26 Essential HR Metrics To Track and Improve Your Bottom Line

In today’s unique business landscape, HR leaders can no longer rely on instinct alone. Every decision, from who you hire to how you retain top talent, should be guided by data. Learn how financial decision-makers can leverage HR metrics and data from HR reporting tools to drive business growth and measure success.

As the business landscape constantly evolves, the role of finance is also expanding. Some finance departments must now manage more than just financial operations; they must play a significant role in overall business strategy and contribute to their company's bottom line via cost management, forecasting, and human capital ROI. To achieve this, finance and HR must work together to harness the full power of HR data and inform strategies that affect business outcomes — including your company's bottom line.

What Are HR Metrics?

Human resources metrics are measurable data points that help organizations track and evaluate the effectiveness of their human resources strategies and operations. Think of them as your company's vital signs — they give you clear, actionable insights into how your HR strategies support broader business goals.

Talent Enablement Partner at Paychex, Megan Burdett, states that HR metrics are “just the numbers behind how your people and processes are actually working. They help businesses measure the impact of things like hiring, training, engagement, and turnover. This can help eliminate the guesswork or going off gut instinct.”

Instead of relying on assumptions, HR metrics provide quantifiable insights into workforce trends. Examples of HR metrics include tracking everything from hiring and training to compensation and retention, turning day-to-day operations into data you can analyze, compare, and improve. “Think of them as the pulse check for your people strategy. Are you hiring fast enough? Are the right people staying? Are managers actually effective?” says Burdett. “HR metrics give you real answers to those questions.”

These measurements span nearly every aspect of the employee experience, including employee performance, recruitment efficiency, compensation equity, workforce diversity, and organizational development. When used strategically, HR metrics offer a clear lens into specific improvement areas rather than making broad, sweeping changes that might fix one problem while creating three more. Burdett advises that “when you’re tracking the right metrics consistently, you can start spotting patterns, making smarter decisions, and tying your people practices back to real business outcomes. It’s how you move from reactive HR to strategic HR, with data to back you up.”

The Importance of HR Metrics

Data is the fuel behind better decision-making. HR metrics can drive business success by offering strategic insights into how effective your talent management data is in meeting your overall business goals. More specifically, HR data can help you:

• Identify steps to optimize the cost of recruiting and engaging a productive talent pool
• Reduce costs by understanding turnover trends
• Confirm that compensation, benefits, and other forms of payment are aligned with performance
• Improve productivity by targeting training gaps
• Determine whether it is better to build talent or hire external talent
• Align hiring with growth goals, before the bottlenecks begin
• Identify and implement improvements across potentially inefficient workplace processes
• Create a more diverse and profitable work environment
• Mitigate compliance risks through proactive employee relations tracking
• Benchmark compensation to ensure you are competitive in the marketplace

In short, by collecting and monitoring HR data, you can more effectively assess workforce costs and productivity measurement, as well as how employees are hired, developed, and managed for greater business success. When used well, HR metrics tell the story of your workforce — past, present, and future.

Applying HR Metrics To Improve Business Performance

Armed with these insights, you can track human resources KPIs to uncover who the top performers are, who contributes most to the bottom line, and who is falling behind — and perhaps, most importantly, why.

You can also track how their performance evolves and forecast future performance. Are employees compensated adequately for what they contribute? Are they getting better at what they do, or is their performance on the decline? Are employees staying with the company, or is retention becoming a challenge? Is overtime being used effectively? What's the average return on your workforce investment? What is the revenue or profit per employee? How much does hiring a new employee or replacing someone who left cost your business?

For greater insight, see where your company stands against your peers by measuring your business performance metrics against industry data, using benchmarking reports published by industry associations, HR associations, or private research firms. You can also use these benchmarks to monitor your business's development by setting targets and tracking your progress toward achieving them.

“Metrics don’t solve problems, but they do shine a light on where to look for them. With the right technology partner, HR leaders can move from reactive to predictive. From transactional to transformational.”
Megan Burdett | Talent Enablement Partner at Paychex

26 HR Metrics To Track

You can use many HR metrics and analytics to conduct a health check on your business, get a comprehensive view of your workforce, interpret historical trends, and develop predictive models to make data-driven decision.

To effectively analyze and optimize workforce metrics, HR professionals should categorize metrics based on key areas of impact.

Below are examples of strategic HR metrics organized into categories. Each offers valuable insights into different aspects of talent management, employee performance tracking, and business efficiency.

Talent Acquisition Metrics

Hiring the right people is only part of the equation — recruiting metrics showing how efficiently and effectively you bring them on board also matters.

• Time to Fill: The number of days it takes to fill a role from the moment it's posted to the day an offer is accepted. To calculate this metric, you divide the total number of days from job postings to offers accepted by the total number of hires.
• Cost per Hire: How much you spend on bringing in each new employee, including internal and external recruiting costs. To calculate cost per hire (CPH), you divide the total costs associated with hiring by the total number of hires.
• Source of Hire: The source of your most successful hires, whether from job boards, referrals, or recruiting agencies.

Employee Performance Metrics

Once employees are hired, HR performance metrics help you understand how effectively they contribute to your business goals.

• Time to Productivity: The average time it takes a new employee to reach full productivity in their role. To calculate this metric, you divide the total number of days to full employee productivity by the total number of hires.
• Performance Review Ratings: The feedback employees receive during regular evaluations is often scored against performance benchmarks. These reviews can include input from managers, peers, and even the employees themselves, giving you a well-rounded view of individual contributions.
• Goal Completion Rate: The percentage of individual or team goals achieved within a specific timeframe. It gives you visibility into what employees are working toward, how their goals align with broader company objectives, and the progress they're making along the way.

Retention and Engagement Metrics

The best HR metrics help you keep your best people, which is just as important as finding them in the first place. Retention and engagement metrics help you understand how employees feel about their work, how long they stay, and what might be hindering long-term success.

• Employee Retention Rate: The percentage of employees who stay with your company over a defined period. To calculate this metric, divide the number of employees who remained employed with your company over a specific period by the total employees at the start, then multiply this by 100.
• Turnover Rate: The percentage of employees who leave your organization over a specific period. To calculate this metric, divide the number of employees who have separated from your company during a set period by the average number of employees over that time, then multiply this by 100.
• Employee Engagement Score: This score measures the level of investment your team feels in their work and the company overall. Based on employee surveys and workplace feedback, it blends insights from areas like satisfaction, recognition, leadership, and alignment with company values.
• Absenteeism Rate: The average number of unplanned days employees are absent over a set period, excluding approved paid time off. To calculate this metric, divide the total number of days absent by the total workdays.

Compensation and Benefits Metrics

What you offer employees — in both pay and perks — plays a significant role in attracting and retaining top talent. These metrics help you assess the competitiveness, fairness, and overall value of your compensation and benefits strategy.

• Compensation vs. Industry Benchmark: The comparison between your company's pay rates and the average compensation offered by similar roles in your industry or region.
• Benefits Utilization Rate: The percentage of eligible employees actively using the benefits you offer, such as health insurance, retirement plans, or wellness programs. To calculate this metric, divide the total number of employees enrolled in a benefit by the total number of eligible employees, then multiply this by 100.
• Pay Equity: The measurement of whether employees performing similar work are paid fairly, regardless of gender, race, or other protected characteristics.
• Total Compensation Cost per Employee: The average amount your company spends per employee on wages, bonuses, benefits, and other forms of compensation. To calculate this metric, divide the total compensation plus total benefits cost by the total number of employees.

Workforce Efficiency Metrics

Measuring workforce efficiency helps you understand how your people contribute to business outcomes, not just in hours worked, but in how those hours translate into value.

• Total Cost of Workforce: The sum of all workforce-related expenses, including employee compensation, benefits, contract labor, and temporary staffing over a set period.
• Training Return on Investment (ROI): The financial gain your company sees from investing in employee training compared to what was spent on professional development and training. To calculate the training ROI, divide the net monetary benefits of training by the total training costs, then multiply this by 100.
• Revenue per Employee: A measure of how much money the average employee generates for the company. To calculate this metric, divide the total revenue by the total number of employees.
• Profit per Employee: The portion of your company's net income attributed to each full-time team member. To calculate profit per full-time employee, divide the net income of your business over the past twelve months by the current number of your full-time employees (or their equivalent).
• Overtime Hours: The percentage of extra hours employees work beyond their regular schedules, measured against their standard working hours. To calculate this metric, divide the total overtime hours by the total regular hours worked, then multiply this by 100.
• Labor Cost as a Percentage of Revenue: The share of your company's revenue spent on labor-related expenses. To calculate this metric, divide the total labor cost by total sales, then multiply this by 100.
• Job Costing: The labor expense required to complete a specific task or project within your organization. To calculate this metric, multiply the daily payroll rate (or hourly average wage rate) by the number of workdays (or hours) needed to complete a job.

Diversity and Inclusion Metrics

A more diverse team has proven to provide value to companies in many ways. It can help generate new perspectives and ideas that fuel innovation, and research shows that diversity in leadership directly correlates with better business outcomes. By embracing diversity and inclusion, businesses can earn deeper trust and better engage with different audiences — from customers to prospects to current employees.

• Diversity and Inclusion: A measure of how well your workforce reflects a range of demographic backgrounds. These indicators may include race, ethnicity, age, gender, disability, and other factors.
• Gender Pay Gap: The difference in average earnings between men and women across your organization. To calculate this metric, subtract the average pay of women from the average pay of men, divide that number by the average pay of men, and then multiply this by 100.
• Diversity of Leadership: A measure of how many individuals from different groups hold leadership roles within your organization.

Organizational Development Metrics

Supporting career growth from within helps retain top talent and ensures you're ready for what's next. These metrics highlight how well your organization is developing future leaders and creating upward mobility.

• Succession Planning Effectiveness: A metric that shows how ready your company is to fill key positions with internal candidates. It reflects how often critical roles are filled smoothly from within and how prepared your potential successors are when the need arises.
• Internal Mobility Rate: This tracks how frequently employees move into new roles within your organization, which could be through promotions, lateral moves, or department changes.

How Human Capital Management Software Can Help

Workforce expenses, including wages, benefits, and related taxes, can significantly add to business costs. When you understand what metrics are in the HR space, you begin to see the impact tracking and analyzing can have on your business's financial success. To streamline the process, you should consider using a single platform that will help you turn critical HR metrics into concrete, actionable HR insights for your business.

Integrated human capital management (HCM) software can help automate tedious workforce processes and allow you to store your HR and payroll analytics data in one place, which enables workforce intelligence via integrated data sets and can provide access to powerful HR analytics that can help drive better business decision-making. In short, HCM software can help finance professionals and HR departments create a strong alliance, helping both departments implement combined strategies that drive growth and meet business objectives.

HCM software not only benefits businesses by providing a unified platform that offers on-demand access to HR data but can also help streamline business processes, including recruiting, hiring, performance management, and professional development, making it easier to analyze workforce trends that align with business goals, while optimizing where needed. Having access to all your HR data in one place enables you to uncover trends, compare your data against industry benchmarks, and build business cases for setting overall business strategy goals. It also enhances your HR data handling efficiency and accuracy, allowing your HR department to work smarter, not harder.