The BASK names four metrics for the HR function itself, and SHRM defines one of them with a formula you must be able to run.
The four HR-function metrics
- HR staff per full-time employee
- Customer satisfaction
- Key performance indicators (KPIs)
- Balanced scorecard
Only those four. Cost per hire, time to fill, yield ratio and selection ratio are Talent Acquisition staffing metrics. Compa-ratio, range spread, midpoint differential and pay compression are Total Rewards compensation-structure measures. Turnover rate, retention rate, absence rate and revenue per employee are general workforce metrics, not this list.
The HR-to-employee ratio
SHRM defines it as HR staff per 100 employees:
HR-to-employee ratio = (HR FTEs / total FTEs) × 100
Worked example: an organization with 1,120 FTEs and 14 HR FTEs. 14 / 1,120 = 0.0125. 0.0125 × 100 = 1.25 HR staff per 100 employees.
The trap is inversion. Total FTEs divided by HR FTEs gives employees per HR staff member, which is a different number entirely. Dividing HR payroll cost by total payroll cost is an HR cost measure, not the staffing ratio. Using business units as the denominator is not SHRM's formula. The denominator is total FTEs, always, and you multiply by 100.
Picking the right metric for the question
- A CFO asking HR to justify its headcount against an external reference point wants HR staff per full-time employee. It is the measure expressed relative to the workforce and the one benchmarked externally. KPIs is a category, not a measure; you would still have to choose a staffing metric inside it.
- An HR director wanting to know whether internal clients experience a shared services consolidation as an improvement wants customer satisfaction. It is the read on how those receiving HR services rate them. Staffing level will not reveal service experience, the balanced scorecard is a framework for balancing measures rather than a read on clients, and involuntary turnover measures employer-initiated separations.
Carry this: HR FTEs on top, total FTEs on the bottom, times 100.