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Assignment #2

This document discusses human resource metrics that can measure the effectiveness and efficiency of an organization's HR department and employees. It describes 7 common types of HR metrics: turnover rate, absentee rate, job satisfaction rate, cost per hire, revenue per employee, cost of HR per employee, and billable hours per employee. For each metric, the document provides a description, whether it is measurable, the formula to measure it, and typical or standard values. The overall purpose of these metrics is to help HR and management evaluate the performance and value of the HR function and workforce.

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170 views5 pages

Assignment #2

This document discusses human resource metrics that can measure the effectiveness and efficiency of an organization's HR department and employees. It describes 7 common types of HR metrics: turnover rate, absentee rate, job satisfaction rate, cost per hire, revenue per employee, cost of HR per employee, and billable hours per employee. For each metric, the document provides a description, whether it is measurable, the formula to measure it, and typical or standard values. The overall purpose of these metrics is to help HR and management evaluate the performance and value of the HR function and workforce.

Uploaded by

Malik
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Metrics for Human Resource Performance

Human Resource Metrics


Human resource metrics are different measurements that are used to show the value that the
human resources function provides to the organization. These metrics also help in monitoring
the productivity and performance of HR team in an organization.

Types of Human Resource Metrics


Following are the types of human resource metrics:
1) Metrics that measure the effectiveness of the human resources function
2) Metrics that measure the efficiency of the human resources department
3) Metrics that measure the effectiveness of the employees within the organization

1) Metrics that measure the effectiveness of the human resources function

These metrics are used to gauge the effectiveness of various HR responsibilities and initiatives
such as hiring, employee retention, training and labor costs. These metrics are used to improve
the effectiveness of HR department. The goals for these metrics are usually set by the
management of organization. HR department monitor these metrics to ensure that they are
meeting or exceeding their goals. Following are some of the common metrics for HR
effectiveness:
1) Turn Over Rate
2) Absentee Rate
3) Job Satisfaction Rate
4) Cost Per Hire
5) Revenue Per Employee
6) Cost of HR Per Employee
7) Billable Hours Per Employee
8) Employee Engagement
9) Cost of Training Per Employee
10) Employee Over Time
11) Ratio of HR Professionals To Employee
12) Ratio of HR Business Partners Per Employee
13) Effectiveness of HR Software

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1) Turn Over Rate
Description
Employee turnover rate is used to determine whether the employees in an organization are
happy or not. If an organization is frequently losing employees and having to hire new ones
there might be an issue with that organization.
Measurable
Yes it is measureable
Formula to Measure
Average number of employees= ((Number of employees beginning of year) + (Number of
employees end of the year))/2
Turnover rate = Number of employee terminations ÷ Average number of employees
Standard Values
20% turnover rate is average across most industries and a good goal to strive for would be 10%
or less than that.

2) Absentee Rate
Description
Employee Absentee rate is the amount of time that employees are absent from work due to any
reason for instance sick leave, casual leave, annual leaves. It is a measure of employee health
and wellness as its common knowledge that unhappy employees take more time off.
Measurable
Yes it is measureable
Formula to Measure
Absentee Rate = Workdays missed ÷ Total workdays scheduled
Standard Values
2.5 % absentee rate is average across most industries

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3) Job Satisfaction Rate
Description
Job Satisfaction rate is used to determine that how much an employee is satisfied with his/her
job. It can be measured on a survey much like a customer satisfaction survey based on any kind
of scale.
Measurable
Yes it is measureable
Formula to Measure
Job satisfaction rate = Number of people who report being satisfied ÷ Total number of
employees
Standard Values
37 % job satisfaction rate is average across most industries

4) Cost Per Hire


Description
Cost Per Hire is used to determine the cost of hiring & on boarding new employee for an
organization. Cost Per hire depends on hiring volume.
Measurable
Yes it is measureable
Formula to Measure
Cost per hire = All recruiting and HR staffing costs ÷ Number of new hires
Standard Values
A recent survey by the Society of Human Resource Management (SHRM) found that the
average cost per hire is just over $4,000. This number is the average across all the companies
SHRM surveyed.

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5) Revenue Per Employee
Description
Revenue Per Employee is the financial ratio that measures the revenue generated by
each employee  of organization on average.
Measurable
Yes it is measureable
Formula to Measure
Revenue per employee = Total revenue ÷ Total number of employees
Standard Values
The average revenue per employee is about $190k to $210k per year on SaaS companies

6) Cost of HR Per Employee


Description
Cost of HR Per Employee is the total expense incurred by the Human Resources (HR)
Department divided by the total number of employees working for the organization over the
same period of time.
Measurable
Yes it is measureable
Formula to Measure
Cost of HR per employee = Total HR salary & benefits ÷ Number of employees

7) Billable Hours Per Employee


Description
Billable Hours Per Employee are the actual hours that an employee is required to do the specific
task. Only these hours are billed to client. To calculate it one needs to determine the time frame:
week, month, quarter or annual. Then take the number of hours billed and divide it by the
number of employees.
Measurable
Yes it is measureable.

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Formula to Measure
Billable hours = Billable hours ÷ Total hours worked

Standard Values
Good goal to strive for would be 35 billable hours per week for full-time employees

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