of absenteeism to reduce it. Low job satisfaction, stress, burnout, and health issues are some of the common reasons behind absenteeism.

Track absences

Monitoring employee attendance helps identify patterns and trends in absenteeism, allowing the organizations to address the issues proactively and make the necessary arrangements.

Flexible work options

Flexible work arrangements like remote work or flexible hours help employees manage personal commitments as well as work, this reduces stress and helps you maintain some level of productivity instead of being zero.

Employee Wellness Programs

Invest in employee wellness programs to promote the mental and physical well-being of employees.

Implement attendance policies

Having clearly defined attendance policies helps set the right expectations for employees regarding attendance and the consequences of excessive absenteeism.

7. Training Completion Rate

Organizations have multiple training programs to help their employees in their professional journey and help them develop the right skills to do the job. Training completion rate is a key performance indicator that measures the percentage of employees who successfully complete a training program within a specified period.

To calculate the training completion rate percentage- Number of employees who completed training / total number of employees enrolled x 100

Tracking training completion rate is important due to multiple factors such as:

• A high completion rate means that employees are engaged and find value in the training.
• Helps organizations assess the effectiveness of their training initiatives, allowing them to identify areas of improvement.
• Understanding the completion rates allows organizations to make informed decisions on resource allocation.

Training and development programs at the workplace are of vital importance and they must be monitored to ensure their effectiveness. Devlin Peck, a learning and training platform, states that 59% of employees think training directly improves their performance.

8. Cost Per Hire

A critical metric for organizations, Cost per hire (CPH) represents the total cost associated with hiring a new employee. This KPT should be assessed regularly as CPH can significantly impact an organization’s budget and efficiency.

Let’s see the breakdown to understand what factors are included in it:

Recruitment Advertising Costs

Expenditure related to job posting ads on various platforms such as job boards, recruitment websites, and social media.

Agency fees

Costs incurred when a recruitment agency is used, this amount is usually a percentage of the new hire’s salary.

Employee Referral Bonus

The incentives offered to current employees for referring successful candidates also add up in cost per hire.

Other costs include recruiter salaries, training and onboarding costs, and administrative costs.

Strategies to reduce Cost per Hire

• Create a robust employer brand: Focus on building a strong employer brand that attracts the right candidates organically, reducing reliance on cos-incurring methods.
• Leverage technology: Use applicant tracking systems and AI tools to automate parts of the hiring process.
• Utilize digital platforms: Use social media and other digital platforms for job postings and attract talent organically.
• Targeted recruitment, Optimize Job Descriptions: Have clearly defined job descriptions and desired candidate profiles to streamline job postings and reduce time spent on unqualified candidates. :
• Internal mobility: Encourage internal promotions and transfers, this can save on recruitment costs while boosting employee morale.

According to the Saratoga Workforce Index, the national average Cost per Hire in 2022 was $2700. The median Cost per Hire varies widely across industries from around $500 to $3600.

9. Employee Productivity

Efficient productivity of the employees is paramount in an organization’s success strategy. Through employee productivity KPI, organizations assess the efficiency and effectiveness of employees in fulfilling their job responsibilities.  Employee productivity is measured by evaluating the output of individual employees or teams within a specified timeframe.

Balancing quality and quantity of output in the workforce is the key here. While high output is always desirable, it should not be achieved at the expense of work quality or employee health and well-being. Let’s look at some of the strategies through which you can enhance employee productivity:

1. Set Clear Expectations: Clearly defining performance standards and quality benchmarks for employees helps the right expectations in terms of both quantity and quality of work.
2. Implement a Regular Feedback mechanism: Provide periodic feedback to employees about their performance, output levels, and quality.
3. Encourage collaboration and robust leadership: Foster a collaborative environment where employees can share best practices and collaborate. Also, supportive leadership can always be helpful in bringing the best out of employees.

The latest data from Select Software reveals that 77% of employees believe that automating routine tasks would improve their productivity, and those who use automation save an average of 3.6 hours weekly.

10. Diversity and Inclusion Metrics

DEI initiatives are crucial for a positive workplace culture that values diversity and inclusivity.

DEI KPIs help in assessing and building a workforce that reflects the diverse community the organization serves and enhances creativity and problem-solving. This also helps organizations to set goals, evaluate progress, and identify areas for improvement in their DEI initiatives.

Organizations should measure diversity and inclusivity metrics regularly and adapt strategies as needed. This can involve introducing new policies, enhancing training programs, or revising recruitment strategies to encourage a more diverse and inclusive workplace. As per McKinsey’s report Companies with a diverse workforce are 35% more likely to have financial returns above industry medians, signifying the importance of DEI at the workplace.

‍Examples of DEI metrics

Workforce demographics

Collecting data on the composition of your workforce across various dimensions such as race, gender, age, and disability. This helps create a baseline for measuring a diverse workforce.

Hiring Metrics

Analyze the diversity of candidates at each stage of the hiring process to ensure retinol recruitment practices.

Pay Equity

Evaluate compensation across different demographics, and genders to identify and address pay disparities.

Employee Retention rates

Monitor the turnover rates of underrepresented groups to check on workforce inclusivity.

Promotion Rates

Assess the promotion rates of diverse employees compared to their peers to ensure equitable advancement opportunities.

11. Employee Engagement

For an organization, its employees are the biggest asset. Employee engagement KPI ensures that your employees are adequately engaged and productive while working for the organization.  Employee engagement metrics measure the level of employee involvement, satisfaction, and commitment within an organization. This helps organizations the effectiveness of their engagement initiatives.

Employee engagement is an indication of employees being motivated and feeling connected with the organization while ensuring they are productive and fulfilling their job responsibilities. A less engaged workforce is a sign that employees may be facing some challenges or there are problems within that need to be addressed. As per Gallup, engaged employees are 17% more productive and have a 41% reduction in absenteeism.

An engaged workforce is more productive, generates high profitability, has lower turnover costs, and increases customer satisfaction through better service offerings.

12. Training ROI

Training ROI (Return on Investment) is a financial metric that evaluates the effectiveness of training programs by comparing the benefits gained from the training to the costs incurred in delivering it. This measurement helps organizations justify their training expenditures and make informed decisions about future investments in employee development.

To calculate accurate training ROI, you must start by defining clear objectives of the training programs for the employees, and collect data of sales figures, productivity metrics, employee performance evaluations, and customer feedback before and after the training. Also, don’t forget to sum up all the costs that are associated with the training programs.

Formula to measure training ROI

Benefits-Costs / Costs X 100

Where:

Benefits are the monetary gains resulting from the training (e.g., increased productivity, sales, or efficiency).

Costs include all expenses associated with the training program (e.g., materials, instructor fees, lost productivity during training).

Conclusion

Monitoring human resource KPIs, such as employee satisfaction, training ROI, and cost per hire are essential for organizations aiming to gauge employee performance and optimize workforce management. These metrics offer valuable insights into employee engagement, training effectiveness, and recruitment efficiency, enabling companies to make informed decisions.

By implementing these data-driven strategies, organizations can identify areas for improvement, enhance employee experiences, and ultimately drive better business outcomes.

Taking proactive action based on these KPIs not only fosters a more engaged and productive workforce but also strengthens overall organizational performance. Embracing this analytical approach is crucial for sustainable growth and success in today’s competitive landscape.