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July 28, 2023

HR Analytics Made Simple: 10 HR Formulas to Make the Most of Your Data

a man standing next to a large HR computing machine

Great talent management is an art form. But it’s also a science

In today’s data-driven world, you need simple analytical tools that will save you time and money, while helping you deliver a better experience for the people behind the business.

In this straightforward guide to HR analytics, we’ll help you figure out what to measure and how to interpret your results to keep your business — and the people in it — as happy and productive as possible.

The top 10 human resources metrics to track

  1. Revenue per full-time equivalent (FTE)
  2. Employee retention rate
  3. Voluntary turnover rate
  4. Employee engagement rate
  5. Absenteeism
  6. Employee performance
  7. Employee experience
  8. Time to hire
  9. Acceptance rate
  10. Quality of hire

What is HR analytics? Using workforce data to improve performance

Sometimes used interchangeably with terms like ‘people analytics’, ‘talent analytics’ and ‘workforce analytics', HR analytics is the collection and application of talent data to improve a company’s workforce performance. It involves measuring the data behind your recruitment, hiring, and employee engagement processes, and how they may affect your business into the future.

And it’s not just for large enterprises. For growing companies, HR analytics is a lot more important than you might think. By zeroing in on your HR data, you can pinpoint key patterns, identify cost-saving and revenue-generating opportunities, and discover new ways to increase employee engagement and retention.

What are the four levels of HR analytics?

HR analytics can get complicated. But if you’re like most companies, you probably don’t need a data scientist tracking every HR metric known to mankind. For many growing businesses, success with HR analytics is about which metrics you choose and how you act on that data.

Start by understanding the four broad levels of HR analytics. Then narrow it down to just the key metrics you need.

The four levels of HR analytics are:

  1. Descriptive Analytics: Companies and HR professionals analyze historical human resources data for a better understanding of past trends and patterns, such as employee turnover rates, recruitment metrics, or training effectiveness.
  2. Diagnostic Analytics: Diagnostic analytics goes beyond past events. This level helps employers understand why those outcomes occurred. From investigating the reasons behind high employee turnover to identifying the key drivers of employee engagement, it’s all about digging deep for the “why” behind your HR patterns.
  3. Predictive Analytics: Statistical models and machine learning algorithms help predict future HR trends and outcomes. By analyzing historical data and identifying patterns, predictive analytics can forecast future workforce behavior and determine your likelihood of attrition and other key outcomes.
  4. Prescriptive Analytics: Prescriptive analytics takes predictive analytics a step further by recommending actions or strategies to optimize HR outcomes. From addressing skill gaps to improving employee engagement, this stage is all about finding actionable ways to apply your data insights.

The top 10 human resources metrics to track

From retention rates to quality of hire and beyond, taking the temperature of your HR efforts can help you stay on track with your bigger picture business goals.

Here are the top 10 HR formulas to track.

1. Revenue per full-time equivalent (FTE)

Ever wondered exactly how much revenue each employee is earning for your company?

If so, you’re going to love revenue per FTE. This classic HR metric does exactly what it says — it measures the amount of revenue generated per full-time employee.

Revenue per employee = Revenue / Current number of FTE employees*

*Multiply by 100 for comparison purposes and quality of hire calculations (see below).

When to use it:

With this foundational metric, you can quickly assess company health and identify departments or teams that are driving the most revenue for the business. 

This metric can also support your human capital and resource allocation decisions, helping you structure team compensation strategies, identify upskilling opportunities, optimize your operations, and more.

Take Apple, for example. In the wake of mass tech layoffs, Apple has succeeded in maintaining efficient operations, while retaining employees who earn an impressive $2.4 million per FTE.

2. Employee retention rate

Employee retention is a perpetual challenge for employers of every shape and size, but it’s also a great source of insight for your forward strategy.

Your employee retention rate is simply the percentage of employees who stay with the company over a specific period of time.

Number of employees who remained employed for time period /

Number of employees at start of measurement period x 100

When to use it:

Use this metric to determine how well your current employee perks, benefits, and policies are performing.

You can also use your retention rate to measure your ROI on any key HR investments. For example, by comparing your annual retention rates before and after launching a specific perk or benefit, you can see how well that investment is succeeding in increasing your year-over-year (YoY) retention rate.

3. Voluntary turnover rate

Unlike involuntary turnover, which happens when there are staff cuts or performance issues, voluntary turnover is when an employee decides to leave a company, either for new ventures or due to being unhappy with their job.

From inadequate compensation to dreams of leaving it all behind to become an apple farmer, employees voluntarily leave organizations for a variety of reasons. Your voluntary turnover rate can help you understand when, why, and how often that happens.

To get to your voluntary turnover rate, calculate your:

(Number of resignations over a period of time / total number of staff over the same period) x 100

From here, you can compare your results against the national or industry average to see how well you’re doing.

For example, if you had 20 staff members resign in a year and your staff size is 100, your turnover rate is 20 / 100 x 100 = 20%. If the average industry turnover is 15%, you know there’s room for improvement.

When to use it:

While your retention rate lets you know how long employees are staying with the company, your voluntary turnover rate is about understanding how many people are resigning and why.

Keep in mind, not all attrition is bad attrition. Monitor this metric to understand employee satisfaction and pinpoint specific roles or departments with higher than average voluntary turnover so you can work to strengthen those parts of the business.

4. Employee engagement rate

Engaged employees are great for business and your employee engagement rate gauges how committed your people actually are.

Employee engagement can be measured in a variety of ways, including weekly pulse surveys, employee Net Promoter Scores (eNPS), annual employee satisfaction surveys, and more.

To utilize this metric:

  • Send out a survey to collect data from your employees
  • Apply a weighted average to every question
  • Add in a weighting factor
  • Calculate your employee engagement score

When to use it:

By tracking employee engagement, you can identify at-risk employees and take action to increase employee satisfaction. In addition to your survey findings, consider your retention rate, voluntary turnover rate, performance review data, and more, in order to get a complete picture of your company-wide employee engagement levels.

It’s also worth noting that you can check in on employee engagement at any time. For example, when Arby’s hired a new CEO with no fast food experience, he saved the drowning company by tapping into their most valuable resource — their employees.

"What would you do if you were me?" he asked, and the answers came flooding in. Not only did this result in their best fiscal year to date, it also made existing employees feel heard and valued.

5. Absenteeism

From unexpected illnesses to deaths in the family, a certain number of absences is business as usual. But when it becomes a sustained pattern, you might have a problem.

Absenteeism measures the rate of employee absences over a specific timeframe, helping you identify ongoing problems within your work environment.

Number of absent days / Number of available work days in a given period = Absenteeism rate

When to use it:

If you have high absenteeism rates, this is often indicative of larger issues within the business, such as low employee engagement or poor management.

Use your absenteeism rate to assess the health of your company culture and investigate any unanticipated spikes.

6. Employee performance

There’s a reason 81% of HR leaders are making changes to their performance management strategies. According to our own research, over 40% of employers surveyed say they have trouble managing poor performers, and nearly 39% struggle to identify and address performance issues.

Just like people analytics, HR analytics, or any other fundamental piece of organizational behavior, performance management is a vast field. As an employer, there are a variety of employee performance metrics you can track. Here again, the key is to narrow in on the ones that provide the best insights for your unique business.

Some common performance metrics include:

  • Number of tasks or projects completed
  • Number of deadlines met
  • Number of errors
  • Customer Net Promoter Score (NPS)
  • 360-degree feedback
  • 180-degree feedback
  • And more

No matter what type of performance management framework you choose, the goal is the same — to evaluate and elevate employee productivity.

When to use it:

Use your employee performance data to reward star performers, set clear performance goals, and provide targeted training to enhance employee productivity.

Many companies choose to do this annually, but regular one-on-ones, weekly, monthly, and quarterly reviews all have a role to play depending on the unique rhythm of your business.

7. Employee experience

Employee experience spans every interaction a team member has with your company — from recruitment to exit. It’s a lot of ground to cover.

Some common employee experience metrics include:

  • Absenteeism rates
  • Increased performance
  • Employee retention
  • Employee turnover
  • Employee engagement data
  • And more

At the recruitment level, it’s also important to track your candidate experience to help gauge the strengths and weaknesses of your hiring process, and provide a smoother hiring and onboarding experience for new employees.

When to use it:

You can review your employee data at any point in an employee’s journey with your company to gather feedback on how well your company is doing.

Workday, for example, garnered a 70% response rate with its weekly surveys, sending out just a few short questions each week to help keep their finger on the pulse of the employee experience.

8. Time to hire (a.k.a. time to fill)

If competing for top talent is a priority, the amount of time it takes to fill an open position is one metric you don’t want to miss.

Time to hire measures the amount of time from posting an open role to hiring a candidate. It’s typically used to pinpoint potential obstacles in the hiring process so you can reduce wait times and keep qualified candidates in your talent pipeline. 

Use your applicant tracking system (ATS) to generate a clear and visual time-to-fill report, including the number of days to fill and average days to hire.

Alternatively, try this simple formula to find your time to fill:

Total time to fill for each role / Number of roles you filled in the same period = Average time to fill in days

For example, let’s say you made three hires last quarter and they took 11, 10 and 9 days to fill.

Your sum is 11 + 10 + 9 = 30 / 3 = 10-day average time to fill.

When to use it:

Monitor this metric to assess the efficiency of your recruitment process and identify areas for improvement and optimization.

The longer it takes to post an open role, shortlist candidates, interview them, and make a confident hiring decision, the less likely it is candidates will wait around.

9. Acceptance rate

Your acceptance rate is a vital HR metric for assessing the strength of your job offers and employer brand.

For hiring managers, recruiters, and HR teams, it’s also a big indicator of how well you’re performing.

The formula for this metric is simple:

Numbers of offers accepted / Number of offers extended = Acceptance rate

When to use it:

Use this metric to assess the appeal of your job offers, the strength of your candidate experience, and the overall effectiveness of your recruitment process.

For example, if you’re experiencing low acceptance rates, you might review your compensation packages, benefits, or interview process to better align with candidate expectations.

10. Quality of hire (QoH) 

According to our survey, 55.3% of employers cited a lack of qualified candidates as their top recruitment challenge. Even if you already have a talented team of employees, figuring out how and why things are working is a great way to increase your total number of rockstars.

That’s where quality of hire comes in. This recruitment metric measures the performance of new hires, helping you refine your recruitment strategies and make better hires every time.

To work out your quality of hire, add your existing indicators and divide by the number of indicators used.

For example, if you’ve measured your productivity (total score of 70), Employee Lifetime Value (ELTV) (81) and time-to-fill (89), add them together and divide by 3.

In this case your average would be 70 + 81 + 89 = 240 / 3 = 80%

To figure out the QoH score of your company as a whole, the same formula applies. Only this time, you’ll use averages over the whole company instead of individual indicators: 

For example, if you’ve measured your average job performance (total score of 81), % of hires who stay for over one year (60) and average time-to-fill (84), simply add them together and divide by 3.

Your average would be 81 + 60 + 84 = 225 / 3 = 75%

Depending on the number of indicators you choose, this can feel like a lot of math. If you have an HR tool that can generate these reports for you, great!

Otherwise, keep in mind that you only need to set these formulas up once. After that, simply plug-and-play as needed.

When to use it:

Use this HR metric any time you want to assess the strength of your recruitment and selection process. Your QoH data can also help you increase ROI by pinpointing places to optimize your recruitment budget, including your best sourcing channels and job boards.

Ace your analytics like a true HR pro

When it comes to building the best possible workforce for your business, data is crucial.

And you don’t need fancy HR analytics software or a 10-person HR department to get it. If you don’t have hours to spend manually creating your weekly HR reports, don’t worry. With the right HR systems in place, you can make confident business decisions in a fraction of the time.

Breezy HR is the end-to-end recruiting software that enables HR teams with built-in reports for all their core recruitment metrics, including time-to-fill, pipeline reports, top candidate sources, and more. And with the custom reporting add-on, you can make data-driven decisions on anything you need. 

Get the actionable insights you need with a free 14-day trial.