Measuring HR Success: 7 HR Metrics That Matter

Measuring HR success involves taking a comprehensive look at a range of metrics that capture the efficiency and effectiveness of human resources practices within an organization. These metrics are crucial for understanding how well the HR department is supporting the organization's goals and the overall satisfaction and productivity of the workforce.

“Metrics essentially give us a way of qualifying the health of our organization, and, to that end, HR metrics are now different,” Ross Sparkman, senior director of workforce strategy at Walmart and former head of strategic workforce planning for Facebook/Meta, tells the Society for Human Resource Management (SHRM). “They’re measuring how the HR function is doing as a whole and also how we’re leveraging the people in the organization to maximize the performance of the company.”

Below are 7 key HR metrics, their calculation methods, significance, and benchmarks when available.

1. Turnover Rate

The turnover rate measures the percentage of employees who leave an organization during a certain period of time. To calculate it, divide the number of employees who leave by the average number of employees during the period, then multiply by 100.

Why It Matters:

High turnover can indicate dissatisfaction with the workplace, poor fit, or competitive pressures. Benchmarks vary by industry, but generally, a turnover rate of around 10% is considered healthy in many sectors.

But don’t take the turnover rate at face value; always interrogate it more closely. As Gallup writes, “If your overall turnover number is 10%, but the people heading for the exits are from the sales force's top tier, you have a serious problem. On the other hand, if the 10% who are leaving are from the bottom end of your sales force, your turnover situation could actually improve the quality of your organization.”

How to Improve:

Enhance employee satisfaction through engagement initiatives, career development opportunities, competitive compensation, and recognition programs. Conduct exit interviews to understand the reasons behind departures and address systemic issues. For more ways to improve the turnover rate of your business, check out our blog, Top 12 Strategies for Retaining Top Talent. 

2. Cost Per Hire

This metric calculates the total costs associated with recruiting and hiring new employees. Add up all internal and external recruiting costs and divide by the number of hires in a given period.

Note, however, that this metric yields the cost per all hires. It might also be worthwhile segmenting into separate categories, like cost per successful hire (those that last longer than a certain timeframe or perform at a certain level). “Really, cost-to-hire should be cost-to-good-hire,” Ben Yurchak, president of analytics firm KnowClick, tells SHRM. You can evaluate “good hires” with measures like performance ratings, retention rates, and productivity levels.

Why It Matters: 

This metric helps organizations understand the efficiency of their recruitment processes. As a benchmark, the average cost per hire in the U.S. can range from $4,700 for typical employees to $28,329 for executives, according to the Society for Human Resource Management (SHRM), though these figures can vary tremendously.

How to Improve: 

Optimize recruitment channels to focus on those with the best ROI, streamline the hiring process to reduce time and resources spent, and leverage employee referrals to reduce costs. This is also an area in which getting outside from a staffing service, advisor, or PEO help can potentially optimize costs.

Note: Be wary of evaluating metrics like cost per hire in isolation; they are never more than one data point in a larger story. ​“[These metrics] have to be looked at holistically,” says Rishi Agarwal, a partner and people analytics leader for advisory firm PwC.

3. Time to Fill

Time to fill measures the number of days from when a job opening is posted until an offer is accepted. Calculate the average number of days from job posting to job acceptance over a set period.

Why It Matters:

This recruitment metric reflects the efficiency of the recruitment process. A shorter time to fill can indicate a more efficient hiring process. The benchmark varies greatly across industries but typically ranges from 20 to 40 days.

For example, leisure and hospitality have an average time to hire of 20.7 days, but government averages 40.9. The health services sector tops the list at 49 days average time to fill.

How to Improve: 

Streamline the recruitment process with clear job descriptions, efficient screening methods, and structured interviews. Leverage recruitment software and build talent pools for quicker placements.

4. Employee Satisfaction/Engagement Score

This metric assesses how satisfied or engaged employees are with their jobs and the company. Usually derived from survey data, scoring can be based on a scale (e.g., 1-10) across various dimensions of job satisfaction and engagement. It’s often easier hiring an outside firm to measure this metric.

Why It Matters:

High satisfaction and engagement are correlated with higher productivity, better customer service, and lower turnover. Benchmarks in this area vary too much to define here, in part because different ways of measuring employee satisfaction and engagement themselves can vary tremendously. And like turnover rates and cost per hire, these scores can obscure more complex dynamics.

How to Improve: 

Anything that improves employee experience will help. Additionally, services like PEOs can make a surprisingly big difference with employee satisfaction.

5. Absenteeism Rate

Absenteeism is the rate at which employees are absent from work. Divide the total number of lost workdays by the total number of available workdays, then multiply by 100.

Why It Matters:

 High absenteeism can indicate poor job satisfaction, engagement, or workplace issues. It’s also a rough indicator of lost productivity. The benchmark for a healthy absenteeism rate is typically below 1.5%. The average rate was 2.9% in 2021, according to BLS.

How to Improve:

Address workplace issues that contribute to absenteeism, such as employee burnout, health and wellness, and work-life balance. Implement flexible working arrangements and employee support programs.

6. Promotion Rate

This is the rate at which employees are promoted within the organization. Divide the number of employees promoted by the total number of employees, then multiply by 100.

Why It Matters: 

A healthy promotion rate indicates opportunities for growth and development within the company, impacting employee retention positively. Benchmarks can vary, but promotion rates of 8-10% annually can be indicative of healthy internal mobility. Smaller businesses and businesses operating in technology, professional services, financial services and manufacturing tend to have higher promotion rates than others.

How to Improve:

To enhance the promotion rate within your company, consider implementing the following strategies:

1. Career Development Programs. Create clear career development paths that help employees advance within a company. Offer opportunities for skill development, training programs, and mentorships to prepare them for promotion.

2. Conduct Regular Performance Reviews. Regularly evaluate employee performance to identify high performing employees that have the potential for advancement. Offer constructive feedback and guidance to support their career progress.

3. Define Promotion Criteria. Clearly outline the criteria and requirements for promotions. Make the promotion process transparent by explaining how decisions are made and what factors are considered.

7. Diversity and Inclusion Metrics

Diversity metrics measure the composition of the workforce in terms of diversity (e.g., gender, race, age) and the inclusivity of the company culture. Organizations can determine diversity levels by various methods, including demographic analysis and survey data on inclusivity perceptions.

Why It Matters:

Diversity initiatives can be challenging to implement, but the business case in favor of promoting diversity is rock solid: diverse companies outperform others according to an array of measures. Diverse and inclusive workplaces are more innovative, resilient, and capable of attracting a wider talent pool. There are no fixed benchmarks, but progress towards representation that mirrors the broader labor market or community is positive.

When tabulating metrics, use benchmarks as a tool, not as a rule.

As organizations begin tracking metrics like these, it’s important to remember how the information should be evaluated and used. As SHRM writes, “When comparing benchmarking data, the information should be used as a tool for decision-making rather than as an absolute standard. Because organizations differ in their overall business strategy, location, size and other factors, any two companies can be well-managed, yet some of their human resource measures may differ greatly.”

“Take turnover,” asks Jennifer Currence, SHRM-SCP, president of HR strategy consulting firm OnCore Management Solutions. “High is bad, low is good. But what story is it telling? Why is it high or low? Is it recruiting? Demographics? Who’s retiring? Is it high in just one department? Why? Is there not enough training there? If not, who’s the manager for training in that area? The initial metric gives you a start to digging down deep.”

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