These formulas cover employee turnover, retention, cost per hire, training ROI, and more, helping HR professionals make data-driven decisions.
Formula:
[
{Turnover Rate} = \frac{{Number of Employees Who Left During Period}} / {{Average Number of Employees}} * 100
]
Example:
- Employees at the start of the year: 100
- Employees at the end of the year: 90
- Employees who left: 20
- Average number of employees = ((100 + 90) \div 2 = 95)
- Turnover rate = (\frac{20}{95} * 100 = 21.05\%)
Scenario:
A retail company experiences a 25% turnover rate in a year. HR reviews exit interviews to identify the reasons (e.g., low pay or lack of career development) and implements retention strategies, such as offering competitive wages and growth opportunities.
Formula:
[
{Retention Rate} = \frac{{Number of Employees at End of Period - New Hires}} / {{Total Employees at Start of Period}} * 100
]
Example:
- Employees at the start: 200
- New hires: 30
- Employees at the end: 190
- Retention rate = (\frac{190 - 30}{200} * 100 = 80\%)
Scenario:
A tech firm finds its retention rate is 70%. HR creates a mentoring program and offers skill-development workshops, which increases retention to 85% within a year.
Formula:
[
{Cost Per Hire} = \frac{{Total Recruitment Costs}} / {{Number of Hires}}
]
Example:
- Total recruitment costs: $50,000
- Total hires: 25
- CPH = (\frac{50,000}{25} = 2,000)
Scenario:
An HR team notices their CPH is high due to reliance on third-party recruiters. They invest in an internal recruitment team and reduce CPH by 30%.
Formula:
[
{Absenteeism Rate} = \frac{{Total Unscheduled Absence Days}} / {{Total Workdays in Period}} * 100
]
Example:
- Unscheduled absence days: 150
- Total workdays for all employees: 10,000
- Absenteeism rate = (\frac{150}{10,000} * 100 = 1.5\%)
Scenario:
A manufacturing company finds its absenteeism rate is 4%. After introducing wellness programs and flexible schedules, the rate drops to 2%.
Formula:
[
{Training ROI (\%)} = \frac{{Net Benefits of Training}} / {{Training Costs}} * 100
]
Net Benefits: ({Increased Revenue or Cost Savings - Training Costs})
Example:
- Training costs: $20,000
- Revenue increase due to training: $50,000
- Net benefits = $50,000 - $20,000 = $30,000
- Training ROI = (\frac{30,000}{20,000} * 100 = 150\%)
Scenario:
A sales team undergoes negotiation training costing $10,000. Sales increase by $25,000 within 3 months, leading to a 150% ROI.
Formula:
[
{Time to Fill} = \frac{{Total Days to Fill All Positions}} / {{Number of Positions Filled}}
]
Example:
- Total days to fill positions: 300
- Number of positions filled: 10
- TTF = (\frac{300}{10} = 30 { days})
Scenario:
An HR department’s TTF is 45 days. By optimizing job descriptions and using AI-based applicant tracking systems (ATS), TTF decreases to 30 days.
Formula:
[
{OAR} = \frac{{Number of Offers Accepted}} / {{Number of Offers Made}} * 100
]
Example:
- Offers made: 20
- Offers accepted: 15
- OAR = (\frac{15}{20} * 100 = 75\%)
Scenario:
A startup with a 60% OAR improves its employer branding and increases the rate to 90% by promoting benefits like remote work and flexible hours.
Formula:
[
{Engagement Score} = \frac{{Total Engagement Responses (Positive)}} / {{Total Responses}} * 100
]
Example:
- Positive responses: 400
- Total responses: 500
- Engagement score = (\frac{400}{500} * 100 = 80\%)
Scenario:
An employee survey shows an engagement score of 70%. HR introduces recognition programs and development opportunities, increasing engagement to 85%.
Formula:
[
{Salary Increase (\%)} = \frac{{New Salary - Old Salary}} / {{Old Salary}} * 100
]
Example:
- Old salary: $50,000
- New salary: $55,000
- Increase = (\frac{55,000 - 50,000}{50,000} * 100 = 10\%)
Scenario:
After benchmarking salaries, an HR team adjusts salaries by 5–10% to remain competitive in the industry.
Formula:
[
{Diversity Hiring Rate} = \frac{{Diverse Hires}} / {{Total Hires}} * 100
]
Example:
- Diverse hires: 25
- Total hires: 100
- Diversity hiring rate = (\frac{25}{100} * 100 = 25\%)
Scenario:
A company with a diversity hiring rate of 15% partners with diversity-focused job boards and achieves a 30% rate the following year.
Formula:
[
{Turnover Cost} = {(Recruitment Cost + Onboarding Cost + Lost Productivity)}
]
Example:
- Recruitment cost: $10,000
- Onboarding cost: $5,000
- Lost productivity: $20,000
- Turnover cost = $10,000 + $5,000 + $20,000 = $35,000
Scenario:
A mid-sized business reduces turnover costs by implementing retention initiatives, such as career development plans and improved leadership training.
Formula:
[
{Human Capital ROI} = \frac{{Revenue - Operating Expenses (Excluding Labor Costs)}} / {{Labor Costs}}
]
Example:
- Revenue: $1,000,000
- Operating expenses (excluding labor): $600,000
- Labor costs: $300,000
- ROI = (\frac{1,000,000 - 600,000}{300,000} = 1.33)
- ROI = 133%
Scenario:
HR evaluates that their current ROI is 100%. By optimizing workflows and implementing automation, they boost ROI to 150%.
Formula:
[
{Average Tenure} = \frac{{Total Years of Service for All Employees}} / {{Total Number of Employees}}
]
Example:
- Total years of service: 500
- Total employees: 100
- Average tenure = (\frac{500}{100} = 5 { years})
Scenario:
A company with a low average tenure (2 years) launches a mentorship program and increases the tenure to 3.5 years.
Formula:
[
{HR-to-Employee Ratio} = \frac{{Number of HR Staff}} / {{Total Number of Employees}} * 100
]
Example:
- HR staff: 5
- Total employees: 500
- HR-to-employee ratio = (\frac{5}{500} * 100 = 1\%)
Scenario:
A company with a growing workforce adjusts its HR staffing to maintain a ratio of 1:100 (1%).