Essential HR Metrics: Tracking Key Performance Indicators

HR metrics measure how effective the results of your HR activities are, including elements such as employee retention and recruitment. That's why they're a huge help in your work as an HR professional - because they help you see things you didn't know about or identify problems.

But your time is limited, and you probably can't capture every single metric there is. So what are the most important HR metrics that should be included in your standard HR metrics dashboard?

Here you will find an overview of the most important HR metrics:

What are the most important HR metrics?

There are metrics that most companies track in one way or another because they are extremely useful. These important HR metrics include:

• Cost per setting
• Time to Hire / Time to Fill
• Quality of settings
• Recruitment yield rates
• Employee turnover
• Sales per employee

These are examples of HR metrics, but there are also other metrics that, although not tracked as commonly, are very useful for your HR work. Two of these key figures are the acceptance rate of offers and the fluctuation rate of new employees as well as a qualitative key figure “reasons for rejection”.

What is an offer acceptance rate?

The offer acceptance rate (OAR) indicates what percentage of applicants accepted your job offer. Here is the formula to calculate the OAR:

Sometimes this important HR metric is also expressed as a ratio. For example, if your company sent out ten job offers in a month and six applicants accepted them, the acceptance rate for that month would be 10:6. So your offer acceptance rate is 60%.

The OAR considers official offers from the moment they are communicated to an applicant. Also consider formal verbal offers, even if they precede written ones. This is because the OAR would also be affected if an applicant rejects a verbal offer, thereby preventing you from making a written offer.

It makes sense to keep a spreadsheet of your recruiting metrics or record them automatically in your Applicant Tracking System (ATS).

Why OAR is important

You can use the acceptance rate of your offer to determine the overall success of your recruiting process. If your OAR is 90%, you can assume your process is working well. If your OAR drops to 30%, your hiring process is in trouble.

An OAR value between 30% and 90% is more difficult to interpret. Track and compare your odds over time to see changes. Calculating offer acceptance rates by department, hiring manager, or recruiter on a monthly, quarterly, or annual basis can give you better insight into potential problem areas.

Reasons for rejection: A qualitative HR measurement

OAR is a high-level HR KPI that doesn't go into much detail. Tracking qualitative data helps you better understand applicants' decisions.

For measurement, you could track Glassdoor reviews in which applicants rate their experiences and provide reasons for rejecting an offer. Alternatively, you can also send surveys about applicants’ experiences. Add some open-ended questions asking candidates who declined your job offer to explain their reasons for declining. Avoid multiple-choice questions as they limit applicants' answers. You could also send this type of survey to new employees to understand why they accepted your job offer.

After collecting data from applicants, you could create a simple report like this:

• Ninety percent of applicants had a positive experience with our hiring process
• Eighty percent felt our interview process was not challenging enough
• Seventy percent felt that our offers were not attractive.
• Sixty percent liked our company culture

These results may lead you to reconsider the difficulty of your hiring process or find new ways to align your job offer with industry standards. Below are some common reasons applicants give for rejecting job offers, as well as some possible remedies:

• The job offers are not competitive enough
• The final job offer does not correspond to the job advertisements or the interviews during the recruitment process
• Applicants have problems with location, working hours, etc.
• The applicants had no intention of working for your company.

We go one step further: fluctuation in new hires

Your overall turnover rate has many causes, but new employee turnover is closely related to your recruiting and onboarding process. Any miscommunication can jeopardize the future of a new employee in your company.

To calculate new hire turnover, divide the number of new hires who left the company within a certain period of time (e.g. one year) after being hired by the total 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 can be considered new hires.

Compare new hire turnover to overall turnover to determine if your company is having trouble retaining new employees.

How do you calculate HR metrics?

In addition to using formulas for HR metrics, you can also automate data collection for a list of HR metrics. Recruitment software like IceHrm, for example, provides detailed and easy-to-read reports with data automatically collected at every stage of the hiring process.