HR Certification Podcast Episode 13: HR Metrics & Formula Review for HRCI & SHRM

Welcome to the HR Certification Podcast: a podcast for HR leaders working towards their human resources certification with HRCI and SHRM. Join host Jessica Miller-Merrell, founder of Workology.com and HR certification prep program, Ace The HR Exam, as she shares study tips, exam insights, and topical review for HR exams, including the aPHR, PHR, SPHR, SHRM-CP, and SHRM-SCP. Now, here’s Jessica with this episode of the HR Certification Podcast.

HR Certification Podcast Episode 13: HR Metrics & Formula Review for HRCI & SHRM

Jessica Miller-Merrell: [00:00:37.28] Hey there and welcome to the HR Certification Podcast. I’m your host, Jessica Miller-Merrell and I am so excited to have you here. My mission, purpose, and passion is elevating the human resources industry. And in the HR Certification Podcast, we provide personal and professional development solely focused on HR certification for SHRM and HRCI exams. This podcast is powered by Workology’s HR certification prep courses and resources. To learn more about these courses and prep resources, visit www.HRCertificationPodcast.com. Now, before I dive into today’s podcast, I do want to hear from you. Give me a follow over on Instagram or TikTok, @WorkologyBlog, where I’m happy to answer your HR certification questions. That’s @WorkologyBlog, and maybe I’ll feature your question in an upcoming episode of the HR Certification Podcast. In every single episode, I cover information and resources to help you with your HR certification exams. This podcast is short and to the point, so you can get your review in and move on. The HR Certification Podcast is divided into different segments and each in every single episode, we address a common question an HR topical area to assist you in your review, and we also take a look at a glossary term to help you prepare for your HR certification exam. Again, these are designed for SHRM and HRCI exams and that includes the A for the for the S for the Shrm-cp and the Sherm SCP. In the transcription notes of every single podcast. I also share recommended resources and information to assist you, and that’s available at HRCertificationPodcast.com.

Jessica Miller-Merrell: [00:02:28.40] This specific episode is all about HR metrics and formulas. These terms and information cut across SHRM and HRCI competencies. The subject of formula and metrics is a really a point of contention for HR leaders because we’re concerned about calculations during the exam. And yes, you will have access to a digital calculator, but let me assure you that no, you will not have complex math on the exam. However, it is important to be familiar with the terms and how to calculate them because you might need to use one of them in some way. Think of these test questions that require you to think around corners, meaning that you might have to make some assumptions, maybe about a formula or metric as part of the answer to a test question. Yes, for you SHRM folks, I’m talking about those tricky situational judgement test questions and some of the more strategic questions in the SPHR. Even if you aren’t going to be doing calculations on the exam, I do want to stress, it’s important to be familiar with terms like revenue per employee and scenarios where these things like earnings per share might be important. An HR metric that is growing in importance is the HR-to-staff ratio. So we’re going to talk about this metric, how to evaluate it, how we can leverage it as an HR leader. Yes. This topic, the HR-to-staff ratio is in your SHRM and HRCI exam, so let’s tune in to an excerpt from a video I recently posted on the HR-to-staff ratio.

Jessica Miller-Merrell: [00:04:02.45] So an HR metric that is growing in importance is the HR-to-staff ratio. Let’s talk about what this metric is and how we can use it to evaluate how we as HR support our employee population and, also, is this topic part of your SHRM and HRCI certification exams. Simply put, the HR-to-staff ratio is employees divided by human resources team members. Sounds easy right? This ratio is important. Since our current economic downturn, our HR departments have reduced in number dramatically. HR serves as an internal customer support staff. Maybe just like a call center, customer service employees that are external facing but different. We’re internal-looking at the employees. Metrics like this one are important because we need to consider how many employees we support, and the more employees we have but the less team members, we are more thinly spread. And in traditional HR, our metrics and numbers are not normally tied to specific activities like the IT department and the number of tickets that are open with employee technical questions. So most IT departments, they have a ticket system that they not only use to log questions and keep track of the support they provide, but you can see it in terms of how long a ticket is open, but also as a tool that monitors the number of tickets that are logged per day, the number of questions and the time spent on each ticket, and the duration the ticket is open before it’s closed or escalated.

Jessica Miller-Merrell: [00:05:32.25] Traditionally, in HR, we haven’t had a way to track these sort of interactions because we have operated in a world where we don’t have a ticketing system. Generally speaking, in HR, I relied on case management software or some low-tech tool like a notebook to log conversations, investigations, and interactions. But I really didn’t think about the amount of time spent or the complexity of questions and requests, because we don’t have a way to truly measure our workload in HR. And that’s one of the reasons why CEOs have no idea actually what we do, or really found a way to understand what we do, and finding out what that average HR-to-staff ratio can be a challenge across the board. Now, according to recent SHRM data, the average HR-to-staff ratio in 2024 is 2.57, but the sweet spot for most employers is between 1.5 and 4.5 HR staff per 100 employees. So basically what that means is that if you have 500 employees, you should have anywhere between 7.5 to 22.5 HR employees at a 500-person company. I don’t think that even at a company where I had 2500 employees, we had 22.5 HR staff members to support the team. This is one of the biggest challenges with the HR-to-staff ratio. So there it is. That’s the HR-to-staff ratio. Yes, this is a formula that is evolving. Yes, this is a formula you need to be familiar with as part of your HR certification exams for SHRM and HRCI. But more importantly, you need to know this information in your interactions and conversations with your executive team and business leaders so that you can explain and discuss the value that HR brings and the type of staff and support we need to support our organizations successfully.

Jessica Miller-Merrell: [00:07:29.10] So hey, that’s the HR-to-staff ratio. Again, yes, you do need to know this formula. It is going to be on perhaps your SHRM or HRCI certification exams. But more importantly, you need to know this information so that you can have conversations with your executive team, business leaders, so you can talk about the importance of having appropriate staff to support your employees and your organization’s business efforts. Now, if you’re looking for more great resources like this one, our course Ace the HR exam is packed full, jam-packed full of more resources to help you prep for your exam. That’s over at AceTheHRExam.com. I have more than 42 hours of training, hundreds of pages of downloadables and resources, +1500 test questions in our bank. That’s AceTheHRExam.com.

Break: [00:08:17.58] I know that was a fast and furious review, but it’s time to take a reset while we move into our next segment here at the HR Certification Podcast, powered by Workology. I’m your host, Jessica Miller-Merrell. It’s so exciting to have you here. Workology does offer HR certification prep courses and resources. You can head on over and take a look at www.HRCertificationPodcast.com or, frankly, Workology.com to see everything that we’re cooking up. Physical products like flashcards and study guides, as well as on-demand learning for all types of learners. Most importantly, our courses and content is accessible whenever and however you need them. They are all available on demand and accessible on our very own Workology app for Android and iOS. I do want to hear from you. Send me your HR certification questions. No question is too silly or they’re all welcome. Head on over to TikTok or Instagram, @WorkologyBlog, and I’m happy to answer questions there. And we can talk all about HR certification prep.

HR Glossary Term(s) – The Cost of Vacancy (COV)

Jessica Miller-Merrell: [00:09:21.18] So we’re now moving into a special segment of the HR CertificationHRM Podcast, where I review an HR glossary term, and we do this for every single episode. Yes, all these terms are going to be on your SHRM and HRCI exam, so let’s get to it. The cost of vacancy or COV refers to the financial impact or cost incurred by an organization due to an unfilled job vacancy, and this is over a certain period of time. This represents the expenses associated with lost productivity, decreased efficiency or inefficiency, and potential revenue loss resulting from an absence in and of that, that qualified employee that’s in a critical role within our organization. The COV varies by industry. We have an example coming up, and this can be estimated using the company’s revenue per employee, which is the company’s total revenue divided by your number of employees. And then you’re going to divide that by the number of working days in a year, which is 260. This gives you the average revenue produced by an employee on a daily basis. We can use this formula to calculate COV for specific positions. So let’s go ahead and talk about that. We’re going to use an example of a software developer role. The mean annual salary in the US right now, according to the BLS, is $109,950, with our average days to hire of 30. So 109,950 divided by 260 multiplied by 30 equals 12,686.53. The cost of vacancy for an unfilled software developer role, positioned for 30 days, is $12,686.53 for this example. Now think about it. If you’re hiring multiple developers or engineers for other roles in tech, your COV can be hundreds if not thousands of dollars. And that’s a lot of added pressure for recruiting teams. But there are other ways that we can factor in to how to consider COV. Calculating our COV is critical because employers may be unlikely to place the necessary emphasis and budget on addressing recruitment issues, maybe because they’re unaware of the negative impact of these vacancies and what they may be or not be generating. So while this metric is an HR metric, it is also covered under talent acquisition or recruiting areas for both SHRM and HRCI exams. Cost of vacancy. It’s a doozy. Good luck and let’s move on to our next section.

HR Test Question Review for SHRM and HRCI Certification Exams

Jessica Miller-Merrell: [00:12:00.81] We are now moving to a special segment of the HR Certification Podcast, where we review an HR test question, and we do this for every single episode. These are all test questions that cover the knowledge base for SHRM and HRCI exams. I like to keep it easy. It’s called the HR Certification Podcast. Before I share our question, I do want to walk you through just a quick rundown of my HR test question framework. If you’re looking for more information on how to answer test questions, you should be having a strategy in this area. Head on over to our Workology YouTube channel. I’ll also link to more information on our framework in the transcript of this specific podcast episode. Now there are five steps to the HR test question framework. Step one is to read each question slowly and concisely. Step two is to identify the competency. Step three, eliminate the wrong answers. If you know they’re wrong, eliminate them from your mind. Step four is WWSD or WWHD, which is what would SHRM or what would HRCI do if they ask this question? Think about how you answer this question, not from your experience, but from the test takers, the test question writers point of view. Step five, above all, answer every question and go with your gut. So let’s go ahead and take a look at this episode of the HR Certification Podcasts practice test question. Are you ready? We’ll read this question twice before I give you the answer. When conducting a critical evaluation of recruitment processes, which of the following metrics is most relevant for assessing its effectiveness? Is it A) The number of applications received? B) The average time it takes to fill a job vacancy. C) The total cost of recruitment process, or D) The diversity of applicants. Okay, let me repeat this question a second time for you. Are you ready? Let’s go.

When conducting a critical evaluation of the recruitment process, which of the following metrics is most relevant to assessing its effectiveness? Our first option is…

A) The number of applications received.

B) The average time it takes to fill a job vacancy, or…

C) The total cost of recruitment process. And finally…

D) The diversity of applicants.

Jessica Miller-Merrell: [00:14:29.28] What do you think the correct answer is? Drum roll, please. Are you ready? The answer is B. B is the most relevant metric for assessing the effectiveness of the recruitment process, and that’s because it directly measures how quickly an organization can fill a job vacancy. A shorter time to fill a vacancy is often associated with lower costs, which we calculated, right? And also reducing the disruption to the business if that role is filled more quickly. Good job. If you got the answer right, awesome. If you didn’t get this one right this time, do not worry. Make a note that you need to go back and review maybe the term cost of vacancy. I suggest adding this topic into your daily review for 3 to 5 to 7 days. I do have more test questions you can access in our test question bank, including 25 free test questions. Head on over to www.HRTestQuestion.com. Do it! It’s great. I love writing test questions, I really do. I don’t know if you like answering them, but I love writing them.

Closing: [00:15:39.98] HR certification is such an important step in your career. Whether you’re looking to increase your HR knowledge, maybe you want to gain credibility in the office or increase your income potential, or maybe prove to yourself that you deserve it, that you deserve to be there in HR. Because I know you do. Let’s elevate the HR profession together. I want to thank you for joining me on this episode of the HR Certification Podcast. Again, my name is Jessica Miller-Merrell. I help HR leaders ace their HR certification exams. I’m here to help you. I want to do the same for you. Workology does offer a host of courses and resources to help you ace your HR certification exam. You can visit www.HRCertificationPodcast.com to learn more about how we help HR leaders with their certification prep and recertification. We do this for the aPHR, the PHR, the SPHR, the SHRM-CP, and the SHRM-SCP exams. If you have a suggestion for an upcoming topic for the HR Certification Podcast, let me know. Send me a note over on TikTok or Instagram. It’s @WorkologyBlog. Let’s talk HR certification. Thank you for being here. I’ll see you on the next episode of the HR Certification Podcast. Until next time, have a great day!