Key HR metrics: The most important metrics you should track
HR metrics measure how effective the results of your HR operations are, including elements such as employee retention and recruiting. That’s why they’re a great ally to your job as an HR professional – because they’re a way of identifying issues you didn’t know existed or pinpointing problems.
But, your time is limited and you probably can’t track every metric in the book. So what are the key HR metrics that should be part of your standard HR metrics dashboard?
Here’s an overview of HR metrics that matter:
What are the most important HR metrics?
There are metrics that most organizations track in some way or another because they’re extremely useful. These key HR metrics include:
- Cost per hire
- Time to hire / Time to fill
- Quality of hire
- Recruiting yield ratios
- Employee Turnover
- Revenue per employee
These are HR metrics examples, but there are other metrics, too, which, even if they’re not so widely tracked, they’re very useful to your HR operations. Two of these metrics are offer acceptance rate and new employee turnover rate, plus a qualitative metric “rejection reasons”.
What is an offer acceptance rate?
Offer acceptance rate (OAR) shows what percentage of candidates accepted your job offer. Here’s the formula to calculate OAR:
Sometimes, this key HR metric is expressed as a ratio. For example, if your company extended ten job offers in one month, and six candidates accepted, your offer acceptance ratio for that month is 10:6. Your offer acceptance rate is 60%.
OAR takes into account official offers from the moment they’re communicated to a candidate. Include official verbal offers too, even if they precede written ones. That’s because OAR would still be affected if a candidate rejected a verbal offer and prevented you from extending a written one.
It’s useful to keep a spreadsheet of your recruiting metrics, or keep track of it automatically in your Applicant Tracking System (ATS.)
Why OAR matters
Your offer acceptance rate helps you determine the overall success of your recruitment process. If your OAR is 90%, there’s good cause to believe your process works well. If your OAR drops to 30%, your hiring process is in trouble.
An OAR between 30% and 90% is harder to interpret. Track and compare your rates over time to identify changes. Calculating your offer acceptance rate monthly, quarterly or annually and by department, hiring manager or recruiter can give you more insight into potential problem areas.
Rejection reasons: A qualitative HR measurement
OAR is a high level HR KPI that doesn’t dig into much detail. Tracking qualitative data helps you understand candidates’ decisions better.
For measurements, you could track Glassdoor reviews where candidates rate their experiences and give reasons for offer rejection. Alternatively, you could send candidate experience surveys. Add a couple of open-ended questions asking candidates who rejected your job offer to elaborate on their reasons for turning you down. Avoid including multiple choice questions as they constrain candidates’ answers. You could also give this kind of survey to new hires to learn why they accepted your job offer.
Related: How to post a job on Glassdoor
After collecting data from candidates, you could compile a simple report like this:
- Ninety-percent of candidates had a positive experience with our hiring process
- Eighty-percent thought our interview process wasn’t challenging enough
- Seventy-percent thought our offers weren’t attractive
- Sixty-percent liked our company culture
These kinds of results may prompt you to rethink how difficult your hiring process is or explore new ways to bring your job offers up to industry standards. Here are a few common reasons candidates give for rejecting job offers and some possible remedies:
- Job offers aren’t competitive enough
- Final job offers don’t reflect job ads or discussions during the hiring process
- Candidates have issues with location, working hours etc.
- Candidates didn’t intend to work for your company
Going a step further: New hire turnover
Your overall turnover rate has many causes, but your new hire turnover is closely related to your recruiting and onboarding process. Any miscommunication may jeopardize a new hire’s future at your company.
To calculate new hire turnover, divide the number of new hires who left within a certain period (e.g. a year) after they were hired by the overall number of employees who left during the same period:
The definition of a ‘new hire’ varies. People who joined a company three, six or 12 months ago may be considered new hires.
Compare your new hire turnover with your overall turnover to see if your company has problems retaining new hires specifically.
How do you calculate HR metrics?
Apart from using HR metrics formulas, you can also automate data collection for a list of HR metrics. For example, recruiting software like Workable offer detailed and easy-to-read reports from data collected automatically from every stage of your hiring process. Here’s more on the most commonly used Workable reports.
