5 Useful Metrics to Measure HR Effectiveness

In every organization, the performance of each department is tracked via key performance indicators (KPIs). These KPIs serve as benchmarks for evaluating the effectiveness of departmental initiatives and strategies, helping to identify areas of improvement and ensure alignment with overall organizational goals. 

While other departments track metrics like revenue, output, and customer satisfaction, the HR department often deals with subjective matters like employee morale, company culture, and interpersonal dynamics, which can be challenging to quantify. In this article, we’ll discuss five useful metrics your organization can use to measure HR effectiveness.

1. Employee Net Promoter Score

An employee Net Promoter Score (eNPS) measures how likely your employees are to recommend your organization as a place to work or an organization to do business with. It is calculated by asking employees to rate on a scale of 0 to 10 how likely they are to refer your organization to others, and then subtracting the percentage of detractors (those who rate 6 or lower) from the percentage of promoters (those who rate 9 or 10). 

A higher eNPS indicates a more positive and loyal workforce and strengthens your brand as an employer of choice, while a lower eNPS may indicate significant dissatisfaction among employees.  You can analyze your results based on various employee demographics, such as tenure, position, department, age, gender, or race. This enables your HR team to identify trends related to issues like employee burnout, leadership satisfaction, or equity concerns. 

For instance, if female employees consistently report lower satisfaction than male counterparts, you can investigate potential cultural or gender-related issues. Utilizing eNPS in this manner allows you to gain insights into workplace dynamics and avoid complex survey questions that may hinder open responses.

2. Employee Turnover Rate

Employee turnover rate measures the rate at which employees leave an organization over a certain period of time, typically expressed as a percentage. It is an important indicator of workforce stability and organizational health.  It can be categorized into voluntary turnover, where employees leave voluntarily (e.g., resignations, retirements), and involuntary turnover, where employees are terminated or laid off by the organization.

You can calculate your employee turnover rate by dividing the number of employees who leave the organization during a specified period by the average number of employees during that same period, then multiplying by 100 to express the result as a percentage. 

For example, if you had 10 employees leave during a year, and the average number of employees during that year was 100, the turnover rate would be 10%. Your goal should be to have a low employee turnover rate, as that is an indication of greater stability and continuity within your workforce.

3. Absenteeism Rate

This metric measures how often your employees are absent from work due to various reasons, such as illness, injury, personal issues, etc. You calculate this by dividing the total number of days or hours lost due to absenteeism by the total number of days or hours scheduled forto work during that period. It will be more helpful to measure unexcused and excused absences separately.

Knowing whether absences are excused or unexcused allows employers to address the root causes effectively. Excused absences may be due to legitimate reasons like illness or family emergencies, while unexcused absences may signal potential issues likeemployee disengagement or disciplinary problems.

4. Cost Per Hire

This metric measures how much it costs your organization to recruit and hire a new employee. It is calculated by adding up all the internal and external costs associated with the hiring process, such as advertising, screening, interviewing, testing, etc., and dividing them by the number of hires made during that period.

Cost per hire helps you evaluate how efficiently you are able to attract, evaluate, and onboard new employees in your organization. A lower cost per hire generally indicates that your organization is able to fill positions with minimal resources and expenses, which suggests a more efficient recruitment process. Similarly, a higher cost per hire may signal inefficiencies or challenges in the recruitment process that need to be addressed.

5. Internal Mobility Rate

Internal mobility rate measures how many of your employees are moving within your organization to different roles, departments, or locations. It is calculated by dividing the number of internal transfers or promotions by the total number of employees during that period. Internal mobility encompasses various types of movements, including promotions, lateral transfers, demotions, reassignments, and rotations. It reflects your organization's ability to develop and retain talent, provide career advancement opportunities, and adapt to changing business needs.

Improve Your HR Effectiveness By Tracking the Right Metrics

There are several useful metrics that can help you measure the effectiveness of your HR initiatives. But, you should consider the specific goals, challenges, and context of your organization when choosing and applying these metrics. It's also good to look at both quantitative and qualitative data, and then compare them to industry standards over time to get a more comprehensive and accurate picture of your HR performance.

At The Mission, we recognize how crucial it is for HR to be efficient and effective in making a business successful. Our HR outsourcing services are crafted to help you refine your HR strategies, simplify procedures, and cultivate a top-notch workforce. You can partner with The Mission today to strengthen your HR efforts and watch your company’s profitability and productivity increase. Contact us today to learn more about our services.