People Metrics Worth Tracking

Shawnee Love   •   August 10, 2018

I am a fan of metrics.  I realize their limits though.  Metrics don’t tell the whole story of why.  They also don’t tell you how.  But they can give you a sense of norms and variances.  And when compared within industries or to other organizations in a similar geography, they can be indicators of how your organization is doing.

Small and medium sized businesses often think metrics are for larger companies. However, even smaller organizations that don’t have sophisticated HR software can figure out the key people metrics for their business:

  • Profit per Employee: A snapshot in time, this measure is literally just year end profits divided by the number of employees.  If you are a fast growing organization, you might want to use an average number of employees for the year, and if you are seasonal, you may want to break up the seasons and divide by the number of employees in each season to get a more clear measure. This is a useful measure of overall productivity and efficiency.The higher the better in theory, as long as you aren’t cutting too many employees and risking the delivery of services.  This measure is really most useful over a 5 year span.
  • Labour Costs as a percentage of Expenses:  To get this measure, you divide your overall labour costs (wages, benefits, employer remittances) by Expenses (exclude interest and taxes though).  This is a great metric for understanding the value of your people as it relates to your overall operation and for gaining understanding of operational effectiveness in the context of your industry.
  • Overall Retention Rate:  This measure is the reverse measure of turnover.  I like it because it is a positive approach and showcases how well you are doing on your overall people management, i.e., are your culture, managers, types of work, practices, and people doing a good job at retaining employees.  This metric gives you a sense of employees’ happiness with the organization.  Retention rate is simply the number of employees at the end of the year who were with the company at the beginning of the year.  I would run a list in January each year to get the headcount then, and then run a list on January 1 the next year of people who have been with you a year or more to get the two numbers and go from there.
  • Resignation by Length of Service:  This metric involves tracking the length of service of anyone who resigns and over time looking for patterns.  Its especially useful in understanding whether your people practices are meeting the needs of employees at each stage of employment (new hire/ onboarding, up to one year, 2-4 years, 5+ years).
  • Absenteeism Rate: The absenteeism rate is simply the number of days lost to absences (primarily sick, injured, etc., but not including vacations or statutory leaves) divided by the number of workdays overall (i.e., for all employees).  Hint, if you typically work 5 days per week, there are 260 workdays in a year per employee (including vacation).  If you have 10 employees, that would be 2600 workdays per year.  If you have each employee take 6 days off per year, that would be 60/2600, that is a 2.3% absenteeism rate, which is pretty good considering.  I like to track the absenteeism rate, per month and per year, because it helps me plan (e.g., if I know absenteeism is higher during flu season, I will plan for less productivity during this time) and an increasing absenteeism points to concerns with team and interpersonal dynamics.
  • Time to Hire:  This measure involves tracking how long it takes you to hire from recognizing the vacancy to a new person beginning work.  It is a sign of how effective your recruitment processes are which is especially important in fast growing organizations, and those organizations seeking to improve HR efficiency.

There are certainly other metrics I love to have.  The first that comes to mind is Employee Satisfaction / Engagement, but this measure requires you to poll employees and can’t be pulled from payroll, accounting and/or a simple excel spreadsheet like the rest of the measures I have listed.  (I will save my recommendations on employee satisfaction for another day.)

For now, use the 6 metrics above as a doctor would use your temperature and blood pressure.  They are indicators of organizational health or areas which may require attention.  When you notice changes that concern you, its a sign to investigate further.