Important Metrics for Talent Acquisition Leaders
At this point in the evolution of recruiting, most people can agree that data is an important piece of the puzzle. All members of a talent acquisition team, from sourcer to VP of Talent Acquisition, can benefit from tracking and understanding recruiting data. When we think about those higher levels of an organization though, what are leaders really looking at and why?
We spoke with leaders across the organization with backgrounds at companies large and small to understand what is important to them in understanding the health of their recruiting teams and efforts. Here we share the insights of those data-driven talent acquisition leaders.
Key Metrics
Cost Per Hire
There are a few key metrics that talent acquisition leaders care about. One of the primary metrics is Cost Per Hire. Most organizations are pretty diligent about how they spend their money and cost per hire can often be more than you would think. It is a talent acquisition leader’s responsibility to know how much they are spending to acquire talent and ideally keep that number low.
“Cost per hire is made up of all of the direct and indirect costs of hiring a candidate. ”
Cost per hire is made up of all of the direct and indirect costs of hiring a candidate. That can include things like job posting fees, the salary of internal recruiters, costs of recruiting tools, and external agency fees.
When looking at how to save money as an organization, cost per hire plays an important role and can be controlled in many ways. One obvious method is considering the source of candidates as agency recruiting fees can add up quickly. Cost per hire can also be managed by ensuring the talent acquisition team as a whole is appropriately staffed and structured to be the most efficient. And one more way to lower the cost per hire is to consider the offers being extended to candidates. Signing bonuses and other incentives can impact the cost per hire number. Ideally, recruiters are finding a candidate's true motivating factors to work for an organization. These factors could include location, base salary, bonus, team environment, culture, etc. Being able to identify and sell candidates based on their true motivations, rather than just throwing more money at an offer is not only a more effective way to close but can help lower the cost per hire metric.
Cost per hire ultimately allows us to measure how expensive it is to hire someone new which we can then compare with the cost of retaining current employees. It is often true that the cost of retaining an employee is less than acquiring a new employee. TA can work collaboratively with HR and the business to adopt a “spend to save” model where money can be allocated to retention programs. If we are spending more on the front end to attract the right candidates and then investing to retain that talent, they will stay longer. This avoids the need to rehire, which can be even more costly.
Offer Acceptance Rate
“Offer declines are interviewer, recruiter, sourcer, coordinator, and hiring manager hours wasted. ”
Another key metric that talent acquisition leaders care about is the offer acceptance rate. Extending a lot of offers can be great, but not if you only have a 50% offer acceptance rate. Offer declines are interviewer, recruiter, sourcer, coordinator, and hiring manager hours wasted. Which ultimately costs money. All this feeds back to our first important data point, reducing the overall cost per hire. The more efficient your recruiting process is, the less your cost per hire will be.
The best way to determine your recruiting team's effectiveness is to look at your offer acceptance rate. The second layer of this metric is looking at the reasons candidates are declining offers. This allows you to dissect different factors and improve the overall recruiting process and employee experience. Are we paying market value or are we behind on salary? Are we lacking a healthy culture? Work-life balance? Or is remote to onsite work an issue, etc. The reason candidates are saying no to offers enables companies to dive into how they can better position themselves against the market and better attract the top talent they desire.
Offer acceptance rates can not only be used to better your organization as a whole but they can also be used to improve internal team performance. If you have recruiters with lower-than-average offer acceptance rates, your managers can leverage this data to identify who needs more training.
Other Pass-Through Rates
While extremely important to measure, offer acceptance rate is not the only pass-through rate that helps TA leaders pinpoint areas for internal team improvement. Pass-through rates between each interview stage should be looked at and assessed to identify key areas for process improvement. For example, if the hiring manager phone screen has a low pass-through rate, talent acquisition leaders can start to address this issue, beginning by asking the right questions.
Are the hiring manager and recruiter aligned?
Is the recruiter asking the right questions in their calls to screen out the wrong candidates?
How can we better source and screen candidates to increase this pass-through rate?
“Optimizing each step of the recruiting process ... will not only increase efficiency and improve the candidate experience but set you up for a higher offer acceptance rate down the funnel. ”
The same goes for other stages throughout the process. Optimizing each step of the recruiting process through these data sets will not only increase efficiency and increase the candidate experience but set you up for a higher offer acceptance rate down the funnel.
Why is all of this important?
Analyzing all this data is important because, at the end of the day, every company wants to hire the best people to work in their organization. But, you need efficient and accurate hiring processes to do so. This starts with being able to identify and fix key issues within your recruiting process. Measuring interviews pass-through rates and offer acceptance rates allow your TA team to do just that. As we improve our accuracy and efficiency, our overall cost per hire decreases, saving the company money, while attracting and hiring top industry talent for your organization.
What unique data does Flawless provide our clients?
Tracking, analyzing, and presenting these core metrics, along with others are one of the many values Flawless provides to our clients through our pipeline data visualizations and presentations. Another value we are able to provide during our weekly syncs is around market trends. Our position working across multiple clients in a number of industries gives us unique insight into the broader market and we can provide important perspective to our clients:
Are your competitors facing the same issues or is it just you?
If it is just you, what is causing it and what are possible solutions to overcome it?
Is the entire market affected by a certain event? What are other companies doing to overcome it?
Flawless also tracks and includes a weekly team “Awesomeness Ratings”. Happy employees are more productive employees, so every week we ask how the team is feeling. We can dig in to understand the factors leading to increased or decreased awesomeness and provide the support people need.
Flawless presents all of this data and more on a weekly or monthly basis. We want to bring everyone in a room together to regularly share and discuss the data so that we can accurately identify what's working, and what isn’t. Most importantly, if something is not working, we recommend solutions. At the end of the day, we care about our clients and work to collect and present the right data in order to drive overall efficiency and optimization throughout their talent acquisition organization.