In today’s environment organizations generate large volumes of data. It’s important to analyze and highlight necessary information in order to measure efficiency, productivity and other factors of improvement.  That’s when KPIs come into action. They help to visualize data and make it easier to understand.

Let’s see what is KPI in HR environment:

HR KPIs are measurable values used by HR Teams to track and determine their progress on specific business objectives. These KPIs help determine how well HR Teams are performing.

These are Compensation KPIs, Culture KPIs, Employment KPIs and Performance KPIs.

 Compensation KPIs

• Percentage of Cost of Workforce: The cost of the workforce as compared to all costs can be measured by summing all salaries and dividing by the total company costs within a given period.
• Salary Competitiveness Ratio (SCR): Used to evaluate the competitiveness of compensation options. Can be determined by dividing the average company salary by the average salary offered from competitors or by the rest of your industry.
• Health Care Expense per Current Employee: Provides an understanding of the comprehensiveness of a company’s health care plan. Can be determined by taking the total price of health care costs divided by all employees.
• Benefits Satisfaction: This allows a company to see how satisfied an employee is with specific benefits they are offered. Can be determined through surveys and can be used to break down each benefit individually.
• Employee Productivity Rate: Helps to measure workforce efficiency over time. Can be determined by taking the total company revenue and dividing it by the total number of employees.
• Return on Investment (ROI): As an organization, you want to ensure that the dollars you are putting into training your employees is paying off. Can be defined as the profit per dollar invested in social compensations/wages.

Culture KPIs

• Employee Satisfaction Index: This is a key metric underlying talent retention. Using a company-wide survey can be helpful in gauging employee happiness.
• Number of Employee Satisfaction Surveys: Helps to understand how much effort is being put into maintaining and improving employee happiness.
• Percentage of Employees Trained in Company Culture: Evaluates the importance and understanding of company-wide organizational culture.
• Percentage of Vacation Days Used: Helps in showing the company attitude toward a healthy work-life balance. Determined by observing the number of vacation days used as compared to those unused.
• Net Promoter Score: Measures how likely an employee is to recommend their organization as a place to work. This is determined by the difference in percentage of promoters and detractors.

 Employment KPIs

• Absenteeism Rate: Gives perspective on the amount of labor and productivity lost due to sickness and otherwise unpredicted leave. Formula: (Total number of lost workdays due to absence) / (Number of available workdays in an organization) = (Absenteeism rate)
• Number of Full-Time Employees: Keeps tabs on the growth of the company workforce over time.
• Number of Contractors: Examines the growth in associated workers over time. Can be compared to the number of full-time workers to better understand workforce trends.
• Average Tenure: The average length of time that an employee spends with the company helps determine employee satisfaction and talent retention.
• Voluntary Termination Rate: Determined by taking the number of employee-led resignations from the company over the total number of terminations in a given time period.

• Retirement Rate: This metric is particularly important for any organization developing a strategic workforce plan. Can be calculated by looking at the number of employees who retired as a percentage of the headcount.
• Average age of Retirement: The summed age of all retiring employees divided by the number of retiring employees. Being aware of these trends aids in forecasting retirement and planning for workforce replacement.
• New Hire 90-Day Failure Rate: Helps in determining how successful the talent acquisition process is at finding the right fit for jobs.
• First Year Voluntary Termination Rate: Reflects on how welcoming the company is to new hires. A high percentage suggests that the right people are being hired, but not embraced.
• Average Time to Fill a Job Vacancy: Tracks how efficient the hiring process is in terms of time resources used to fill a vacant spot.
• Hiring Process Satisfaction Rate: Provides perspective on how well the process works from the employee’s perspective.
• Cost per Hire: Acknowledges the amount of resources invested into acquiring the best talent. Can be determined by averaging the total marketing, hiring process, and referral (if necessary) costs per hire.
• Effectiveness of Training: Helps the company to understand how comfortable new hires feel after their training vs. before. Typically determined through a post-training survey.
• Training Cost per Employee: Helps to measure the amount invested in onboarding new hires.
• Percentage of Employees Trained: Helps a company to see how quickly new hires are being onboarded.
• Diversity Rate: Keeps track of how successfully the organization is creating an environment that fosters an open and accepting community.
• Number of D&I Initiatives Implemented: The number of D&I initiatives implemented measures organizational commitment to establishing and maintaining a culture of diversity and inclusion.
• Attrition Rate: Helps a company to figure out how successful they are at retaining talent. Determined by dividing the number of employees who left the company in a given period by the average number of employees in that time period.
• Turnover Rate for Highest Performers: Turnover of top performers in particular is negative and comes at a higher cost. This metric helps to indicate the success of retention efforts and aids planning for talent replacement. Can be determined by dividing the number of high performers to leave in the past year by total high performers identified.
• Average Time to Find a Hire: Helps track the efficiency of hiring process.
• Candidates Interviewed per Hire: Determined by calculating the total number of candidates interviewed by the total number of hires in a particular hiring period.
• Yield Percentage: This is the percentage of candidates remaining after each round of elimination in hiring process. A low percentage might indicate the need to update an unclear or unattractive job posting, and a high percentage indicates a larger number of qualified candidates with whom to continue the hiring process.
• Knowledge Achieved with Training: Helps the company to see not the price of the training specifically, but whether it was effective. It is critical to see if the individuals retained knowledge well enough to apply. Can be determined by creating an exam, and monitoring exam pass rate %, average score %, and pre/post training %.
• Diversity Numbers/Nationalities in The Work Force: Workplace diversity helps to cultivate innovation and competitive advantage. Diversity of nationalities and ethnicities can be calculated by noting the differences among employee demographic segments.
• Acceptance Rate: Dividing the number of acceptances by the number of offers allows organizations to get a sense of how successful their recruitment strategies are. Industry benchmarks can then be a helpful comparison.
• Employee productivity rate: Although this metric is hard to calculate, it says something about the capacity of growth in terms of production of human capital.
• Employee satisfaction index: Employee satisfaction is measured through employee attitude and engagement surveys. Dissatisfaction is an important cause for employee turnover.
• Employee engagement index: Employee engagement is also measured through attitude or engagement surveys. High employee engagement predicts higher productivity, better customer service, lower turnover, and many other relevant and positive outcomes.
• Employee innovation index: Innovation is also measured through attitude or engagement surveys. Innovation is more and more often a key driver of business success. It’s the role of HR to enable this innovation.
• Involuntary turnover rate: Not all turnover is voluntary. This is the number of employer-led resignations as a percentage of the total resignations.
• Voluntary turnover rate: This is the number of employee-led resignations as a percentage of the total resignations.
• Unwanted turnover rate: Not all turnover is bad. It’s usually positive when bad performers leave. This is the number of good performers leaving as a percentage of all performers.

Performance KPIs

• Percentage of Job Candidates Who Meet Job Criteria: Helps in evaluating the effectiveness of job postings in reaching top candidates.
• Rate of Internal Job Hires: Shows the effectiveness of organizational talent development.
• Rate of Internal Referral Hires: Allows managers to see the value added when current employees help to identify and acquire talent.
• Performance of New Hires: The performance of new hires can be compared to that of other employees. Typically done by evaluating performance reports.
• Internal Promotions Vs. External Hires: This ratio measures how many people already working at a company are considered for internal promotion versus the number of externally attracted people. Can be particularly effective when looking at organizational succession planning.
• Internal Promotion Rate: Internal promotions indicate successful retention and growth of top performers. Can be determined by dividing the number of promoted individuals by the total number of employees.
• Suggestions per Employee: Evaluates employee engagement in improving business processes and reflects on the openness of a company to employee input.
• HR-to-FTE Ratio: The number of HR full time equivalents divided by the total number of full-time equivalents. Helps determine HR’s ability to provide services. Larger organizations typically have a smaller ratio, but more HR staff overall, than small businesses.
• Cycle Time to Process Payroll: Shows timeframe of process, giving projection if assistance/updated process is needed. This is the number of business days in the payroll process from start to finish.
• Cycle Time to Resolve Payroll Errors: The number of business days it takes to resolve payroll error reported by employees. A high number of days could indicate the need to review your payroll process.
• Percentage of Workforce Below Performance Standards: This measure keeps tab on the amount of low-performing employees in an organization.
• Quality of hire: The quality of hire is the percentage of new hires that are given a good rating by their manager during their performance review. Quality of hire indicates how effective HR is in recruiting and selecting candidates. Consistently maintaining a high quality of hire rating enables the organization to reach its strategic goals.