The HR productivity formulas for your company.
There are many different ways of calculating HR productivity and here divided into 3 parts:
- **What? –** What are the HR productivity formulas?
- **Why? –** Why is the HR productivity formula needed?
- **How? –** How to use the HR productivity formula for improving employee performance?
_Productivity is not just about doing more, it is about creating more._
There are not many efforts, sweat, and labour in productivity, more results come itself.
_Productivity of work is not the responsibility of workers but managers._
It means the manager is responsible for increasing productivity, not the worker.
Productivity is not an accident; it is the outcome of planning, preparation, and prevention.
## **#1 HR PRODUCTIVITY FORMULAS**
What are the HR metrics or productivity formulas that enable you to enhance your impact reduce the cost, measure the performance, and predict the future?
Predict future means you have the formula that helps in knowing what will be the future of your business.
These are the metrics that measure the efficiency and effectiveness of the whole organisation and especially of the HR department.
**For example:**
You can measure the employee turnover, employee training, employee retention, human capital cost, cost of labour, and employee expenses per employee using the formulas.
_A person who feels appreciated will always do more than he is expected to do._
You can do this with help of the following:
- Quantify the HR values
- Prepare guide for workforce
- Calculate Return on Investment (ROI) from HR
- Frame measurement standards
- Find HR contributions on business results
- Uncover the strength and weakness of the business
- Better decision-making with the help of data
HR demonstrates the business language (generally people do not consider HR with business language).
_Employees engage with employers and brands when they are treated as humans._
An employee works together with an employer and brand when he/she treated as humans. You need data and numbers to treat employees as humans.
## **#2 REVENUE PER EMPLOYEE**
Use the following formula to know this:
**Total revenue of the company/Total number of employees**
**For example:**
- Revenue of your company is Rs. 1 Crore and Total employees are 10.
**Revenue per employee = Rs.1 Crore/10 = Rs. 10 Lakh per revenue**
- In the case of 100 employees, it will be Rs. 1 Lakh per employee.
## **#3 COST PER HIRE**
It is the cost of HR and recruitment staff.
**For example:**
- You have 5 employees in the HR department.
- The total cost of the HR employees is Rs. 1 Lakh per month and 5 new hirings done in a month.
**Cost per hire = Rs. 1 Lakh/5 = Rs. 20,000**
You spend Rs. 1 Lakh on hiring 5 new employees so the cost per hire amounts to Rs. 20,000.
## **#4 OVERTIME PERCENTAGE**
It means the payment done to employees for overtime.
The formula for this is:
**Overtime percentage = Overtime Amount Paid/Total Salary of Employees × 100**
**For example:**
- Overtime amount is Rs. 10 Lakhs and total salary is Rs. 1 Crore.
**Overtime percentage = Rs. 10 Lakhs/ Rs. 1 Crore × 100 = 10%**
This can be also termed as incentive payout. You need to write incentives in the numerator and total salary cost of employees in the denominator to get the incentive payout.
**Incentive payout = Inventives Paid/Total Salary of Employees × 100**
**For example:**
**Incentive payout = Rs. 20 Lakh/ Rs. 1 Crore × 100 = 20%**
You can calculate the percentage to have an idea for deciding what standards to fix.
## **#5 ABSENTEEISM**
You can also calculate absenteeism.
**Absenteeism = Number of unexcused absence/Total working days × 100**
**For example:**
- Total working days are 100 and the number of the unexcused absence of an employee is 10 days.
**Absenteeism of Employee = 10/100 × 100 = 10%**
- You need to make the employee understand to bring it to 2%, 3%, or 5% means out of 100 days try only to take 2, 3, or 5 unexcused leaves. It is wrong to take 10 unexcused leaves.
You will be able to make the decisions when you have data.
## **#6 JOB SATISFACTION RATE**
The formula for this is:
**Number of satisfied employees/Number of total employees × 100**
You survey your company. You ask all the employees (suppose the company has 100 employees) that are they satisfied or not.
**For example:**
- Out of 100 employees, 80 employees wrote satisfied and 20 wrote dissatisfied.
- Job satisfaction rate will be 80/100 × 100 = 80%
_In order to build a rewarding employee experience, you need to understand what matters most to your people._
Employees feel rewarded when you give them the rewards they deserve.
## **#7 SUCCESSFUL EXECUTION**
You can also calculate the execution rate.
Formulas help you in MIS creation and decision-making. The CEO or owner of the company need not look into things all the time. He/she can make good decisions based on the data.
**For example:**
- Entrepreneur uses not to visit his office before COVID and he will also not go to the office after COVID.
- He has maintained a CEO’s office, based on the data and information received, he does all his decision-making. The company itself performs very well.
All the time you can monitor employees to do their work. It is not a good way. Employees give resignations due to micro-monitoring.
The formula for calculating successful execution is:
**Successful execution = Total number the of task completed/Total number of the task assigned × 100**
**For example:**
You gave 10 tasks to an employee and he/she completed 5 tasks. The execution rate will be 50%
## **#8 PROFIT PER EMPLOYEE**
Calculate this by writing business profit in numerator and number of employees in the denomination.
The formula is:
**Profit per employee = Business profit/Number of employees**
**For example:**
The number of employees is 100 in your business and the profit is Rs. 1 Lakh. The profit per employee will be:
**Rs. 1 Lakh/100 = Rs. 1000 per employee**
## **#9 TRAINING SPEND PER EMPLOYEE**
You should focus on the training and development of your employees.
The formula for this is:
**Training spend per employee = Total training cost/Number of employees**
**For example:**
Your total training cost is Rs. 1 Lakh and the number of employees is 100.
The training spend per employee will be:
**Rs. 1 Lakh/100 = Rs. 1000 per employee**
You can tell your employees that Rs. 1000 will be invested in the training of each employee.
## **#10 ABOVE AVERAGE PERFORMANCE MANAGEMENT RATIO**
The formula for this is:
**Above-average performers/Total employees**
**For example:**
If above-average performers are 70 employees and total employees are 100 then above average performers are 70%.
## **#11 TIME TO HIRE**
You can consider the time to hire when you hire employees. Use the following formula either you are hiring employees with your HR team or with the help of a recruitment agency. The formula is:
**Date of the first interview – Date of hire**
**For example:**
If the date of the first interview of an employee is 1st January and the date of hiring an employee is 31st January then it takes 31 days to hire an employee.
This will help you to fix that is it possible to hire in 20 days, 18 days, 22 days, or 23 days that generally takes 31 days.
This will help to improve your benchmark for employee hiring.
## **#12 ANNUAL RECRUITMENT COST**
Calculate the total hiring cost by adding the costs of software, charges paid to job portals such as [naukri.com](http://naukri.com/), advertisement cost, and employees engaged in this task.
## **#13 OFFER ACCEPTANCE RATIO**
You can calculate this by the following formula:
**Offer acceptance ratio = Total number of people accepted offer/Total people offered**
**For example:**
You offered 100 people in a year to join your company, out of this 50 people agreed to join the company. This means out of the offers given 50% of people join your company.
If less number of people are joining, then there is some problem in your company, some wrong written about you on social media, or bad experience of the interview in your company.
You need to check that why people are not joining or the branding of your company is not good.
## **#14 PERCENTAGE OF NEW HIRE THAT LEAVE IN 90/365 DAYS**
The formula for the percentage of a new hire that leaves in 90 days is:
**New hire quit within 90 days/Total new hires within 90 days × 100**
**For example:**
If new hires within 90 days are 10 and 3 new hires quit the job, then the percentage of the new hire will be:
**3/10 × 100 = 30%**
This tells you that 30% of employees of your new hires leave the company in the first three months.
You can calculate this for one year also.
**For example:**
You hired 50 people in a year and 10 people left the job in a year.
Percentage of New Hire that Leave in 365 Days = 10/50 × 100 = 20%
This tells you that 20% of employees of your new hires leave the company in a year.
This helps you to know why people leave the organisation and the number is less or high. It is also not good if a few numbers of people leaving the organisation or not leaving the organisation. All employees are working for the life-time in your company is also not good. This means the company environment is very comfortable. The company or organisation is not considered good if so many people are leaving.
## **#15 TIME TO FILL**
The formula for this is:
**Date of offer acceptance – Date of position open/advertised**
**For Example**:
The opening of the job and interview information was announced on 1st January. People are joining or accepting the offer on 28th February. This tells that 2 months are needed to fill the job openings.
## **#16 OVERALL TURNOVER RATE**
You can calculate the overall turnover rate if employees leaving the job bothers you. The formula for this is:
**Number of employees left in a year/ Total number of employees in a year × 100**
**For example:**
If the total number of employees in your company in a year is 100 and 25 employees leave the company in a year, then the overall turnover rate will be:
**25/100 × 100= 25% of employees left in a year**
Here new hiring took place or not is not considered. Generally, how many employees are leaving the company in a year is considered.
Its opposite employee retention can also be calculated, that is:
**Number of employees stayed in a year/Total number of employees ×100**
**For example:**
If the total number of employees is 100 and 75 employees retained, then the retention rate will be:
**75/100 × 10 = 75%**
You can calculate both attrition and retention rate of employees.
Why do employees leave the organisation?
_When ‘I’ is replaced by ‘We’ even illness becomes wellness._
It means you do not need to work with ‘I’ attitude, work with ‘We’ attitude’.
A famous saying of Ratan Tata ji is:
**“If you want to go fast, go alone, but if you want to go far, go together.”**
Teamwork makes the dream work. When teamwork feeling is given to employees it becomes their dream work and they do not leave the organisation.
Talent wins games. You can win games with talent but teamwork will win championships. You need to win the championship not the game and need to work with the team. It is important to have teamwork in the organisation.
## **#17 STAR PERFORMER’S RETENTION RATE**
The retention rate of star performers of your company is important. Your company may have 100 employees but star performers were 10. The formula for this is:
**Star performer stayed/Total star performers × 100**
**For example:**
The total star performers are 10 and stayed are 8. The retention rate will be:
**8/10 × 100 = 80%**
It means the retention rate of start performers is 80%.
Try to maintain the star performer retention rate of 100%. If your company has 10 start performers, then 10 out of 10 should be in the company at the end of the year. This will help the company grow. The star performers make the company run.
## **#18 CANDIDATE EXPERIENCE METRICS**
When you are doing the hiring, the experience of that should also be considered. Take the feedback of the candidate after the interview. Ask, “Sir How was your experience of the interview? Would you like to recommend this company to some other candidate?”
If he/she recommends then he/she is a promoter. If he/she says for a bad experience, then he/she is a detractor.
The candidate recommending your company and giving 10 or 9 out of 10 marks will depend on the positive answers of the following questions:
- Does somebody offer water to the candidate when he/she came for the interview?
- Does anybody welcome him/her the time he/she arrived for the interview?
- Does anybody tell the candidate about the place to sit?
- Does his/her resume taken and all rounds timely conduct?
The candidate gives good marks for a good place, experience, environment, and the excitement with which people are working.
Detractor gives you 2, 3, or 5 numbers out of 10 and says the company is very bad; I will not join and do not let anybody else to join.
Promoter minus detractor gives you the experience score. If the experience score is good, then people will join. If the experience score is good, then people will join. A bad experience score tells that the candidate will not join and further new candidates may also not join.
This requires the need for improvement, something wrong is happening, and new people coming are getting the message that the company do not take care of them.
If the company is not able to take care of candidates during the interview, then it is not possible at the time of the job.
_Good teams become great ones when the members surrender ‘me’ for the ‘we’._
You need to change the ‘me’ to ‘we’.
The various software formulas are as follows:
- Workforce planning analytics
- People analytics feedback
- Talentsoft analytics
- Orion
- Staff squared
- Oracle HR analytics
- HCM cloud
- Employee site
- Kelly OCG solution
- Kangroo HR
- Team deck
- Wallet HR
There many numbers of software. You can use the software for the calculation or calculate manually at the starting of your business.
Generally, HR productivity formulas are overlooked and considered underrated and useless. The formulas will help you if the organisation is growing.
_Nothing has come in hands, understand that dip is incomplete_
_No matter how difficult it is, the first step is necessary_
Take the first step of implementation. Implementation is beneficial not the information.