You Can’t Manage What You Can’t Measure

Elevate talent acquisition to a more strategic function with 4 key metrics

A talent void in the market is making it more challenging than ever for organizations to find, hire, motivate, and retain great talent. With the unemployment rate hovering around an all-time low, organizations are facing higher turnover, increasing their number of open positions.  
 

According to the recent study by Kronos and Human Capital Institute, “How High-Performing Organizations Compete for Talent,” about half of all organizations say the number of open hourly (48 percent) and salaried (53 percent) positions has increased over the last two years.  

Not only is this increase in turnover placing a financial burden on organizations, it’s straining human resources (HR) and recruiting professionals, who want to engage with internal high performers to stem attrition but also need to source an ever-mounting pool of external candidates. 

Further complicating this, many organizations today are using disparate systems or manual processes to track their talent acquisition, lacking the fundamental insight needed to take a more strategic approach to building a deep talent pipeline.

Using a Data-Driven Approach

Data-driven organizations are replacing disparate systems and manual process with unified human capital management (HCM) suites to eliminate manual processes and better collect and analyze data. This provides a complete understanding of the strengths and weakness of their workforce and delivers greater insight to help the organization make more informed decisions around talent acquisition.  

Even still, fewer than half of high performing organizations identified in the study currently track basic metrics, like time-to-fill, cost-per-hire, time-to-proficiency, assessment scores, and applicant persistence rates. The percentage is even lower for more typical organizations.

Having deeper insight into each part of the talent acquisition pipeline will help organizations analyze the effectiveness of their strategies faster and more easily, giving them an advantage in a tight talent market. Here are the four top metrics all HR organizations should start tracking right now, regardless of their technology, to gauge the effectiveness of their talent strategy.

1. Time-to-Fill = New Hire Start Date Minus Requisition Approval Date

The time it takes to fill an open position is increasing. Based on the Kronos study, time-to-fill for hourly positions has increased at 36 percent of organizations, while time-to-fill for salaried positions has increased at 38 percent of organizations. 

Moreover, less than half (48 percent) of organizations are even tracking the time it takes to fill for an open position.  Extended time-to-fill an open position can put a strain on existing employees and their workload, creating a never-ending cycle of turnover.  

Insight into time-to-fill for a position from the requisition approval date to the new hire start date helps determine areas of the business that may have a harder/longer recruiting timelines and inefficiencies that often in the overall process.

2. Cost per Hire = (Recruitment Fees or Compensation + Signing Incentives + Position Marketing + Hiring Manager Time + Travel Costs and Other Costs) Divided by Total Number of Hires in That Period 

The extended time-to-fill is also driving up the cost-per-hire. Based on the Kronos study, the cost per hire has increased at nearly half for all organizations, for both hourly (48 percent) and salaried (47 percent) positions. Three-quarters (73 percent) of organizations have increased starting pay for salaried roles, while half (50 percent) have increased starting pay for hourly roles as a strategy to attract more candidates – and better candidates – faster. 

When looking at the cost-to-hire, an HCM suite will allow the organization to calculate the cost for the entire recruitment process. Having insight into the total cost of hiring an employee – including recruiter fees or compensation, signing incentives, position marketing, the hiring managers time, and the cost for travel – provides a proactive approach to budget for future positions. 

3. Time to Proficiency for New Hires = Date by Which Performance Review Equals Meets or Exceeds Expectations Minus New Hire Start Date

The onboarding process for new hires, if not done thoughtfully and thoroughly, can have a significant impact on the overall efficiency of the hiring organization.  

Measuring the time it takes for a new hire to become proficient in their role assures that the employee is on target to begin contributing to the organization faster, engages the employee into the culture, and allows managers to see where the employee may need additional help. 

Combined, this will greatly reduce 90-day turnover and will help to propel each new hire’s momentum across their teams, renewing enthusiasm and providing an oft-needed surge in group performance. 

4. Applicant Persistence Rates (%) = Number of Submitted Applications Divided by Total Number of Applications Started

The applicant persistence rate delivers insight into the number of submitted applications and the total number of applications started, helping organizations identify positions that are highly desirable to those that may not be getting as much traction.  

This insight helps organizations evaluate their recruitment strategy in areas like positioning the employer brand or recruitment marketing strategies, determining where they can close the gap.  Having insight into applicant persistence rates also helps organizations take a deeper look into their talent acquisition process and identify areas for improvement, whether it be improvements in sourcing strategies or simply modernizing the application experience for mobile / tablet users.

Bonus Metric: Assessment Scores

One of the other key areas for talent acquisition is tapping into the talent pool that currently exists within your organization.  Having insight into data to identify the skills, personalities, behaviors, knowledge and / or cognitive ability allows HR leaders and people managers to identify individuals who should be promoted up through the organization or who would be a better fit for a different job. 

Some organizations use a weighted average or an index score for multiple performance evaluations or assessments. This insight not only allows organizations to keep the talent they currently have, but it helps the employee feel like the organization is invested in their future, which is a key component to an engaged workforce. This decreases the chance of top talent leaving the company.

Internal pipelines are an important differentiator between high performing organizations and more typical organizations. Typical organizations tend to rely on external hires who have a skill to do a particular job right away, while high performing organizations cultivate a robust internal talent pipeline based on potential. High performing organizations find the candidate who can do one job today and a different job in the future when priorities change. 

Having assessment scores that provide insight across your existing workforce can significantly impact engagement, reduce turnover, and mitigate the costs associated with backfilling for an open position. 

Creating a Strategic HR Function

High performing organizations are taking a more strategic approach to their talent acquisition process. Using an HCM suite that combines HR, workforce management, and payroll to collect data and deliver real-time insights provides better control over the talent acquisition process and gives a peace of mind when it comes to finding, qualifying, and hiring the best talent to drive the organization forward. 

In addition to improving the entire hiring processes, taking a data-driven approach across the entire HR function will help HR be viewed as a strategic – and vital – contributor to the organization’s overall business goals.  

Author Bio

Teresa Smith is an HCM strategic advisor at Kronos.  Connect Teresa Smith Visit www.kronos.com