## 10 HR Metrics You Should Use But Probably Don’t

Sometimes you just want to see a list of HR Metrics and find something new. Today’s will be short and sweet: 10 HR Metrics you should use but probably don’t.

## 1. Retention Risk Index

This one requires some predictive modeling so it’s non-trivial but it will work well even with somewhat basic models like a logistic regression or a decision tree.

The basic principle is as follows:

• Using a predictive model, generate the probability of departure for each employee
• Sort that list of employees by the resulting probability of leaving (descending order)
• Find any top performers within the top 10% of your sorted list
• Focus on those individuals for any retention or career development efforts, conversations, etc.

## 2. Turnover Rate (Running Average)

Turnover is often calculated on a monthly basis. But as I have highlighted in my signal-to-noise posts, obsessing about turnover changes on a monthly basis means you are wasting time looking largely at random monthly swings.

We can use running averages to smooth out some of this noise but still provide leaders with the most current measures. I would specifically suggest using a 3-month running average.

Here are the simple steps if you are not familiar with it:

• Calculate turnover rate for each single month as you would normally. I would suggest doing this for at least two years of data
• Then for each month, add up the turnover rate for the current as well as the two previous months.
• Divide this total by the 3 (because you added three points)

As an example, the running average for turnover in August would be the average of the turnover rates from June, July, and August. For September, the average of the rates from July, August, and Sept, etc.

Note that this means you will not be able to create a running average for the first two months of your data range because you won’t have two months of data preceding it. No one will really care though because those missing months will be a distant memory.

## 3. Promotion-to-Transfer Ratio

This is a great metric for understanding the character of internal movement. It’s simple and simply powerful.

$latex {\frac{\# Promotions\ in\ period}{\#\ Transfers\ in \ period}}&s=2$

I would stick with a quarterly measure for the time period if not longer.

## 4. Net Hire Ratio

This is a good metric for immediately understanding how your workforce is growing or shrinking.

latex${\frac{\# External Hires\ in\ period}{\# Departures\ in\ period}}&s=2$

Again, I would go with quarterly here…frequent enough to be useful, long enough to limit the impact of noise.

## 5. Top Performer Experience Loss

Metric: The total number of years of tenure for all departing top performers.

This one is so simple it almost shouldn’t count as a metric.

If you think is not useful though, tell me which of the following results grabs your attention:

1. In Q1, top performer turnover was 5.2%
2. In Q1, 147 years of top performer company tenure walked out the door

Framing things in years lost is relatable and shakes us from our number numbness.

## 6. Mean Promotion Speed

For the all of those who were promoted in some period, what was the average number of years in their role before the promotion?

$latex {\frac{Total\ Years\ in\ Roles\ Before\ Promotions}{\#\ Promotions}}&s=2$

I would suggest a longer period, probably just annually because promotions are somewhat rare.

Here are two ways to take this a step further:

• Look at the distribution of this measure.
• Look at your current top performers and identify anyone whose years in current role are one SD higher than the mean

## 7. Internal Hire Rate

This measure also falls into the “We Care About Employee Development” category.

$latex {\frac{Total\ Internal\ Movements\ in\ period}{Average\ Headcount\ in\ period}}&s=2$

Are we moving people around? Are we giving them different experiences and expanding their knowledge of the organization? Is everyone static and stuck?

Note: The Average Headcount is the same thing we normally do for measuring turnover and other metrics: it’s just the average of the number employees at the beginning and at the end of your measurement period.

## 8. Internal/ External Hire Ratio

Sometimes hiring from within is great because you retain company knowledge. Other times, you need new blood, new ideas.

$latex {\frac{Total\ Internal\ Hires\ in\ period}{Total\ External\ Hires\ in\ period}}&s=2$

## 9. Performance Ratings Change

Another “this is so simple it’s barely a metric” metric.

Metric: Subtract the current performance rating from the previous year’s rating for each individual employee.

As with other measures, do some distributions, plot things by different departments or age or gender or something else. What did you learn?

Sales teams do year-over-year performance measures all the time but HR teams rarely do. I have no idea why.

How can we expect to improve performance if we don’t look at performance improvement?

## 10. First-Year Retention Rate

Ok, I’m sure many of you use this one…but I’m also sure some of your don’t.

Metric: The percentage of those hired externally who actually stuck around for at least a year.

Just be sure that you filter down your calculation to only those whose hire date was at least one year ago. This is easy to overlook.

Hiring is expensive. Training is expensive.