"Live as if you were to die tomorrow. Learn as if you were to live forever." - Mahatma Gandhi
- Rising Popularity: Companies get $10 for every $ invested in developing analytics skills
- It is an ‘In Thing’: HBR magazine labelled business analytics as the ‘sexiest’ job of the century
- Decision making: 85% of managers use data driven dashboards for decision making
- Bright Career: Jobs and research papers in the field of Data analytics and Machine learning are increasing at a rapid pace
HR Analytics is a combination of one or more of the following steps
- Data Integration
- Organisational and workforce Analysis
- Insight generation
- Helps in identifying, classifying & quantifying the productivity of employees
- Calculate ROI of employee initiatives
- Helps in supporting the business decisions with the backing of data
| Mode | Approach to data | Benefits |
|---|---|---|
| Descriptive | What happened? | Marginal business benefits, process gap identification |
| Diagnostic | Why did it happen? | Significant improvements from status quo, data backed management |
| Predictive | What is likely to happen? | Support for strategic initiatives, forward looking decision making |
| Prescriptive | What should I do to achieve my goal? | Data products, data validated actions, increased success rate of strategic initiatives |
HR metrics, or human resources metrics, are key figures that help organizations track their human capital and measure how effective their human resources initiatives are
-
Time-to-Start:
Average number of days it took to fill a position
=Total days elapsed from the date each filled position was available to the date each new person started in the position / Number of positions filled -
Time-to-Productivity:
Average number of days to satisfactory productivity
=Total days elapsed from the date each filled position was available to the date each new person achieved satisfactory productivity / Number of positions filled -
Accession Rate:
Rate at which employees are joining the organization in a given time period
=Total Hire / Regular headcount -
Turnover Rate:
Rate at which employees are leaving the organization in a given time period
=Number of separations during the time period / Average actual number of employees during the time period -
Cost Per External/Internal Hire:
Average cost incurred with an External/Internal hire
=Total costs related to all (external/internal) hires / Number of (external/internal) hires
Other Staffing matrics: Offer Rate, Offer Decline Rate, Promotion Rate, Retention, Vacancy/Occupancy Rate, Vacancy Costs and Cost per Vacancy, Retirement Risk
-
Competency Rate:
Degree to which employees in key positions have the competencies necessary to achieve their performance objectives.
= # of incumbents with competency ratings of Acceptable or better/ # of incumbents who have received competency assessments -
Readiness:
Reflects how ready the organization is from a human capital perspective to execute on strategy and achieve key goals and objectives.
=Occupancy Rate x Competency Rate X 100 -
Training Spend Rates:
Relative importance of spend on training vs other operating and human capital activities.
=(Training spend/ Total Human Capital Spend) x 100 -
Training Headcount investment:
Amount of investment in trainings for each employee
=Total training cost/ Regular headcount
-
Performance Review Completion Rate:
Percentage of completed reviews
=Number of completed performance reviews/Number of completed performance reviews scheduled -
Average Performance Rating:
The mean performance rating across a selected group of employees receiving performance assessments.
=Total of all Performance Ratings/Number of employees who received a Performance Rating -
Performance Rating Distribution:
The employee representation across each of the available Performance Ratings.
=Number of employees who received each rating/Number of employees who received a Performance Rating
-
HR-to-Employee/Worker Ratio:
The HR-to-Employee ratio and HR-to-Worker ratios provide a way to compare HR staffing levels across and within organizations.
=HR FTEs/Total number of FTEs in the organization -
Productivity:
Describes the relationship between real output and the amount of labor time involved in its production.
=Revenue/Labor hour -
Total Compensation Spend Rate:
The relationship of costs associated with Total Compensation spend, including salaries, overtime, benefits, incentives and bonuses, to an organization’s Total Operating Costs.
=(Direct compensation + Indirect compensation)/ Total operating spend -
Employee Engagement:
Degree to which employees are engaged with and committed to the strategy and objectives of the organization.
=No Particular formula, depends on the organisation.
HR metrics are numbers that help us understand how well a company's HR department is doing. They give us information about things like how good the employees are at their jobs, how happy they are, and how well the HR programs and activities are working. By looking at these numbers, the HR team can make better decisions, find ways to make things even better, and make sure their plans match the company's goals.
- Revenue per FTE (Full-Time Equivalent): Revenue per FTE is a metric that measures the amount of revenue generated by the organization per full-time equivalent employee. It helps assess the productivity and efficiency of the workforce in generating revenue.
=Total Revenue/ No. of Full Time Equivalent Employees
Example: Let's say a company generated a total revenue of $10 million in a given year. During the same period, they had 200 full-time equivalent employees.
Revenue per FTE = $10000000/200 = $50000
In this example, the revenue per FTE is $50,000 meaning that on average, each full-time equivalent employee contributed $50,000 to the company's revenue.
- Profit per Employee: Profit per employee is a metric that measures the profitability of an organization per employee. It helps evaluate the efficiency and effectiveness of the workforce in generating profits for the company.
=Net Profit/ No. of Employees
Example: Let's consider a company that generated a net profit of $5 million in a given year. During the same period, they had 250 employees.
Profit per Employee = $5000000/250 = $20000
- Labor Cost per Employee: Labor Cost per Employee is a metric that measures the average cost incurred by an organization for each employee. It includes all the expenses related to employee compensation, such as wages, salaries, bonuses, benefits, payroll taxes, and any other costs directly associated with employing individuals.
=Total Labor Costs/ No. of Employees
Example: Let's consider a company that incurred $1000000 in labor costs (including salaries, benefits, taxes, etc.) during a specific period. The company had 100 employees during that time.
Labor Cost per Employee = $1000000/100 = $10000
- Labor Cost Percentage of Revenue: Labor Cost Percentage of Revenue is a metric that measures the proportion of an organization's total revenue that is allocated to labor costs. It helps assess the impact of labor expenses on the overall financial performance of the company.
=(Total Labor Costs/ Total Revenue) x100
Example: Let's assume a company has total labor costs of $500000 and generates a total revenue of $2000000 in a specific period.
Labor Cost Percentage of Revenue = $500000/$2000000 x100 = 25%
- Absence Rate per Department: Absence Rate per Department is a metric that measures the average rate of employee absences within each department of an organization. It helps evaluate the frequency and extent of employee absences in different areas of the company.
=(No. of Absence Hrs in a Dept/ Total Available Work Hrs in a Dept) x100
Example: Let's consider a company with three departments: Department A,Department B, and Department C. In a specific period, Department A had 100 absence hours, Department B had 200 absence hours, and Department C had 150 absence hours. The total available work hours in Department A were 5000, in Department B were 7000, and in Department C were 6500.
Absence Rate for Department A = 100/ 5000 × 100 = 2%
Absence Rate for Department B = 200/ 7000 × 100 = 2.86%
Absence Rate for Department C = 150/ 6500 × 100 = 2.31%
- Overtime Expense per Period: Overtime Expense per Period is a metric that measures the total cost incurred by an organization for overtime hours worked by employees during a specific period. It helps assess the financial impact of overtime work and the efficiency of workforce planning.
=Total Overtime Hours Worked x Overtime Hourly Rate
Example: Let's assume a company had a total of 500 overtime hours worked during a specific period, and the overtime hourly rate is $25.
Overtime Expense per Period = 500 hrs × $25 = $12500
- Training Expense per Employee: Training Expense per Employee is a metric that measures the average cost incurred by an organization to provide training and development opportunities to each employee. It includes all expenses related to training programs, workshops, seminars, e-learning courses, materials, trainers' fees, and any other costs directly associated with employee learning and development.
=Total Training Expenses/ No. of Employees
Example: Let's assume a company spent $100000 on various training programs, workshops, and development initiatives in a specific period. During that time, the company had 200 employees.
Training Expense per Employee = $100000/200 = $500
- Turnover Rate: Turnover Rate is a metric that measures the rate at which employees leave an organization over a specific period of time. It indicates the proportion of employees who exit the company, voluntarily or involuntarily, in relation to the total workforce during that period.
=(No. of Employees who Left/ Average No. of Employees) x100
Example: Let's say a company had 50 employees at the beginning of the year and during that year, 10 employees left the company.
Turnover Rate = 10/ 50 × 100 = 20%
- Turnover Rate per Department: Turnover Rate per Department is a metric that measures the rate at which employees leave specific departments within an organization over a specific period of time. It helps assess the turnover or attrition rate within different areas or teams of the company.
=(No. of Employees who Left a Dept/ Average No. of Employees in the Dept) x100
Example: Let's consider a company with three departments: Department A, Department B, and Department C. During a specific period, Department A had 20 employees, Department B had 30 employees, and Department C had 50 employees. In that period, Department A had 3 employees who left, Department B had 5 employees who left, and Department C had 8 employees who left.
Turnover Rate for Department A = 3/20 × 100 = 15%
Turnover Rate for Department B = 5/30 × 100 = 16.67%
Turnover Rate for Department C = 8/50 × 100 = 16%
- Cost of Absenteeism: Cost of Absenteeism is a metric that measures the financial impact of employee absences on an organization. It quantifies the direct and indirect costs incurred by the company due to employee absences, including both planned and unplanned time off.
=(Total Absenteeism Hours x Hourly Wage) + Additional Cost Incurred
Additional Costs Incurred can include expenses related to hiring temporary staff, overtime payments to cover workload, decreased productivity, impact on customer service, training replacement employees, or any other costs directly associated with managing and addressing employee absences.
Example: Let's assume a company has a total of 1000 absenteeism hours in a specific period. The average hourly wage of employees is $25. Additionally, the company incurred additional costs of $5000 due to absenteeism-related factors such as overtime payments and temporary staffing.
Cost of Absenteeism = (1000 hrs × $25) + $5000 = $30000
- Cost of Turnover: Cost of Turnover is a metric that measures the financial impact of employee turnover on an organization. It quantifies the direct and indirect costs incurred as a result of employees leaving the company and the subsequent recruitment and onboarding of new employees.
=Separation Costs + Replacement Cost + Training Costs + Productivity Costs
The components of the formula are as follows:
- Separation Costs: Expenses related to employee separation, including exit interviews, administrative tasks, and any other costs associated with the departure process.
- Replacement Costs: Expenses incurred in the recruitment and hiring process, such as job advertising, agency fees, pre-employment assessments, and background checks.
- Training Costs: Expenses associated with training and onboarding new employees, including orientation programs, job-specific training, and mentorship.
- Productivity Costs: The decrease in productivity during the transition period as new employees ramp up to full productivity levels, including the time spent by managers and colleagues in assisting and mentoring new hires.
Example: Let's consider a company that experiences turnover of 10 employees in a specific period. The separation costs per employee are $2000, replacement costs are $5000 per employee, training costs per employee are $3000, and productivity costs per employee are estimated to be $10000.
Cost of Turnover = (10 × $2000) + (10 × $5000) + (10 × $3000) + (10 × $10000) = $190000
- HR to Employee Ratio: HR to Employee Ratio is a metric that measures the number of HR staff members relative to the total number of employees in an organization. It indicates the HR department's capacity and workload in managing and supporting the organization's workforce.
=No. of HR Staff/ No. of Employees
Example: Let's assume a company has 5 HR staff members and a total of 200 employees. HR to Employee Ratio = 5/ 200 = 0.025
- HR Cost to Full-Time Equivalent (FTE): HR Cost to FTE is a metric that measures the average cost incurred by an organization for HR-related expenses per Full-Time Equivalent employee. It helps assess the cost efficiency of the HR function in relation to the size of the workforce.
=Total HR Costs/ Total FTE Employees
Example: Let's assume a company has total HR costs of $500000 and employs 100 Full-Time Equivalent employees.
HR Cost to FTE = $500000/ 100 = $5000
- Promotion Rate: Promotion Rate is a metric that measures the proportion or percentage of employees who are promoted within a specific period. It indicates the rate at which employees advance to higher positions or take on increased responsibilities within the organization.
=(No. of Employees Promoted / Total No. of Employees) x100
Example: Let's consider a company that has 500 employees and promotes 50 employees to higher positions or roles within a given year.
Promotion Rate = 50/500 × 100 = 10%
- Time to Fill: Time to Fill is a metric that measures the average amount of time it takes to fill a vacant position within an organization. It quantifies the duration between the initiation of the recruitment process and the successful placement of a candidate in the position. =Total days to fill vacant positions / No. of vacant positions
Example: Let's say a company had three vacant positions during a specific period. The time taken to fill those positions was as follows: Position 1 took 30 days to fill, Position 2 took 45 days to fill, and Position 3 took 60 days to fill.
Time to Fill = (30 + 45 + 60) / 3 = 45 days
- Time to Hire: Time to Hire is a metric that measures the average amount of time it takes to complete the hiring process for a new employee. It quantifies the duration between the initiation of the recruitment process and the candidate's acceptance of the job offer. =Total days to hire / No. of hires
Example: Let's assume a company made 10 hires during a specific period, and the time taken to complete the hiring process for each hire was as follows: Hire 1 took 20 days, Hire 2 took 25 days, Hire 3 took 30 days, and so on.
Time to Hire = (20 + 25 + 30 + ... + 𝑛)/10
To calculate the precise Time to Hire, you would need to sum up the total number of days it took for each hire and divide it by the number of hires.
- Cost per Hire: Cost per Hire is a metric that measures the average cost incurred by an organization to hire a new employee. It quantifies the expenses associated with the recruitment and onboarding process, including sourcing candidates, advertising, interviewing, selection, and orientation. =Total recruiting costs / No. of hires
Example: Let's assume a company incurred $50, 000in recruiting costs during a specific period and made 10 hires.
Cost per Hire = $50,000 / 10 = $5000
- First Year Attrition: First Year Attrition is a metric that measures the rate at which employees leave an organization within their first year of employment. It indicates the proportion of employees who voluntarily or involuntarily separate from the company during their initial year of service.
=(Number of Employees who left within the first year / No. of employees hired) x100
Example: Let's say a company hired 50 employees during a specific year, and out of those, 10 employees left the company within their first year.
First Year Attrition Rate = (10 / 50) × 100 = 20%
- Applicants per Opening: Applicants per Opening is a metric that measures the number of job applicants received for each job opening within an organization. It indicates the level of interest and competition among job seekers for available positions.
=Total No. of Applicants / No. of job openings
Example: Let's say a company receives 500 job applications for 10 job openings.
Applicants per Opening = 500 / 10 = 50
- Selection Ratio: Selection Ratio is a metric that measures the proportion of job applicants who are ultimately selected for a position within an organization. It indicates the competitiveness of the selection process and the percentage of candidates who successfully move forward in the hiring process.
=No. of hires / No. of applicants
Example: Let's say a company receives 500 job applications and hires 10 candidates.
Selection Ratio = 10 / 500 = 0.02
- Offer Acceptance Rate: Offer Acceptance Rate is a metric that measures the percentage of job offers extended by an organization that are accepted by candidates. It indicates the success rate of the organization in securing the commitment of selected candidates to join the company.
=(No. of offers accepted / No. of offers extended) x100
Example: Let's say a company extended job offers to 20 candidates, and out of those, 15 candidates accepted the offers.
Offer Acceptance Rate = (15 / 20) × 100 = 75%
- Vacancy Rate: Vacancy Rate is a metric that measures the percentage of vacant positions within an organization during a specific period. It indicates the extent to which positions are unoccupied or unfilled, and reflects the organization's ability to maintain a fully staffed workforce.
=(No. of vacant positions / Total no. of positions) x100
Example: Let's say a company has 50 vacant positions out of a total of 500 positions.
Vacancy Rate = 50 / 500 × 100 = 10%
- Application Completion Rate: Application Completion Rate is a metric that measures the percentage of job applicants who successfully complete the entire application process. It indicates the level of engagement and commitment of applicants in completing the required steps and providing all necessary information during the application process. =No. of completed applications / No. of started applications
Example: Let's say a company received 200 applications for a specific job posting, and out of those, 150 applicants successfully completed the entire application process.
Application Completion Rate = (150 / 200) × 100 = 75%
- Promotion Rate: Promotion Rate is a metric that measures the percentage of employees within an organization who are promoted to higher-level positions during a specific period. It indicates the organization's ability to recognize and reward employee growth, development, and advancement.
=(Number of promoted employees / Total no. of employees) x100
Example: Let's say a company promoted 20 employees out of a total of 200 employees.
Promotion Rate = (20 / 200) × 100 = 10%
- Succession Rate: Succession Rate is a metric that measures the percentage of key positions within an organization that have identified successors ready to assume those positions in the event of a vacancy or planned transition. It assesses the organization's preparedness for leadership and critical role succession. =(No. of key positions with identified successors / Total no. of key positions) × 100
Example: Let's say a company has identified successors for 80 key positions out of a total of 100 key positions.
Succession Rate = (80 / 100) × 100 = 80%
- Competency Rate: Competency Rate is a metric that measures the percentage of employees within an organization who possess the required competencies or skills to perform their job effectively. It assesses the level of alignment between the competencies expected for a particular role and the competencies demonstrated by employees in that role. =Number of Employees Possessing Required Competencies/ Total No. of employees in the role) x100
Example: Let's say a company has 100 employees in a specific role, and after evaluating their competencies, it is determined that 80 employees possess the required competencies. Competency Rate = 80/100 × 100 = 80%