Important Key Performance Indicators(KPIs) for Strategic

Human Resource(HR) management

Human resource is one of the important assets for any organization. Each and every
organization require to review the performance of human resources with the help of
measurable key performance indicators. Utilizing the talent of human resources is very
important. In this article, we learn different measurable key performance indicators in
human resources. If an organization wants to achieve human excellence follow the
attached key performance indicators.

HR KPIs are divided into three parts in broader view as per attached below.

Employee satisfaction measures.

Turnover rate
The turnover rate basically measures how many employees leave your organization
certain period of time. If you focused on more detail you individually calculate voluntary
leave and involuntary leave of the employees. In general case chances the higher
percentage of voluntary leave employees.

Turnover rate = (Numbers of employees leaving the organization/average number

of employees in the organization) * 100.

Dismissal rate
The dismissal rate measures the number of employees terminated by the organization’s
decision due to certain reasons.

Dismissal rate = (employees terminated by organization / avg. employees in the

organization) * 100

Employee satisfaction
Employee satisfaction is basically measured based on employee feedback form filling it
includes many criteria for employee satisfaction such as financial, work-life balance,
flexible working hours, medical benefits, etc.

The average length of service

This KPI measures the average working cycle of each employee in the current
organization if you require to bifurcate staff and workers or you can analyze combined
also on yearly basis.
The first-year voluntary termination rate
This KPI indicates how new employees adopt the organizational system and set with the
new environment. To measure this KPI with the number of candidates who leave the
organization before one-year completion Vs the total candidate hired certain period of
time.

First-year voluntary termination rate = Candidate leaves organization within one

year of hire / total candidate hire period of the year.

Human resources operation

Absenteeism
Absenteeism measure of absent manpower against totality manpower. This KPI is very
important for running an organization and many industries have faced major issues or
project delays due to manpower absenteeism.

Absenteeism = (Absent manpower / total planned manpower) * 100

Overtime
Overtime is working more than normal working hours. This activity is planned or unplanned
depending on organizational planning but its directly proportional to the absenteeism
matrix. If absenteeism increases chances to increase overtime to fulfill the organizational
requirements. Overtime measures on a monthly or weekly basis.

Average time for recruitment

To calculate the average time for recruitment calculate the gap between current
employees leaving the organization Vs new employees joining the organization for the
same position. Each and every organization of the human resource team maintain this
KPI as minimum as possible to maintain organizational practices.

Average time for recruitment = new employees join the organization – current
employees leave the organization for the same position

Average time to hire a candidate

Measure the average time for selecting a candidate for an open position. Measure this
KPI on a quarterly and yearly basis.

Average time to hire candidate = Current employee leaves the organization – new
employee selected for this position
Education and training
It measures the number of education and training sessions planned for employee’s certain
period of time. In general case purpose to measure this KPI is for each and every
organization plan to training sessions to boost the employee’s productivity and learn new
concepts and technology.

Employee productivity
The organization is measure employee productivity with the help of KRA and KPIs each
KRA and KPI is given the targeted points. The maximum points limit for KRA and KPI is
100 and productivity is calculated based on of 100 scores. The human resource
department has a structural plan for employee review on a quarterly and yearly basis and
reviews KRA and KPIs for targeted.

Employees working productivity = (KRA and KPIs Score) / 100 (Max. score of KRA
and KPIs)

Retirement Rate
Measure the retirement rate KPI compare with the totality headcount. The ratio is
measured in percentage on yearly basis.

Retirement Rate = Numbers of retired employees / avg. employee’s

Training Effectiveness
To measure training effectiveness with the help of feedback score. Developed a structural
system for the training feedback form and derive the percentage score of training
effectiveness.

Acceptance rate
To measure the acceptance rate with the help of a total number of job offers accepted by
candidates out of the total offers provided by the organization. This KPI gives an overall
idea of how the recruitment process is effective.

Acceptance Rate = Total job offer accepted by candidate / total offer given by the
organization.

Salary competitiveness ratio

To measure the salary competitiveness ratio with the help of the average salary of the
organization to the average salary offered by competitors or the average salary of
competitors.
Salary competitiveness ratio = Average salary of organization / Average salary of
competitors.

Gender diversification
Measure the numbers of men, women, and transgender working in your organization on
yearly basis.

Suggestion per employee

To measure this KPI developed a structural system for collecting employees’ suggestions
for improving the business process.

Suggestion per employee = Total suggestion received per year / total number of
employees per year.

HR-to-FTE ratio
The HR-to-FTE ratio measures the number of HR employees versus the total number of
employees in the organization. This KPI provides the percentage of employees’
contribution to the human resource department.

HR-to-FTE ratio = (number of HR employees/numbers of total employees) * 100.

Human resources Financial

Cost per hire
This KPI measures the average cost for organizations paid to hire new employees. The
major cost includes the advertisement of the interview, the cost of an interview conducted
in colleges and other areas for hiring candidates, the cost of hiring recruitment
consultancies, and many more. This KPI not considering fixed costs for recruiting.

Cost per hire = Total cost of recruitment / total number of employees recruited.

Cost for employee satisfaction

Cost of employee satisfaction includes quarterly or yearly basis organization spend costs
on employee enjoyment and also the cost of arranging family and other functions for
building strong relationships. It includes workers as well as staff.

Revenue per employee

revenue per employee is calculated based on the ratio of total revenue generation to total
employees over a certain period of time. Top management regularly monitors this KPI for
measuring the organizational performance on a quarterly or yearly basis.
Revenue per employee = Total revenue generation per year / Total employee per
year

Training and education cost per employee = Total training cost per year / total
employees.

Percentage of Cost of Workforce

To calculate the percentage cost of the workforce based on the total cost of the
organization. Very important to measure these metrics on a quarterly and yearly basis and
visibility of the percentage contribution of human resources and its trend in past and
upcoming years.

Percentage cost of workforce = cost of workforce / total expenses of the

organization

Cost of hiring talent

This KPI includes the fixed and variable costs for recruitment or hiring talent. Fixed cost
includes payment for access to web portals and other sources. Variable cost includes the
cost of the recruitment process.

Percentage cost of increment

To measure this KPI with the help of each year or half yearly how much percentage of
increase employees and worker’s salary with respect to total salary. To measure KPI
individually workers as well as staff.

Percentage cost of increment = ((total cost of with increment salary of employees

– total cost of without increment salary of employees) / total cost of with
increment salary of employees)) * 100