Which HR Metric Matters Most?

What is one people analytics metric that matters most in HR?

It’s a question that feels like the HR version Sophie’s Choice. Still, when a range of talent professionals were asked to weigh in on which measurement deserve the greatest focus, here’s what they had to say: 

Vacancy Rate

While there are “sexier” metrics in people analytics, one of the most valuable for measuring multiple people-related organizational capabilities is vacancy rate (the number of vacant positions within the company ÷ the total number of positions x 100 equals = vacancy rate). It is a bit like a compound exercise (e.g., squats or bench press) in resistance training: Many different organizational “muscles” are involved in its outcome.  

Unlike time-to-hire, which primarily measures recruiting productivity, or retention, which only measures lagging exits, vacancy rate is the outcome of both the ability to hire well and to retain the people you hire. Accordingly, it indirectly measures many different organizational capabilities: quality of hire, quality of manager, quality of recruiter, and quality of the employee value proposition.  

It’s also an ideal baseline metric because it directly impacts operational outcomes like revenue and gross margin. Generally, I’ve found that the higher the vacancy rate, the lower the operating performance. — Eric Severson, Chief People and Belonging Officer, Neiman Marcus Group

Voluntary Terminations

There are many people analytics metrics that can prove useful if viewed the right way. Often, finding correlations between seemingly independent metrics can lead to much more action-oriented insights. One that I have found especially valuable is the correlation between having at least one formal, documented goal and voluntary terminations. 

We found that our employees are 33% less likely to voluntarily leave for another opportunity if they have at least one documented, active goal. Although there may be various reasons for this connection, it is ultimately a clear, easy action to take that can increase the likelihood of retention during a time where leaders feel at the mercy of a candidate’s market. — Molly Thiel, CHRO, Cielo

DE&I

The one people analytics metric that should matter most to HR teams is the diversity of talent within a given role or job function. Diversity, equity, and inclusion (DE&I) is a business imperative. The most senior leaders must own it as part of the strategy and culture they want to create, and HR provides the leadership for process, tools, and data. 

When businesses look at career advancement metrics for their employees, DE&I needs to be represented. What is our demographic representation of employees who are in leadership positions, who are seeking new opportunities for upskilling and career mobility, who are in talent pools, and which employees have certain skills? Once we know the answers to these questions, we can begin to implement programs to foster change. — Linda Ginac, CEO and Chairwoman, TalentGuard

Intention to Stay

While turnover rate, and especially regrettable turnover rate, are important metrics for HR teams, they are lagging indicators. It’s too late to take action on something that’s already in the rearview mirror. 

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To get ahead of the problem, focus instead on behavioral intentions, such as the percentage of employees who intend to stay at the organization for at least the next year. Then leverage employee experience and engagement surveys to understand the drivers of intention to stay vs. leave and action plan on those. — Brett Wells, Director of People Analytics, Perceptyx

New-Hire Turnover Rate

Considering the time, effort, and money it takes to find and hire qualified candidates, it would be great to see them remain with their employers. However, turnover is inevitable, even among new hires — and it happens for different reasons, such as finding the job to be different from what they expected, experiencing a poorly managed onboarding process, or feeling unsafe with the culture. 

According to the Work Institute’s employee retention report, 43% of new employees quit within their first 90 days. So HR teams need to track the turnover rate of new hires and discover ways to fix the problem. To calculate this, divide the number of new hire separations during your company’s probationary period by the total number of new hires within the same period. Then multiply the result by 100 to get the percentage. — Osasumwen F. Arigbe, HR Professional

Net Promoter Score

There are many critical metrics to gain insight into the health of the business and your workforce. Understanding metrics like turnover rate, employee satisfaction, and benefits adoption are important to understanding your team, but one of the most important metrics includes your candidate Net Promoter Score (NPS) score. 

Before someone is a new hire or a veteran employee, they’ll be a curious candidate. An engaging and thoughtful candidate experience can exponentially enhance (or damage) your employer branding. — Jim Leahy, People & Talent Acquisition Leader, DailyPay

Tenure

If I had only one HR metric to review, it would be tenure. Ultimately, you want a long-term, highly skilled workforce, and tenure is your best metric for that. Long-term tenure is a good indication that other analytics are working in your favor. — Tammy Cohen, Chief Visionary Officer, InfoMart

Brett Farmiloe is the founder of Terkel, a knowledge platform that converts expert insights into blogs for brands. He's the author of the book Pursue The Passion and has spoken at various HR conferences over the years about employee-engagement topics. 

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