One of the best practices of strategic workforce planning is to rely on actionable data rather than vanity metrics and intuition. However, what relevant metrics should you track, and which ones will misguide you?
This guide on strategic workforce planning metrics will help you sort things out.
This section will review purely quantitive metrics that can be tracked and analyzed through software or manually (we’re advocates of an automated approach, though). They’ll bring you insights into the number of people who work for your organization and their diversification over departments, average lifetime value, and employee turnover
Probably, it’s one of the simplest metrics you could track as it represents the overall number of employees at your organization.
To deepen your insights, you can also track the number of full-time employees ( and the distribution of employees by each department or division unit. That’s how you can find out bottlenecks like understaffing and staff overage.
2. Attrition rate
There’s a slight difference between attrition and turnover. Attrition means the process when employees leave the company voluntarily, and you don’t want to fill their position after they leave. Common reasons for attrition include retirement, resignment, going back to studies at university or school, health reasons, and even death.
To calculate the attrition rate accurately, you need to divide the number of employees that left the company for reasons that qualify as “attrition” to the overall number of employees and multiple that number by 100.
A high attrition rate should be a reason for concern as it indicates reflux of talents that aren’t replaced afterward. If you don’t balance the attrition rates for a while, it’ll eventually lead to issues with knowledge transfer, staff downsizing, and workforce aging.
To prevent high attrition rates, invest in retention programs to keep extraordinary talents within the organization. Also, it makes sense to diversify workforce and employment types like in-house employees and contractors.
3. Turnover rate
The difference between attrition and turnover lies in the scale of employees that leave. Simply put, turnover represents the general number of employees that leave a company, and you want to replace them with internal talents or new hires. Here’s how to calculate the turnover rate:
To dig deeper, you can also calculate voluntary and non-voluntary turnover rates to figure out the percentage of people that leave for their personal reasons and the ones you dismiss.
Another significant reason for high turnover rates is a toxic culture in the workplace. A study by Jobvite shows that 32% of new hires quit the company within the first 90 days because of a toxic culture.
Other common causes why people leave include lack of onboarding, career advancement, and a sense of purpose.
High turnover rates don’t always indicate negative changes. In general, employee turnover happens due to voluntary and non-voluntary reasons.
Most turnover reasons are voluntary, when employees abandon their jobs, switch companies, relocate, go to the army, study, etc.
Non-voluntary employee turnover happens when employers lay off their staff due to poor performance, failing to pass a probation period, redundancy, violation of the company’s policy, and so on. In this case, high turnover could bring positive changes like new, qualified talents.
All in all, it’s essential to keep a balance in your turnover rates and analyze the root cause. Even though the average turnover rates range from industry to industry, the midpoint is 19%, according to the SHRM study.
4. Retention rate
Retention rate is one of the greatest concerns of HR managers. It indicates an organization’s success in retaining its employees over a specific period, like a year or quarter. That’s why, to calculate it accurately, you need to know the exact number of people on the first day of the specified period and the number of people that left during that time.
The higher the retention rate, the better. The same study by SHRM states that the average retention rate over industries is 81%. However, the figures vary depending on the industry. For example, industries with the lowest retention rates include retail, manufacturing, and consumer goods. Because these industries rely on seasonal customer spikes, the average retention rate is low.
Research by IBM Smarter Workforce Institute says that 80% of employees are likely to stay with a company for longer when they feel a strong connection with its culture and values. Thus, focus on bringing the talents that match your culture and gathering feedback is vital to low retention rates and a loyal workforce.
Time-to-hire is one of the key strategic workforce planning metrics that helps assess the average time spent bringing new talent on board. To track this metric for a specific vacancy, you need several inputs: the day when you opened a vacancy, the day when a first candidate applied, and the day when a candidate accepted the offer.
Let’s say you opened the vacancy on the 1st of March, then you received the first application on the 3rd of March and successfully closed the vacancy on the 29th of March. You need to take three from 29, and you’ll get 16 – the time-to-hire of a candidate for a specific position.
If you want to calculate your average time-to-hire rate, you’ll need the arithmetical average. Here’s the formula:
Ideally, this metric must be as low as possible. In this case, it means that you get enough exposure to bring in qualified talents and attractive working conditions to generate accepted offers.
To speed time-to-hire, companies follow a marketing approach in HR to create a positive employee experience at all touchpoints with a company. It includes building a positive employer brand image among external audiences, implementing referral and opt-in bonuses, offering an impressive benefits package and compensation, and more.
6. Tenure rate
Tenure is also sometimes called employee lifetime value. It’s an important strategic workforce planning metric that represents the average time employees stay with an organization. If the tenure rate is high, it indicates positive retention efforts and employee engagement.
To assess your tenure rate, you’ll need to sum up the number of days each employee has worked at organizations, divide that number by the headcount, and multiply by one hundred.
You can modify your tenure metrics and estimate an average number of days, months, or years. Also, you can calculate employee tenure in a specific position. Such metric provides insight into areas for improvement, training opportunities, and internal mobility potential.
7. Internal mobility rate
Internal mobility indicates career opportunities for employees within an organization, like:
- Department transfers
- Side projects
The development of internal mobility potential can be by six times cost-effective than with external hires. Moreover, a sustainable internal mobility process results in better employee engagement, higher retention rates, and upskilling potential.
8. Absenteeism rate
When employees spend their work time doing their personal affairs, it obviously leads to low engagement, poor performance, and revenue loss. A high absenteeism rate signalizes unproductive time and helps you implement preventive measures. For that, you’ll need several inputs: number of unexcused absences and periods like a month, quarter, or a year.
Note that absenteeism implies two types of excuses why employees don’t work when they’re supposed to:
- Admissible excuses like diseases, the death of relatives, days off, working trips, etc.
- Inadequate excuses like a no-show, personal affairs, being late, etc.
Studies show that common workplace absenteeism causes include toxic culture and harassment, personal issues, insufficient compensation of sick leaves, and job hunting. That’s why it’s essential not only to investigate excuses of absenteeism but the root cause as well.
This section will review strategic workforce planning metrics you can’t measure directly with software or Excel spreadsheets. It doesn’t mean they’re invaluable, though. They bring you as much insight as quantitative metrics and help you dig deeper into the root cause of employee disengagement, bad hires, diversity disbalance, and more.
9. Failed hires rate
About 74% of HR managers admit they fail to hire suitable people for open positions. Businesses bring bad hires to their teams because of:
- Poor recruitment processes like insufficient candidate screening and defective candidate pipeline.
- Poor onboarding and training that results in poor performance.
- Too much focus on hard skills and match with a job profile rather than soft skills and adherence with culture and values.
To calculate failed hires, you’ll need to specify the length of the probation period (let’s say it’s 90 days), the number of new hires in this period, and the number of people that passed the probation. In this case, the formula would be:
In addition to quantitive metrics, you might want to investigate the reason why new hires fail to pass their probation. To get these insights, consider exit interviews and exit surveys to get employee feedback on their supervisors and a team, reason for dismissal, suggestions to improve, etc.
10. eNPS – Employee net promoter score
eNPS means “employee net promoter score,” or likeliness of recommending your company to friends and relatives. In other words, high eNPS scores demonstrate employee loyalty and engagement with a company.
HR experts recommend conducting eNPS surveys at least once a year. Some companies run monthly, bi-monthly, and bi-yearly surveys, though.
A typical eNPS questionary asks employees to grade the statements with scores from 1 to 10 and provide complete answers to the following questions:
“How likely are you to recommend our company to your friends and relative?”
“Why would you recommend our company to other people?”
“How can we improve our HR processes to increase the scores?”
In the eNPS survey, HR managers outline three types of employees: detractors, neutrals, and promoters. To calculate the ratio of each employee type, you’ll need several inputs:
- The overall number of respondents
- Number of respondents that rated the statements with 9-10 grades (promoters)
- Number of respondents with 0-6 grades (detractors)
No matter what eNPS grade you get, it’s important to listen to feedback and implement necessary changes, at least the most critical ones. To enhance your eNPS, you might want to gather more data like demographics, departments, and employee tenure. For example, you could find out that some departments show lower eNPS rates due to a team’s lack of leadership or toxic culture.
This isn’t a full list of strategic workforce planning metrics. There are endless possibilities of collecting and analyzing the data that’ll help you become a data-driven company.
Also, don’t let vanity metrics misguide you. Make sure that you track actionable metrics that help your organization achieve its goals. If you and your team are novices in strategic workforce planning, HRForecast will support you with consulting and customized software solutions. Drop us a line to schedule a demo call in the shortest terms.