Before we go over 6 HR metrics we first have to define what HR Metrics are. A simple definition:  HR metrics are used to find the efficiency of HR policies.

Common examples of HR metrics are turnover rates, training costs, but more valuable metrics are emerging today that include diversity, inclusion, and equality representation. In this article, we will outline 4 HR metrics that can provide invaluable insight to you. 

1. Career Path Ratio

This ratio measures the current mobility of employees within the company. This is important because it shows HR managers how promotions are affecting the company. It also shows whether employees are leaving the company or growing within. Additionally, through this measure, you can look into the mobility issues. This includes finding out if employees are leaving due to a lack of opportunities at the company or because others being promoted ahead of them. This ratio is found by dividing the number of promotions by the lateral movement (determined with this formula =  number of promotions/lateral moves). This ratio is only helpful if your organization has a highly organized job tier and if they have a clear understanding of each tier. 

2. Quality of Hire

This metric is based on what you measure as “quality.” While it is hard to design, this metric is very valuable because you can tailor it to the results that you are trying to find. The best part of this ratio is that you can make your own rating system for the “quality” that you have previously defined. For example, in a recruiting firm, your “quality” measure could be the number of placements or the total number of submittals. This ratio all depends on what is important to your business.

3. Compa-Ratio

The formula commonly used by compensation professionals to assess the competitiveness of an employee’s pay level involves calculating a ‘“compa-ratio’”. Compa-ratio is the short form for the Comparative ratio. Compa-ratio is calculated as the employee’s current salary divided by the current market rate as defined by the company’s competitive pay policy. Compa-Ratios are position-specific. Each position has a salary range that includes a minimum, a midpoint, and a maximum. A compa-ratio divides an individual’s pay rate by the midpoint of a predetermined salary range. A compa-ratio of 1.0 means that the employee is paid at the exact midpoint of the range, whereas values higher or lower than 1.0 indicate how they are paid relative to the midpoint. An employee’s progression through the pay range may be directly related to his or her performance. It’s important to note that you don’t need a pay range as a basis for comparison to benefit from compa-ratios, you can also compare your employees’ salaries to appropriate benchmarks from market data. Comparing the salary of your CFO, for example, to the median salary for institutions with the same classification can help you determine how your institution’s pay compares to your peers. 

4. Top Performer Retention Rate

This metric can help organizations catch problems before they arise by identifying why your best help isn’t staying. This metric is valuable to HR also because it makes you think about what makes up a “top performer,” An important factor of this is not counting new hires in your calculations, as they are too green for this calculation. You need to determine what makes a “top performer” and choose a time period for this measure. The formula for this requires the number of top performers at the time period duration you have selected. You divide the end number by the start number then multiply by 100. 

Overall, HR metrics are an easy way to keep track of your employees and company performance as a whole. When used and understood, these metrics can help develop your HR department and provide you with incredible insight into your organization. 

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