At last check, the average U.S. employer spends about $4,000 and 52 days to hire a new worker (Bersin by Deloitte Talent Acquisition Factbook 2015).
If you’re in HR, recruiting or talent acquisition, do you know your own organizational cost-per-hire (CPH) and time-to-hire by department, title or recruitment channel?
If you don’t, it’s probably time to start taking some of the guesswork out of your recruiting, make savvier budget decisions and earn your rightful seat at the decision-making table in your organization. From setting realistic hiring goals and determining the most profitable job boards to decreasing your time-to-hire, studying the data behind your hiring efforts—talent analytics—can help.
The case for talent analytics
“The discipline of talent analytics has become a mandate for HR and business leaders around the world,” notes industry analyst and researcher Josh Bersin in his foreword to our new eBook, Talent Analytics For Dummies®, Glassdoor Special Edition.
“Decisions like who to hire, who to promote, how much to pay people, and what jobs people should take next can all be informed by data, teaching us things about our organizations we never understood before.”
Unfortunately, too often, companies take a backward‐looking approach to recruiting, for example, determining headcount for the coming year without considering current attrition rates or consulting the people on the front lines who can help them best achieve their goals: recruiters. As a result, many recruitment budgets and strategies simply mimic those of the previous year, whether or not they were fruitful or realistic.
By allowing recruiters to drive the hiring strategy based on talent analytics rather than guesswork or simply setting things on “repeat,” companies can adopt a more strategic (and realistic) way to allocate recruitment budget.
“From a personal standpoint, HR and line leaders must understand that business executives expect data behind every major decision,” says Bersin. “When you recommend… a certain person for a new role, your business leaders are likely to ask, ‘Why?’ If you don’t have data, history, and models to support your recommendations, your personal credibility will suffer.”
Answering big questions
Is one job board or recruiting channel delivering higher‐quality candidates at a lower hiring cost? What regions did your company have the most success recruiting in? How are candidates responding to job listings or your employer brand?
Which recruiting programs were most successful? What sources of hire have the shortest or longest duration? How do candidates rate your employer brand or interview process?
“Our ability to simplify and improve the employee experience, drive employee engagement, understand the drivers of retention and performance, and make people’s work lives better are all dependent on data,” says Bersin.
In short, talent analytics can help inform your recruiting efforts. Below are a few key metrics and areas to focus on:
Know your cost‐per‐hire
Without it, you can’t realistically expect to request more recruiting budget or double down on the most profitable sources and channels of hires.
In a nutshell, to compute your cost-per-hire (CPH), for a given timeframe (e.g., prior fiscal year) or position, you’ll have to add up all your external costs (e.g., outside recruiters, job board advertising) and internal costs (e.g., talent acquisition teams, applicant tracking systems) that impacted that hire. Then divide that cost by the number of hires you made.
A benchmark you can leverage in forecasting, budgeting and seeing where you stand against your industry or competitors. By expanding your analysis, e.g., determining CPH by team, job title, department or GEO, you’ll be able to make better decisions across the hiring spectrum.
Meeting hiring goals, engaging the right people
Because a company’s hiring goals need to be able to adapt to changing requirements, you may not be able to set a recruiting budget several months in advance. Talent analytics can help you more accurately forecast the budget you need to meet those hiring goals, as well as allocate appropriate spending wisely on people, systems and programs—in the end, putting the right employees in the right jobs.
By uncovering hard metrics like your time‐to‐hire or sourcing more subjective intelligence like quality‐of‐hire via surveys hiring managers, you’ll be able to track your efforts to optimize your recruiting strategy, from investment in more profitable recruitment channels to putting the right employees in the right jobs.
Then, to earn more control over your company’s recruitment budget and overall strategy, arm HR, recruiting and executive leadership with this real-world insight and intelligence. Showing your CEO how you can save the organization money while hiring better candidates will elevate your reputation as a strategic partner and resource in building a recruiting strategy at your organization.
Refining the brand and candidate message
How are candidates responding to your recruiting message? Again, talent analytics can take the guesswork out of what’s resonating (or not) with job seekers.
Like it or not, employer brand and company reputation can have serious impacts on recruiting. By analyzing trends in your company reviews on Glassdoor and monitoring your profile traffic, company rating or CEO rating, you can focus on key areas that may need attention, such as what candidates think of (and how they rate) your interview process.
Part of that effort may include engaging internal employees to develop your company’s story and message. Then, just as you would track your CPH over time, monitoring the effectiveness of your recruitment message with your target audience (by looking at key variables such as traffic to your careers page, job applications and quality‐of‐hire) can further validate your efforts.
More than ever, “understanding the numbers”—talent analytics—is an essential part of success for any hiring manager, recruiter or talent acquisition professional who hopes to compete for the right talent at the right cost.
“From an organizational standpoint, analytics has become the key to driving business growth and employee satisfaction,” concludes Bersin.
Taking the time to analyze recruitment data can take much of the guesswork out of finding and, by extension, retaining top talent. Looking for candidates most likely to do well in your company means they’re less likely to leave because of a bad fit—whether that’s related to the role, organizational culture, company reputation, or all of the above.
Ready to adopt a better, data-driven way of hiring? Download our brand new eBook Talent Analytics For Dummies®, Glassdoor Special Edition.