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Talent Acquisition Metrics that Matter

As Talent Acquisition and HR professionals, we are constantly faced with the pressure of “adding value” to our organizations. That is not to say that other departments don’t have their own pressures and need to add value.  Sales/Business Development has to generate leads and close clients in order to meet revenue targets. Production environments have quality and quantity targets to meet and the list goes on. However, due to the continued emergence of the HR profession, we need to consistently demonstrate our value to our organizations not just by delivering on tactical elements. All of the planning, programs, etc. that we develop and implement need to be managed and measured. Our talent acquisition activities, which are so key to ensuring that our companies have a continued pipeline of talent, must be measured by more than just the number of closed requisitions or general customer satisfaction. HR professionals need to have their own dashboard that they present on a weekly, monthly or quarterly basis to their operations partners and executive team. If you have an HRIS and an ATS, than you will be able to quickly leverage a lot of this information to incorporate into your dashboard. If you don’t have either, you need to leverage your current relationship with your CFO/Controller to obtain some of this information to track and report on it. To that extent, I give you these eight (8) metrics that matter:

1. Turnover – seems obvious but many companies get into this split of voluntary vs. involuntary and just reporting on voluntary turnover. I am a believer that you need to report on turnover. Period. All in. Whether candidates have voluntarily left or have been ‘removed’ it is turnover and there is a cost and work effort to replace the “churn” effect that his been created. There are several ways to calculate turnover, but I have always gone with the number of attrits in the period being looked at divided by the average number of employees in the organization during the same period.
2. Service revenue per employee – this is a measure of your total service (or sales) revenue divided by the number of employees you employed in the period being looked at. Essentially, you are tracking growth here. By measuring this on a monthly and quarterly basis, your hiring efforts over time should be showing a positive trend in the revenue generating activities of your new hires. Stagnation or downward trends may be a sign of poor hires, lack of engagement or other problems organizationally.
3. Referrals as a % of new hires – we all read/hear the stories about how valuable referral hires are. Truth be told, these reports are all true. Referrals are often your best source of hire AND they can significantly reduce your cost per hire metric. They are essentially a source of pre-qualified, unadvertised candidates. Simply put, you are calculating the # of hires made in a given period divided by the total number of hires or starts in the same period.
4. External Offer Acceptance Rate – this metric captures the effectiveness of your recruiting function and their ability (along with your hiring managers) to close candidates on the opportunity at hand. This is a measurement of your teams’ ability to effectively downstream candidates and close (not always based on direct compensation) while managing candidate engagement. You are measuring the number of offers extended in the period divided by the total number of offers made. Obviously a low percentage here may be indicative of problems with sourcing and recruiting, your employment brand, the scarcity of talent/level of competing offers or overall candidate experience at your organization.
5. Source to interview (a.k.a. time to source) – this measures your sourcing/recruiting team’s ability to identify candidates and present to hiring managers. Essentially, this is the time period that is within your team’s control – i.e. sourcing, leveraging pipeline activities and your talent communities, identifying and assessing candidates and gauging initial interest and ability. The clock starts ticking on this metric when your team has an approved requisition to the time your first slate of candidates is interviewed by the hiring manager. In order to effectively manage this, your team must be closely aligned with your operations partners and be able to create a sense of urgency that will motivate them to interview your candidates.
6. Interview to Offer – picking up from #5, this is the time period from when the hiring manager interviews your slate of candidates to when a formal offer is accepted the candidate(s) selected. While elements of this metric are not in the direct control of the Talent Acquisition group, it does manage the team’s ability to effectively work with hiring managers, create a sense of urgency and communicate/engage with candidates during this time period. Numbers 5 + 6 will give you your overall Time to Fill calculation. Talent Acquisition/HR can add tremendous value by being able to effectively reduce these metrics on a quarterly/annual basis.
7. Cost per hire (CPH) – CPH is a cumulative metric which takes into consideration all costs associated with the recruitment process, but can be one of the more difficult metrics to effectively capture. What you are looking at here during a given period (year) are your sourcing and recruiting costs such as advertising, technology/tools utilized, (i.e. LinkedIn accounts), candidate travel costs, testing costs, referral bonuses paid out, etc. divided by the number of hires made. Again, great value can be demonstrated by reducing this number during a given period/year. As per metric #3, referrals go a long way in reducing your time to hire AND your cost per hire.
8. Percentage of permanent hires employed after 1 year – this is one of my personal favourites that I believe demonstrates the overall effectiveness of your talent acquisitions activities as well as the effectiveness of HR and the hiring managers. Essentially, you are measuring in a given 1 year period (rolling) what percentage of your hires are still employed a year later on their anniversary date. This metric is capturing the effectiveness of your recruiting capability, quality of hire, employment brand, on boarding effectiveness and supervisory capability. EVERYONE in your organization owns this metric!

What other metrics do you track? What have you found to be the most effective in demonstrating Talent Acquisition and/or HR’s value to your organization? Any here that you disagree with? I would love to hear from you.

Image courtesy of renjith krishnan/ FreeDigitalPhotos.net

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