Thought leaders have been promoting the need for Human Resources to get on the bandwagon for using analytics in decision-making. Dr. John Sullivan has an interesting take on HR’s need to use metrics, especially in Talent Acquisition. Dr. Sullivan cites the Boston Consulting Group’s work with the World Federation of People Management Association “From Capability to Profitability – Realizing the Value of People Management” in 2012 that shows that Recruiting, Onboarding and Retention have the highest business impact, but rarely are TA teams able to prove their impact to their business.
As a Talent Acquisition leader at a company, it is tough to produce even the most basic dashboard of metrics for the business. Pulling data is cumbersome in some Applicant Tracking Systems and in some cases, the data is not correct. Most of us don’t have teams of data scientists like Google or Amazon who can focus on the data and the meaning of the data. I was always lucky if I could pull just the basics with all of the other work that needed to get done, much less analyze what the numbers actually meant! I am a firm believer in the importance of data and how it can and should drive decision making.
It is unlikely that historical metrics such as time to fill, candidate source data, and a basic funnel analysis sufficiently satisfies the business leaders on TA’s progress in meeting the hiring demands. TA needs to show insightful metrics and analysis that can influence decisions. For TA, I would challenge you to develop a regular dashboard to show the business not only progress in meeting the current demands for “butts in seats,” but more insightful information that will help drive decisions.
Beyond the basics of metrics above, some additional metrics that you may want to include to tell a more insightful story about how the Talent Acquisition team is helping meet the business goals.
Cost per hire
This information is usually readily available, but few leaders ever asked for it. If one of the goals of the organization is to reduce costs, then understanding cost per hire is an obvious metric to comprehend. Cost per hire includes Advertising costs + Agency Fees + Employee Referral payouts + Travel cost of applicants and staff + Relocation costs for new hires + TA team member’s pay and benefits. This will help you understand where the spend is and how to potentially reduce it in the future. Using this data in combination with other information such as hire sources and turnover, you provide some useful information.
Most of us do not really understand what it costs a company when someone leaves their role and it becomes empty. This can cost a business thousands of dollars if it is for an extended period of time. The vacancy cost calculates the work that would have been performed if the worker were still in the role. For example, loss of sales, delay in product release, or longer time to fill requisitions. Other costs include costs for temporary workers or overtime needed to cover the work that needs to get done. Finance can be a big help in gathering this information.
New hire failure rate
Recruiters generally know the turnover rate of the company, but usually little evaluation is done into the failure rate of new hires and why they are failing. This metric is derived from the new hires who have left within 12 months (some companies use 6 months) divided by the number of external hires. Once this baseline is established, it becomes easy to determine where and why these failures might occur. A company will always have some failures and there are some reasons that are beyond anyone’s controls; however, there may be some commonalities in new hire source, manager, role, gender, ethnicity or location. On the flip side of this lies the success rate. What are the traits of a successful employee? How can the recruiters target candidates who fit this profile?
Plenty of discussion circulates about the need for predictive analytics to drive decision making; however, most companies need to “crawl before they can walk” and get the basic information to start the process. It takes some time to develop a baseline and to see trends in the data, but soon you will be able to understand the best current as well as future sources of candidates. This will lead to better understanding of who is most likely to leave and how/where to recruit a more “sticky” candidates. The Talent Acquisition team’s success arguably could have the largest return on investment of any department in an organization as Dr. Sullivan noted, but without having the basic data from which to draw conclusions, there is no way to show the team’s business impact.