Ask any HR professional and they’ll tell you the pandemic, and the ensuing effects of the Great Resignation, have turned talent acquisition strategies on their head. The fact remains that recruiting good talent is very difficult in this job market. Organizational leaders are being forced to adopt the mindset that talent acquisition must become a strategic priority if a company is to achieve long-term success.
Fortunately, this paradigm shift is ushering HR professionals to their rightful seat at the decision-making table alongside CEOs, CFOs, and other members of an organization’s core leadership team.
How did we get here? For a very long time, organizational leaders have believed that it was relatively easy to hire someone, and it is. However, hiring the right person is not very easy at all, and without the right talent at an organization, any chances of measurable growth are made significantly more difficult. One out of every three business leaders in America believes their existing workforce is an impediment that is stalling their company’s growth.
Perhaps Co-CEO of Salesforce, Marc Benioff, said it best recently: “Acquiring the right talent is the most important key to growth. Hiring was — and still is — the most important thing we do.”
Now that talent acquisition has finally buoyed to the top of the list of strategic priorities, HR leaders and recruiters are relying heavily on data analytics and metrics to not only support and justify their hiring decisions but also to strengthen their existing workforce.
Organizations have grown increasingly more digital over the past decade and most, if not all, of them, have some form of technology platform at the core of their HR department’s administrative efforts. The good news is that, over time, these HR platforms become filled with valuable and actionable insights that can be extracted in the form of Talent Acquisition Metrics.
Importance of Talent Acquisition Metrics.
According to an HR Research Institute study on the future of talent acquisition, a whopping 31% of the participants described their organization’s talent acquisition process as “improvisational, chaotic or nonexistent”. Hey, that’s not good. To rectify this problem, many organizations are turning to technology to overcome the shortcomings of their talent acquisition strategies. 70% of the world’s HR professionals believe that investing in new technologies is the best way to put their recruiters in a position to succeed in a job market that is tilted so heavily in favor of the candidate.
A huge benefit of investing in these HR technologies is their ability to reveal very precise details about an organization’s talent acquisition strategies – Specifically, what’s working in their recruitment strategies and what’s not. These details are widely recognized within the HR profession as Talent Acquisition Metrics, and they are crucial to recruitment success. Also known as Key Performance Indicators (KPIs), these golden nuggets of data can reveal eye-popping statistics that an organization may be entirely unaware of.
Applicant Tracking System (ATS)
There is no doubt that modern technology can dramatically enhance the efficiency and effectiveness of talent acquisition strategies, but it is important to understand the tools involved and how to properly use them to access these talent acquisition metrics.
An Applicant Tracking System (ATS) is a centralized strategic HR technology asset – a software resource that functions as the nerve center of the recruitment, hiring, and selection activities for an organization. 75% of recruiters are using some form of ATS system in their hiring processes and the marketplace is continuing to rapidly adopt these systems because of their ability to simplify and accelerate an organization’s talent acquisition efforts. As it stands, the ATS market is on pace to reach $2.1 billion by 2026.
Recent innovations in Software-as-a-Service (SaaS) technologies have yielded powerful ATS systems that are remarkably effective in terms of their ability to provide recruiters with customizable tools to access these useful talent acquisition metrics. The best ATS systems are cloud-based SaaS systems that recruiters can use for the administration and automation of their entire scope of talent acquisition and hiring processes by providing a centralized, consistently accessible location to post jobs, access resumes, and quickly identify a short list of strong candidates for their open positions.
ATS systems customarily include an analytical tool referred to as a “dashboard,” and they are incredibly resourceful as a business intelligence resource. As the name implies, dashboards are a visual tool offering a graphical interface for easily tracking and monitoring an organization’s talent acquisition metrics as they accumulate and get stored over time within the ATS system. HR professionals and recruiters gain enormous advantages by using these dashboards to quickly calculate and review key talent acquisition metrics all from one dashboard.
Modern ATS systems provide a way for HR professionals to customize their HR dashboard so the talent acquisition metrics are presented in an easy-to-interpret format that can be distributed and easily understood by people other than HR professionals. Finally, HR dashboards are an effective means of maximizing the value of a recruiter’s time by offering a tool to quickly access accurate data.
The Top Talent Acquisition Metrics
Hiring the wrong person cost is at least 30 percent of the individual’s first-year expected earnings, and it can also place a bad apple in a very valuable basket that runs the risk of damaging other “apples”. Fortunately, an ATS system that allows you to track the following key talent acquisition metrics can help organizations avoid making the same costly mistake.
Metric 1: Quality of Hire
This is rapidly becoming the metric of all metrics. The Quality of Hire (QoH) metric reveals the genuine value that a new hire brings to an organization, and many experts believe this is the most important metric. QoH can tell you just how much a new hire is positively contributing to the longevity and success of an organization. However, QoH is also one of the more challenging metrics to accurately measure and suggestions vary on how this metric can be applied.
Experts have referred to QoH as a “frustratingly elusive metric” because it is, after all, a metric that continues to evolve. For one thing, QoH can only be reliably measured after a certain amount of time has passed and an organization needs to first hire someone to apply this metric. More than half of the organizations using the QoH metric use it in conjunction with “new hire performance” metrics such as how well a new hire is meeting deadlines, achieving quotas, or how much new sales revenue the new hire has brought to the organization.
Historically, organizational priorities have a significant impact on how the QoH metric is used.
Metric 2: Time to Hire
The Time to Hire (TtH) metric tells an organization how long it is taking recruiters to select and hire a candidate. It is a metric often used to improve the talent acquisition process. It is used to get a sense of how many days or months a recruiter may need to fill an open position. Organizations use this metric to evaluate the efficiency of each stage of their hiring pipeline. Particularly, how quickly recruiters are identifying the best candidates.
If a candidate applies 8 days after you post a job, and you hire that candidate on day 20, then your TtH metric would be 12 (20 minus 8).
Metric 3: Offer Acceptance Rate
If an organization truly wants to determine how well its recruitment team is promoting the company to job candidates, this metric can be very revealing. The Offer Acceptance Rate (OAR) metric is simply the percentage of offers that are extended to, and accepted, by prospective candidates. In other words, the OAR metric reveals how well recruiters are appealing to the priorities and needs of a prospective candidate before they are making an organization’s offer to the candidates.
To calculate OAR, divide the number of offers accepted by the total number of offers extended. Then multiply that number by 100 to get your percentage.
100% should always be your goal, but a rate of 89% or lower could mean that your organization’s requirements need to be more closely aligned with the expectations of most candidates.
Metric 4: Cost per Hire
The Cost per Hire (CpH) metric is, to many organizations, the most important metric. The number of costs associated with hiring a new employee is vast and varied and some are especially difficult to measure. Why? Because it can be challenging to add up all the costs of promoting a job or organization to candidates (career fairs, technologies, etc.) plus all the costs associated with the time that a recruiter might invest in speaking with possible candidates in interviews, over the phone, or in less formal settings.
Innovations in HR technologies are offering solutions to help organizations more accurately calculate this metric, but it remains a tricky number because of the wide array of efforts recruiters are making (social media, etc.) to attract talent.
The CpH metric can be calculated by first adding up all cost data and then dividing that number by the number of candidates that were hired.
Metric 5: Source of Hire
Source of Hire (SoH) is the metric that shows what percentage of an organization’s candidate pool enters the process from any given recruitment source. For example, a career site, direct source, referral, etc. The SoH metric is frequently used to guide HR professionals in allocating resources (dollars) to the most prolific recruitment channels available.
Modern ATS systems can be very effective at helping you maximize your recruitment dollars via this metric by helping you drill further into a sourcing channel’s effectiveness – often a metric of its own. Recruiters can divide the total number of applications via channel by the total number of hires via the same channel.
For example, if you have 100 applications via Indeed.com and make 2 hires, then the sourcing channel effectiveness of Indeed.com would be 2%.
Metric 6: Applicants per Opening
The Applicants per Opening (ApO) metric doesn’t simply measure the number of people who complete an application for an open role, which it does, but there is more depth in this metric that we need to consider. The number of people who apply for a job is a huge indicator of a recruitment team’s talent acquisition effectiveness.
If this metric reveals an excessive number of candidates, but a low number of qualified applicants, that is an indicator that an organization’s talent acquisition strategy needs to be modified to produce better results. While a higher metric score here can reflect many quality candidates, it could also be an indication of a job description that needs to be redrafted to be more specific.
Metric 7: Employee Attrition
Probably the most revealing metric in terms of telling you how successful an organization is at recruiting long-term talent is the employee attrition metric. Obviously, the ability to retain talented employees who are capable of consistently contributing to an organization’s growth is a metric of interest.
This metric is calculated by taking the total number of employees who leave an organization within a year of being appointed divided by the total number of employees hired within the same year. This metric could be calculated on a monthly or quarterly basis as well.
Improving your attrition rate begins with a commitment by leadership to understand, and act on, the drivers of attrition. Organizations who want to retain their best talent need to respond to what is important to their employees, whether it be remote work, flexible working hours, or building a strong upskilling program to keep employees engaged.
Building a cast of happy and eager employees should be the chief objective of every organization’s recruitment team and can also be a useful talent acquisition strategy once established.
Metric 8: Diversity
Diversity can also serve as a form of talent acquisition strategy. By closely tracking this metric and striving to achieve higher levels of diversity throughout one’s entire workforce, organizations are applying the same “blueprint” as the most successful companies in the world. The organizations that have great diversity metrics often have a strong brand to rely on that serves to attract more diversified candidates, but recruitment plays a huge role in improving this metric. If a diversity metric reveals a less-than-attractive percentage, organizational leadership will automatically look to their recruiters, who should then be looking at their talent acquisition strategies.
There are multiple calculations to work with when measuring metrics of diversity. This metric can be used to evaluate what channels are producing the most diversified pool of applicants and can also reveal what progress an organization is making over time in the pursuit of building a diversified workforce.
Building a diversified workforce and a culture that reflects inclusivity is an ongoing affair, not a checkmark on a box. Remember, a diversified workforce is strongly linked to a positive, productive culture and a demonstrated commitment to inclusivity is very attractive to the younger generation of our workforce.
It’s difficult (if not impossible) to improve upon anything that isn’t measured. These talent acquisition metrics aren’t just crucial to an organization’s talent acquisition success, they can also play a significant role in strengthening an existing workforce. Remember, the best talent in this job market is hard to locate, and it can be even harder to retain once hired. Organizations that want to attract the most qualified candidates from a society that has largely gone digital need to embrace the digital revolution themselves first.
The organizations that are willing to invest in the most innovative digital solutions (HR technologies) on the market today give their recruiters the best chance at attracting talented candidates that will be leading their organizations tomorrow.
Manatal – The Leading Recruitment SaaS Software offering Powerful Metrics
Manatal’s cloud-based ATS platform has a verifiable history of helping companies accelerate and strengthen their talent acquisition strategies via the use of AI-based software technologies and powerful metric dashboards.
A key feature of Manatal’s highly intuitive and customizable platform, the embedded HR dashboards give recruiters immediate access to all key indicators and metrics. The advanced reporting features embedded within their platform provide detailed recruitment data that helps organizations rapidly identify potential bottlenecks in their recruitment processes and reveals what components of their talent acquisition strategies may need improvement. Manatal also offers a useful Reporting Suite that gives recruiters a clear understanding of each step in an organization’s recruitment process.