HR KPIs: What are the most important key indicators in HR?

5 of July, 2022

KPIs are amazing. They provide you with useful quantitative data so that you can assess all aspects of your business. And with Sesame’s stats and HR reports, collecting and analyzing data has never been easier. For instance, you can resort to KPIs to measure employee performance. Another use of Key Performance Indicators is to evaluate the effectiveness of the HR function.

The areas that depend on the HR department are vast, and so is the list of KPIs you can use to determine its performance levels. We have put together the most common KPIs used to measure HR effectiveness and organized them according to the HR function they relate to.

Recruitment KPIs

It is easy to confuse recruitment and talent acquisition. Recruiting involves sourcing, attracting, interviewing, hiring, and onboarding employees along conventional lines of advertising, rigorous screening, building teams, training needs, and rigorous alignment of new hires with the organization’s established culture and stated mission. Talent acquisition, by contrast, seeks to fill urgently needed niche skills, highly-specific experience, technical or engineering specializations, and senior leadership positions. This involves not just hiring the right person for the position, but doing so lickety-split as the need arises, and in an agile manner that simply does not allow the deployment of the full-range of classic recruitment tools over an extended period of time.

With that being said, here are the most important recruitment key indicators:

Average recruitment time

This metric shows you how long it takes you to make a new hire, starting from the moment you publish the job offer. You want to make it as low as possible in order to minimize recruitment costs.

Average recruitment costs

This KPI is influenced by the previous one, since a longer recruitment time increases the costs. But it also takes into account other factors such as advertising, applicant tracking software and training costs.

Recruitment conversion rate

It indicates how many candidates that go through the next stage of the recruitment process are actually hired. So it shows how efficient your selection processes are.

Application drop out rate

This gives you the proportion of candidates who do not complete a job application. You need to make sure the application drop out rate is low if you want to attract top talents.

Productivity KPIs

The demands of the pandemic dramatically accelerated changes to the HR operating model. Having proven both to themselves and to the satisfaction of their employers that productivity can be kept up without the costly drive to work, and the inevitable tensions of the workplace. It follows that productivity gains of remote working are sustainable beyond the pandemic. 

To realize benefits and avoid harm of transition to remote and hybrid work, HR needs to track the following KPIs:

Employee productivity rate

This metric in its most basic form is the ratio between the number of sales and the number of employees in the organization. But you can add other factors such as the hours worked.

Overtime rate

You should keep track of how many overtime hours your employees work. A high overtime rate shows bad workforce management since you run the risk of increasing burnouts and absenteeism.

Talent management KPIs

Talent management is the way employers hire and develop the most productive workforce possible. Strategically implementing this process will help improve the overall performance of the company and keep it competitive. These are the most common KPIs for talent management:

Abandonment rate

This metric tells you how many employees decide to leave the company, voluntarily or not, within a determined period of time. This give an insight on how good you are at retaining talent.

Employee satisfaction rate

You get this indicator by conducting a survey and asking your employees directly how satisfied they are with the different aspects of your company. It is the best way to understand what is going well what can be improved for your staff’s well-being.

Employee turnover rate

Companies are not only hiring in one of the tightest labor markets in recent history, they are also having a dismal time keeping the employees they already have. The employee turnover rate shows the average time an employee remains working for the company. This is a good indicator of whether the organization is able to retain talent and thus minimize recruitment expenses.

Employee absenteeism rate

The absenteeism rate is the number of absent days divided by the number of available workdays in a given period. There is heavy cost to absenteeism in having to replace the employee, productivity loss, and the increased danger. Measuring absenteeism can tell you which employees are more absent. That way, you will know what are the causes and how you can reduce absenteeism.

Salary competitiveness ratio

Having internal equity is essential to any organization and that means that employees with comparable positions or skills within your organization get equal benefits and perks within the compensation structure. This KPI compares the average salary offered by your company with the one that is usually offered in your sector. This tells you if your business is competitive on the job market.

Internal promotion rate

Internal promotion has many advantages compared to external recruitment processes. So you want to make sure that you are investing enough in the training and promotion of your current employees.

Employee net promoter score

This indicator tells you to what extent your employees are willing to promote your company to other people. It gives you a good insight on the state of your employer brand.

Did this information help you? We hope so. To learn more about how a human resources software can help you track HR KPIs visit Sesame HR.