Workforce planning is an important aspect of success for any organization. By effectively managing and optimizing your workforce, you can ensure you have the right people in the right roles at the right time, enabling them to achieve strategic objectives. One key tool in workforce planning is analytics and metrics.
In this post, we’ll explore workforce planning metrics and their importance, benefits and how you can overcome the challenges that come with their implementation.
What are Workforce Planning Metrics?
Workforce planning metrics are quantitative data points that help organizations better understand and manage their employees. These metrics include factors such as employee turnover rates, time-to-hire, number of vacancies training and development investments, and employee engagement and satisfaction levels. By tracking and analyzing these metrics, leaders can be more informed about the current and future state of their workforce which can help with planning.
17 Workforce Planning Metrics Your Business Should Measure
There are quite a few different data points that are important to workforce planning. Your organization may not have the bandwidth to measure all of them, and that’s okay – it’s important to focus on the ones that matter most to your company’s goals and culture. It’s a good idea to work with stakeholders throughout your organization to determine which workforce planning metrics matter most for your business.
If you aren’t sure where to start, here are 17 metrics we think are important for 2023:
Your company’s headcount is the total number of employees you have. This may sound like a simple metric, but it’s often a shifting number, especially if you have seasonal employees, part-time workers or temporary workers. You can look at headcount changes over time to help you determine the health of your workforce management and to plan for future changes, like adding more employees for seasonal work or adding to a particular department.
Diversity and inclusion percentages
Diversity and inclusion have become increasingly important in the past few decades, especially for companies that want to grow. Some may attribute this shift in attention toward diversity and inclusion to optics, but having a workforce with people from a variety of backgrounds improves a business’s competitive advantage, including more creativity, a broader range of skill sets, increased productivity, more satisfied employees and even higher revenues. To calculate your diversity and inclusion percentage, take the total number of employees from a specific group (for instance, women or Black employees), divide by the total number of employees in the organization and multiply by 100.
Example: 85 women/200 employees = 0.425 x 100 = 42.5%, so women make up 22.5% of this particular workforce.
Employee burnout is a measure of exhaustion caused by work-related stress. It’s a hard metric to nail down because there isn’t a clear definition or medical diagnosis. There are three main aspects to burnout: exhaustion, feeling negatively towards your job and a reduced ability to complete professional tasks. To measure burnout among your employees, you can use surveys, such as the Maslach Burnout Inventory, to score employees on each of those three dimensions. However, employees need to feel safe in answering the survey questions, and you may have better results if the survey is anonymous. You can also use software like ActivTrak to identify early signs of burnout and take preventative measures.
Absenteeism can be a personal problem with an individual employee who misses work often. They may be experiencing chronic illness, depression or problems at home, for instance. But there are sometimes workforce roots to an employee calling out unexpectedly, such as workplace harassment or job hunting. Having employees miss work is expensive for employers, and if high numbers of your employees are calling out more and more often, this can point to serious issues with your workforce. To calculate absenteeism for your workforce, take the total number of days missed by all employees divided by the number of workdays available and multiply by 100.
Example: 17 days missed/63 workdays in the quarter = .27 x 100 = 27% absenteeism rate this quarter
Employee turnover is a measure of how often employees leave your company over a period of time. Your turnover rate can be a big indicator of employee satisfaction and the health of your workplace culture. A high turnover rate can also point to issues in your recruitment process. To calculate your turnover rate, you divide the number of people who have left your workforce by the average number of employees in that time period and multiply by 100.
Example: 5 employees left/200 employees average = 0.025 x 100 = 2.5% turnover rate
You may want to leave out employees who left due to voluntary turnover such as retirement to get a better idea of your turnover rate.
Employee retention is an HR metric of how well an organization can prevent turnover, or keep employees in their jobs. It’s basically the opposite of employee turnover, but can also be a measurement of employee satisfaction and engagement. Many candidates will look for high retention rates at companies to gauge how likely they are to enjoy working there. To calculate retention rate, you take the total number of employees who stayed at your company through the given time period divided by the headcount you had on day one, and multiply that number by 100.
Example: 195 employees stayed the year/200 employees on Jan 1 = 0.975 = 97.5% employee retention rate for the year
An employee’s tenure rate is how long they’ve been with a given company. Like retention and turnover rates, it can be an important human resources metric to determine the health of your workforce and to strategically plan for long-term workforce issues, such as replacing employees who have long tenure when they retire. To calculate employee tenure, subtract each employee’s start date from the current date or the date they leave the company, then add each of these numbers together and divide by the number of employees to get the average.
Employee 1: Worked at the company 3,000 days
Employee 2: Worked at the company 4,380 days
Employee 3: Worked at the company 650 days
3000 + 4380 + 650 = 8,030 days/3 employees = 2,676.67 days average tenure
This average can be skewed if you have many new employees leaving while older employees stay on longer, so knowing your retention and turnover rates as well can provide a better picture.
Internal mobility rate
In HR, the internal mobility rate is how employees advance to new opportunities or positions within your organization. This doesn’t just have to include upward mobility like promotions – it can include demotions, newly created positions, lateral moves and others. To calculate internal mobility, take the total number of job movements in your organization and divide it by the average number of employees over that same time period, then multiply by 100.
Example: 4 job changes/200 employees = 0.02 x 100 = 2% internal mobility
Cost per hire
Cost per hire is an important recruiting metric showing the average amount of money you spend on each new employee that you bring into the company. It includes advertising costs, labor costs for recruiting teams and other aspects of hiring new candidates. To calculate cost per hire, you add up all recruiting expenses (both internal and external) and divide by the total number of hires over a given range of time.
Average training time
Bringing in new employees means training them, and understanding how much time it takes an average employee to learn their new role can be an important metric for your team. To calculate average training time, take the total number of training hours divided by the number of employees in training over that time period.
Training cost per employee
Understanding how much your organization spends to train employees can also give you insight into how valuable it is to keep your employees in your organization. One report by the Association for Talent Development reported that on average, a company will spend $1,252 per employee on training and development. To calculate training cost per employee, take the total amount of money spent on training and divide by the number of employees who were trained.
Quality of hire
Quality of hire is a somewhat difficult metric to measure because it sums up the value that a new hire adds to your company. Usually companies measure this by how much an employee has contributed to the organization’s long-term success, which can take a long time to truly measure. Each HR department may have its own way to measure the quality of a hire, including individual employee performance metrics and productivity, but also how the employee interacts with their coworkers through turnover or retention.
Failed hire rate
The failed hire rate at your organization is a measure of how many new hires leave in a given period of time, usually a certain number of months after they’re hired. As with other turnover metrics, it can be a valuable tool to understand the health of your hiring and onboarding processes. To calculate failed hire rate, take the number of new employees who have left divided by the number of all of the employees who were newly hired in the same timeframe.
Employee engagement is a measure of how committed an employee is to their work and achieving company goals. It can be a difficult metric to measure because it deals with employee sentiment, such as how they feel about their team, their work and the organization overall, as well as how those feelings show in their actions. There are a number of ways to measure employee engagement, usually through self-reporting such as surveys, one-on-one meetings with managers or internal productivity metrics.
Employee productivity measures how much employees get done (outputs) against the resources put into achieving those results (inputs). The measure is calculated by dividing total outputs (such as completed units, sales, or objectives achieved) by inputs (such as cumulative hours spent). Each organization will measure productivity differently based on its outputs and inputs, which makes calculating it difficult. For a more accurate measure, employee productivity monitoring software like ActivTrak can provide hard data points to help measure productivity in a more objective way.
Knowing how your employees feel about their jobs can help you determine what may be missing from your workplace. Because only employees can really tell you their level of job satisfaction, surveys are the best way to determine this metric. However, comparing job satisfaction rates to other metrics, like employee productivity, retention and turnover, can help in identifying areas for improvement.
The employee net promoter score (eNPS) measures how likely your employees are to recommend your company to others. It’s a way to help you determine if your employees are satisfied in their jobs and engaged in their work. An organization’s eNPS is determined by a one-question survey sent anonymously to employees that asks, “On a scale of 0-10, how likely are you to recommend this company’s products and services to others?” Employees who answer 9-10 are considered promoters, while anyone answering a six or below is considered a detractor. Other respondents are considered passive. Higher scores indicate a more engaged workforce.
Make data-driven decisions with ActivTrak
When it comes to human resource management, workforce planning metrics play a big role in your organization’s ability to plan for your company’s success. ActivTrak can provide data and metrics on employee engagement, productivity and satisfaction through our employee monitoring platform. Contact our sales team to learn more about our workforce planning solutions.