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It’s not news that analytics has been a growing field within the world of recruiting in recent years. It’s also not news that analytics have played a key role in the success of many companies, which include Google, Deloitte, McKinsey, Jet Blue, Best Buy, and Netflix, who have all used analytics to improve their hiring process and streamline their business to cater to their employees and customers. I’ll focus on recruiting and talent analytics in this article, but analytics as a whole is a field that needs to be explored more within the HR field.
A lot of recruiting companies and recruiters often express their success with a few main metrics, which often include the number of positions filled, time to fill and the number of people they have on billing (this last point is more geared to recruiters in staffing agencies, not corporate recruiters). Although that’s great, other companies (such as my company, People Science) delve deeper into these metrics. With the help of our proprietary technology, HireGate, we are able to easily collect crucial recruiting data and make sense of that data through our dynamic reporting, which has differentiated us from other competitors.
So to begin, what metrics should recruiters and management focus on? What determines success from a statistical standpoint? How do you take data and make it interpretable to your managers, clients, and other recruiters? I’ve listed the most important analytics to keep track of in recruiting, which appeal to individual contributors and executives alike:
Cost of Hire – this specific metric I think is often overlooked when evaluating a “good hire”. This takes a look at factors like “time to hire” (which I will mention later) as well as external and internal costs to determine the cost of a hire. The specific formula for “cost of hire” is as follows:
Cost per Hire ($) = [Total External Costs – outside spending on recruiting] + [Total Internal Costs – internal spending on re] / Total Number of Hires
By determining the cost of a hire, your recruiting efforts can focus on what works and what doesn’t. In addition, it will help you determine any inefficiencies in the recruiting process.
Retention/Quality of Hire Rate – retaining employees is a key indicator in seeing how successful hires are in the short and long term future. What is being done to keep your employees engaged? What is being done to keep your top performing talent and reduce turnover to other competitors? Looking at retention rates can give you an idea of what works and what doesn’t in the hiring process as well as the on-boarding process, and long term employment.
Attrition Rate – conversely, attrition rate measures the percentage of employees you have lost and have not replaced. What has led to employees leaving? Is there a way you can reduce your company’s attrition rate? What is the satisfaction rate of your employees? There are many factors for employees leaving a certain organization that are out of your control (i.e. retirement, medical reasons, etc.) but by looking at an attrition rate, you can be proactive (360 degree feedback for example) rather than reactive (exit interviews) about not losing employees that are within reasonable control of not being lost.
Source of Candidate – another way to potentially reduce costs and improve the recruiting process is to find out where you have sourced your best candidates. Are job boards and postings the most effective? Have you been finding out that contacting passive candidates works best? Seeing what channels work will take time and accurate records from employees. Over time, looking at how candidates hear about positions and where qualified candidates are sourced from will help improve your recruiting process significantly and eliminate channels that don’t work.
Candidates Per Hire – this is closely related to ‘time of hire’, which is a common metric used to evaluate a recruiters performance, although in my opinion, I believe ‘candidates per hire’ can lead to a more accurate result and picture of how long the recruiting process takes for a certain position. This metric literally answers the question of ‘how many candidates did it take to hire the right candidate?’ but also brings up the following questions. Are recruiters hitting the mark when it comes to sourcing and recruiting the right candidates? Is the interview process smooth and timely? Does the selection and hiring process run efficiently? These are items to look at when assessing a right candidate fit for a company and its culture.
The purpose of analytics in the recruiting and talent field is to improve performance within the recruiting field, NOT to micromanage employees. Dispelling this theory has proven to be tough over the years but leaders in the field such as Josh Bersin, David Berstein, and Laszlo Bock (amongst others) have forged the way for individuals to contribute to the growing field and for organizations to embrace a more scientific and data driven way to manage recruiting and HR processes.
In addition, analytics in the recruiting field can help attract the right employees to your company. Finding a balance between using these analytics and keeping the human elements alive in HR, can be difficult but not impossible. By analyzing how your company can profit from using analytics and realizing that analytics aren’t meant to judge employees but to propose organizational and personnel solutions, analytics can play an important part in the success of your company and its employees. In short, analytics within the recruiting field are here to stay and are certainly, not a fad.
By Joe Griesbach | People Science Senior Talent Advisor