The most important HR KPIs are employee turnover, time to hire, cost per hire, absenteeism, and labor cost as a share of revenue. Pick the ones that serve this year's company goal, and write down each formula and its data source so it is calculated the same way every time.
Step by step
- 1
Turnover rate
Employees who left during the period ÷ average headcount for the period × 100. The simplest average is the headcount at the start plus the headcount at the end, divided by 2.
- 2
Time to fill and time to hire
Time to fill is the number of days from approval of the hiring request to the candidate accepting the offer, while time to hire usually starts from the date the candidate applied. Choose one definition, write it down and stick to it.
- 3
Cost per hire
Total external and internal recruiting costs for the period ÷ number of hires in the period. External costs include ads and recruitment agencies, and internal costs include the time of recruiters and managers in interviews.
- 4
Absenteeism rate
Days of unplanned absence ÷ total scheduled working days for all employees in the period × 100, excluding annual leave approved in advance.
- 5
First-year turnover
Hires in a period who left before completing a year ÷ total hires in the same period × 100. It shows problems in selection and onboarding.
- 6
Labor cost to revenue
Total employee cost of salaries, contributions and benefits ÷ revenue for the period × 100. Track it as the company grows.
Comparing your numbers with other companies' before fixing how they are calculated leads to wrong conclusions. Fix the formula first, then compare your company with itself over time.
- HR metrics and formulas
- how to calculate employee turnover rate