Talent Acquisition Best Practices: Metrics for Getting it all—Good, Fast, and Cheap
There’s an old saying, “you can have it fast, cheap, or good. Pick two.” That philosophy works in just about every situation. Still, when it comes to filling jobs with quality candidates, recruiters need to always work towards providing all three. Why? Putting it simply, we’re in a buyer’s market. Recruiters have found themselves competing with each other for top talent, and candidates have many choices. And talent acquisition (TA) has become a make-or-break proposition for companies and recruiters alike. That’s why it’s crucial to know how effective the efforts are. Numbers don’t lie, and they give you direction about what you’re doing right and what changes you can make.
Fortunately, TA metrics are relatively easy to track and calculate, and doing it the right way will give the whole company actionable insight into improving the process. And According to recent research conducted by LinkedIn, companies that stay on top of TA metrics are twice as likely to find talent more quickly than those that don’t. So, let’s look at some metrics that’ll tell you how you’re doing.
Getting it fast: Why tracking time to hire and yield ratios are talent acquisition best practices
It’s almost Halloween, so let’s start with a horror story. One well-known Silicon Valley tech company had a director of engineering position open for more than a year. While recruiters presented candidates and the company conducted extensive interviews, innovation ground to a standstill, there was unprecedented churn in the engineering department, and the company endured harsh criticism from media and customers alike for being stagnant. All because of a single slow hire.
What’s considered an acceptable time to hire? The Society for Human Resource Management’s (SHRM) 2017 Talent Acquisition Benchmarking Report recommends 36 days as a benchmark. That figure, however, is an average of managerial and individual contributor hires. Remember, the longer a position remains unfilled, the less productive the department is going to be. Work isn’t getting done, or other employees are picking up the slack. Too much of that, and before you know it, there’s another open requisition.
So what can you do to ensure time to hire is within acceptable tolerance? Glassdoor suggests tracking these metrics to gain insight into processes you can improve right away:
- - How cumbersome is the hiring process? How many steps does it take for a resume to become a candidate?
- - Is the interview process more complicated than it needs to be?
- - Are there unnecessary rules and procedures that prolong the hiring process?
Taking a good look at your processes can reveal hidden opportunities to tighten up the time it takes to bring a great candidate on board.
Another metric to examine is which of your sourcing channels perform the best. Yield ratio measures how many successful hires you’ve had from each channel versus the total number attempted. The mix includes job sites, employee referrals, social media, agencies, and more. For example, Deloitte’s 2017 Human Capital Report says the average ratio between social networking and employee referrals looks something like this:
Clear metrics like this show you where to focus your energies and budget.
Getting it cheap: Look at the average cost per hire to spot inefficiencies
Naturally, there’s a difference between “cheap” and “less expensive,” and we’re talking here about the latter. “It’s crucial to have a solid estimate of your CPH,” says Glassdoor’s Erik Rivas. “Knowing this figure can help you make smarter investment decisions, define your referral bonuses, and save your organization money in the long run.” Surprisingly, this is a metric that many companies don’t track. Yet the average cost to onboard a new employee in the U.S. is $4000. Think about every expense that goes into a hire:
- - Job sourcing
- - Pre-hire assessments
- - Job boards
- - Agencies
- - Recruiting technology
- - Background checks
- - Referral awards
Companies that aren’t tracking these costs may not realize its importance until it’s too late. $4000 per hire becomes a costly prospect if a new employee doesn’t work out—or leaves within six months.
TIP: To figure out your cost per hire, simply divide the amount you spent on recruitment last year by the number of hires you made in the same period. If you reach a figure significantly higher than $4000, you might want to look into the issue. Are you sourcing from the right places? Is your interview process robust enough?
That leads us to our third category: quality of hire and employee and management satisfaction.
Getting it good: Assess the satisfaction rate from both new hires and managers
Nothing is more frustrating than going through a long and arduous hiring process, only to have the new hire leave the company after just a short while. Whether or not the employee leaves of their own accord, the result is the same—lost productivity, lost money, and lost time. So recruiters and HR must work together to onboard a candidate who’ll be a good fit, both culturally and professionally. How do you measure attrition? You might be shocked to learn that SHRM noted in 2017 that 17 percent of new hires left the company within six months, and 26 percent leave within a year. If your turnover rate is higher than that, Your TA processes may need some adjustment. (Time to look at the Getting it Fast and Getting it Cheap sections of this post.)
TIP: Calculate your turnover rate by dividing the number of departures over one year, and divide that by the total number of employees. Drill down further by separating voluntary separations from involuntary ones and divide them separately.
It’s always a good idea to debrief after any new hire and gather some stats on TA techniques from both the hiring manager and the candidate. They’ll likely be more than happy to tell you whether they felt the process was too short, too long, or of proper depth. Candidates will have opinions to share about interview styles and whether the interviewers seemed versed in the job and the candidate’s resume. Survey the new hires using measurable answering methodologies, not with vague responses.
At the same time, talk to the hiring manager about the new hire after they’ve been in the job awhile. Is the team happy with the new hire? Did the TA team meet the manager’s expectations? Ultimately, you’ll come away with a wide variety of preferences, suggestions, areas for improvement, and even praise for being able to deliver quality candidates quickly and cost-effectively.
Ready to hit your hiring goals faster? See Jumpstart in action or contact our team at [email protected].
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