The Top HR Metrics to Track

Support for Mostly metrics comes from Mercury, the fintech startups use for banking and all their financial workflows.

At most startups, +70% of costs walk on two feet. Here are the metrics high functioning finance teams should partner with HR on to ensure you’re getting the most out of your human capital.

Note: I’m not going to comment on anything related to gender, diversity, sexual orientation, or pay equity as I don’t believe I’m uniquely qualified to comment, so I’ll leave D&I to the experts and stick to the maths for this particular post. I’m also approaching this from the eyes of a CFO or COO in the SaaS space with 100% salaried employees.

Efficiency

Average Revenue per Employee: The GOAT of SaaS metrics, in my humble opinion
- Probably offers the best insight into a company's scalability, and eventual operating efficiency
- Are you hiring faster than your company can generate incremental topline results?
- At a high level, can your growth eventually outrun your costs?

Span of Control: Number of direct reports
- Anytime this gets over 9, I think “under investing”
  - Nvidia’s CEO Jensen Huang has 50 direct reports. His calendar must suck.
- Anytime this gets under 5 (and there are additional managers with the same title elsewhere in the org), I think “over investing”
  - For example, you shouldn’t have 12 BDRs and 3 BDR managers…that’s just too rich

“I don’t know why they made me do this product demo in front of a kitchen stove. Also, I have 50 direct reports.”

Pay and Benefits

Average Salary: Should be tracked and trended at both the department and company-wide level
- Companies go through chapters where this moves up and down. There should be a story as to why the trend is going in a certain direction:
  - Increases as they layer in more experienced leaders (think: post Series B)
  - Decreases as they scale and hire more cookie cutter roles to build out their benches (think: post Series D)
  - Increases as they look to bring on subject matter experts (think: pre IPO)
  - Decreases as they strive for efficiency and cash flow at scale (think: mature public company)
Salary Penetration Rate: How do employees match a predetermined benchmark for normal pay at the position
- For example, in a position with a salary range of $80,000 to $100,000, an employee making $90,000 has achieved 50% penetration; $95,000 would equal 75% penetration.
- Companies should purposefully determine if their strategy is to, on average, pay above or below the 50th percentile. Then finance should help them apply that methodology consistently.

Source: Forbes

Cost of Payroll per Employee: Helps monitor the return on investment (ROI) for the software and / or services a business uses to run payroll (Paycor, Paycom, Paylocity, Rippling, Gusto, ADP)
- This should get cheaper the bigger you get, as you can spread the fixed costs over a larger base. You should also get better rates because the payroll providers want to sell you additional services.
Benefit Participation Rate: Percentage of employees enrolled in a healthcare plan
- My rule of thumb is if it’s under ~40% (and you’re employing people in a country that doesn’t offer free healthcare), then employees think your plan is garbage and flocking to that of their spouses
- To determine the rate, divide the number of employees enrolled by the number of employees eligible, then multiply by 100 to get a percentage.
Healthcare costs per employee: Average cost of employer-sponsored health insurance. This is the dollar denominated version of the formula above.
- Should be benchmarked against companies of a similar size in a similar region.
- When paired with the Benefit Participation Rate, it also reveals if you are overpaying for stuff employees don’t care for (like pet benefits)