People & Leadership

The most important HR metrics to track: A beginner’s guide

How much better would your business prosper if you fully understood the people you’ve gathered to drive it? The only way to know is to evaluate key aspects of staffing by monitoring HR metrics.

How well does your organisation attract, retain, and engage the right kind of people to entrust with your success?

That sounds like quite a vague matter to assess—you’re looking at subtle differences in skills, attitudes, and personality.

For example, assuming that employee engagement directly affects productivity, profitability and retention, Gallup estimated that the global economy lost $8.8 trillion in 2023. That was 9% of global GDP that year.

A lot of the information you need to assess engagement, productivity and employee turnover is already at your fingertips.

With the right tools, you can record and analyse HR metrics that shed light on most staffing issues, from perfecting hiring processes to building your corporate culture.

In this article, we’ll walk you through the best HR metrics to track, explaining why they matter, and how to align the resulting insights with your business goals.

Here’s what we’ll cover:

What are HR metrics and why do they matter?

HR metrics are quantitative and qualitative indicators that provide actionable insights into how effectively your organisation is managing its people.

They measure key aspects of your workforce’s performance, engagement, and overall impact on business success.

In the area of employee engagement you might also measure survey scores, participation rates, and feedback.

By tracking these metrics, you can identify strengths in your processes and pinpoint areas for improvement.

The statistics offer a clearer picture of your recruitment, management and staff development efforts, helping you optimise your workforce planning and improve overall performance.

Here’s what you can learn from some of the more specific HR metrics:

• Time to hire: shows how quickly you’re filling roles and the efficiency of your recruitment process.
• Cost per hire: helps you track how much you’re spending on recruiting new employees, enabling better budget management.
• Employee turnover: indicates how many employees are leaving, helping you identify potential retention issues.
• Training effectiveness: measures how well staff are developing, and whether training programmes are impactful.
• Employee engagement: provides insights into how connected and motivated staff members feel, guiding improvements in workplace culture.
• Employee satisfaction: reflects overall employee contentment, which is linked to retention and productivity.

By regularly measuring and tracking these metrics, you gain a clear view of which HR strategies are working well and where improvements are needed.

HR metrics also support better decision-making, resource allocation, and alignment with broader business goals.

HR teams and business owners can use these insights to guide decisions such as staffing levels, training needs, and employee support programmes.

Tracking these key areas enables you to optimise HR initiatives, ultimately contributing to profitability.

Are HR metrics the same as KPIs?

Don’t confuse HR metrics with HR KPIs (key performance indicators).

The difference is that HR metrics are the raw data—like the number of new hires—while KPIs are the metrics that best reflect progress towards your business goals.

For example, staff turnover is a metric that may simply guide operational decisions day to day. But if turnover is hitting one key area of the business especially hard, you can class it as a KPI.

It’s a way of saying “this number really matters to us”. KPIs help you focus on what drives success, while metrics give you the detailed picture.

Key types of HR metrics you should track

HR metrics cover a broad range of indicators that help you understand the entire employee lifecycle and how to maximise performance at each stage.

Here’s a basic rundown of the stages and what the figures can tell you.

Recruitment metrics

Indicators such as time to hire and cost per hire show how efficiently you’re bringing in new talent.

They help you spot bottlenecks, such as lengthy approval processes or slow candidate screening.

They also help you control costs by revealing expensive stages in the recruitment funnel.

Use these to invest more wisely in your recruitment procedures.

Performance metrics

These data points highlight how well staff are meeting goals and expectations.

They give you insights into productivity, quality of work, and overall contribution to business success.

By tracking metrics such as performance ratings and goal completion rates, you can identify high performers and provide support where it’s needed most.

Retention metrics

Turnover rate and average tenure reveal how well you’re holding on to your talent.

They help you understand why people stay or why they leave—and whether individual departments are facing particular challenges.

These insights help you design better retention strategies and create a more stable workforce.

Engagement metrics

Survey results, participation rates, or general feedback can show if your corporate culture supports people and helps them to do their best work.

They highlight areas where morale may be low and can guide initiatives to boost motivation and satisfaction.

Diversity metrics

These figures show the degree of representation across different social groups and can highlight whether your hiring and progression practices are fair and equitable.

They help you build a fully inclusive workplace by identifying gaps in areas such as gender diversity, racial diversity, and inclusion of disabled people.

Understanding key top HR performance indicators

Different workforce dynamics affect different areas of your business.

So, choose the metrics that matter most to your goals or reflect the most urgent pain points.

Let’s go into more detail about the most important metrics and how to respond to them.

Employee turnover rate

The employee turnover rate measures how many employees leave your organisation during a specific period.

It can indicate whether your workforce is stable or if there are potential retention problems, especially if turnover is high in key areas.

The formula is:

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(Average number of employees during the period ÷ Number of employees who left during the period) × 100 

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If your turnover rate is higher than desired, investigate the causes:

Is turnover occurring in specific departments or roles?

You can strengthen your onboarding process, improve career progression opportunities, and create a more engaging workplace environment to help improve retention.

Providing feedback channels for employees to express concerns can also highlight potential areas for improvement.

Tracking turnover allows you take corrective actions before it negatively impacts business operations. High turnover can lead to increased hiring costs and decreased team morale.

Time to hire

Time to hire measures the efficiency of your recruitment process.

It shows how long it takes, on average, from posting a job to an offer being accepted.

The formula is:

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Number of hires ÷ Total days taken to hire

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If your time to hire is longer than desired, look at each stage of your recruitment process for delays:

Are interviews taking too long to schedule?

Are there unnecessary approval steps?

Streamlining these steps can help reduce hiring time.

Improving communication and coordination between HR and hiring managers can also speed up the process.

A long time to hire can indicate inefficiencies or bottlenecks in your recruitment process.

Reducing time to hire ensures you don’t lose out on top candidates who may accept offers elsewhere.

A quicker hiring process also ensures you have the right team in place to meet deadlines and drive business growth.

Employee engagement score

An engagement score reflects how connected and motivated employees are toward their work and the company.

A low score can indicate disengagement, leading to decreased productivity and increased turnover.

The formula is:

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(Number of survey responses ÷ Total score from employee surveys) × 100 

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If engagement scores are low, take immediate action to improve the workplace environment.

Offer opportunities for growth, listen to employee feedback, and ensure clear communication from leadership.

Provide incentives and recognition to encourage employees to stay engaged and create an open feedback loop where employees can voice their concerns.

Engaged employees are more productive, loyal, and likely to stay with your company.

Tracking engagement helps you identify areas where improvements can be made to enhance overall job satisfaction and retention.

Absenteeism rate

The absenteeism rate shows the frequency of unscheduled absences among employees.

It can reveal potential issues such as burnout, poor management, or an unhealthy work environment if absenteeism is unusually high.

The formula is:

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(Total number of scheduled workdays ÷ Number of unscheduled absences) × 100 

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If the metric indicates high absenteeism, assess your workplace culture and workload management.

Consider offering wellness programmes, mental health support, and flexible work options to address absenteeism at the root.

The underlying causes may indicate that employees are struggling with workload, stress, or health issues.

Frequent absenteeism negatively impacts team performance and productivity. It also affects team morale when colleagues need to cover for absent employees.

Implementing an attendance tracking solution helps you spot early signs of employee dissatisfaction or external issues and take steps to prevent long-term problems.

Training effectiveness

Training effectiveness measures how well your staff is developing and whether training programmes are having a positive impact on them. It shows if the skills learned in training are translating into improved job performance.

The formula is:

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(Difference between post-training and pre-training performance scores ÷ Pre-training performance score) × 100

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If training effectiveness is low, review the training content and delivery methods.

Are they aligned with employees’ needs and the company’s objectives?

Gather feedback from employees and managers on the usefulness of the training and consider adjusting the programme to better meet those needs. Offer follow-up support or additional resources if necessary.

By improving employee skills, you can boost productivity and enhance job satisfaction.

Proper training also helps companies stay competitive by ensuring their workforce is equipped with the latest knowledge and capabilities. Tracking training effectiveness helps you plan for future training investments.

How to use HR metrics and analytics effectively

With HR metrics you can engage in meaningful actions that drive your business forward.

But how can you put those metrics to best use?

Start by setting benchmarks to compare your current performance against past results or industry standards.

This helps you understand whether your numbers are strong or if they need improvement.

Use the data to inform decisions by looking for patterns and trends that reveal what’s working and where you might need to focus attention.

For example, if absenteeism is higher than expected, you might explore workplace culture or health and wellbeing initiatives.

Combining data with insights from your people means you can make changes that genuinely support the team and the business.

Proper HR reporting and visualisation are key to making your data easy to understand and share.

Good visuals translate complex data into clear insights. They help you see trends at a glance, compare figures quickly, and highlight areas for action.

This makes it easier for HR teams to communicate findings to leadership and for everyone to align around the right priorities.

By using HR metrics this way, you make HR a strategic partner that helps the business succeed.

Common challenges in tracking HR metrics and how to overcome them

Tracking HR metrics can be tricky because the data is often scattered across different systems and may be inconsistent or incomplete.

This makes it harder to get a clear and accurate picture of what’s happening in your workforce.

A direct consequence of this is that you might miss important trends or draw the wrong conclusions.

However, there are also indirect effects:

• Difficulty aligning metrics with business goals: if your HR data doesn’t link to the bigger picture of your company’s strategy, it can lose relevance and impact. Always make sure your chosen metrics support the overall direction of the business.
• Ensuring employee privacy: HR data is often sensitive, so you need to handle it carefully. This means limiting access to only those who need it, using secure systems, and being transparent with staff about what’s being measured and why. Clear policies and secure platforms help you build trust while protecting privacy.

Resources and tools to help you track HR metrics and analytics

Overcoming the above challenges requires a mix of good processes, reliable tools, and a focus on using data to genuinely support your people and your business.

A single platform can help address these challenges if you invest wisely.

Look for HR software with features such as dashboards, reports, and benchmarks to help you track key metrics.

Dashboards should be easy to customise and share, letting you set goals and monitor progress in real time.

Also, it can integrate with analytics platforms and other essential tools with strong security features to protect employee data.