Measuring Effective Talent Acquisition

Ineffective talent acquisition has dire ramifications for an organization in terms of lost revenue, lost productivity, vacancies, hiring costs, separation costs, replacement and training costs, turnover cost and other attendant drain on resources. An organization’s mission-critical recruitment process should be analyzed to ensure that strategies and processes that are in place are effective in streamlining hiring and ensuring a high-quality talent pipeline that matches the organization’s functional personnel needs. There are several HR and People Analytics available to measure how well an organization is doing relative to its talent acquisition processes as we’ll discuss in the paragraphs that follow.

Quality of Source

The quality of the source of hire is one metric to determine the effectiveness of talent acquisition efforts. It allows the organization to look at all the sources of its hires from print, online, agencies, referrals, internally to academic institutions, in a way to give a clear dashboard of its return on investment. When an organization can reliably and consistently hire from trusted sources that have good retention rates, then, it becomes a no-brainer where the organization will go to build a reliable pipeline of prospective employees. A good source quality analysis should reveal the percentage of high-quality candidates from each recruiting source used by the organization and should track employee engagement, productivity, and retention rates.

Time to Fill

Time to fill is another tool. It monitors how long it takes from the job posting, interviews to job offers and acceptance. The organization should set its own parameters for the use of this analytics. For instance, it can track job processes in stages from job analysis to hire, job posting to hire, posting to interviews, interviews to hire or other stages to uncover any bottlenecks in its processes so it can take timely remedial actions. Knowing how long it takes an organization to fill a position is critical for proper short-term or long-term planning so that panic does not set it and allows the organization the time necessary to shape the strategies it employs for talent acquisition in times of static, growth or contraction.

Ratio

The ratio of qualified candidates per opening is an effective measure of how well your sources are doing in delivering an acceptable pool of candidates. If the candidates that an organization is attracting are not qualified for the positions sought, then, the organization needs to reevaluate its job postings, sources and what is being offered vis-à-vis the role to be filled. For instance, does the pay advertised match the role? Are the requirements so unrealistic that no qualified sane person would apply? Also, it should make sure that its sources of prospective talents are still relevant.

Application completion ratio should be used to decide if there is a high abandonment rate during the application process. One of the things that irks applicants is having to upload a resume and still be required to write out the details already carefully crafted in the resume. If, for example, the application completion rate shows a steep drop off at the writing out state after upload, then, it will be necessary to change that. This method allows an organization to accurately pinpoint the stage in the application process at which the drop offs began. Knowing this can save a lot of time and money.

Cost Per Hire

Cost per hire analytics allows an organization to tabulate the financial investments made to attract and hire talent. There are always costs associated with hiring relative to time and resources. Knowing how much it costs to bring a new employee on board allows for proper budgeting. It makes it easy to abandon or refine processes or sources that do not yield a good return on investment. It will be a good practice to aggregate the average cost for hire as well as segregate the cost for each hire to get a full picture of the costs for the entire process. This is because, some individual hires that may seem expensive may well be worth the cost. Thus, it may tell a company that it should budget more money for certain hires and vice versa.

The Application Process

Applicant experience is another metric to determine the effectiveness of talent acquisition efforts. Candidate experience is the level of satisfaction expressed by the candidate. This can be measured through simple short surveys at the end of each application process. Included in this is the interviews to hire ratio.

Interviewing is a key component in talent acquisition. An organization may by-pass tests and other screening tools, but interviews are indispensable to the talent acquisition process. It is important to understand if an organization’s interviews are effective to identify competencies and behaviors, if they are onerous, off-putting, clumsy with diminishing returns, or are appropriately calculated in time and effort to yield desired results.

Acceptance Rate

Offer acceptance rate is another analytic to determine the effectiveness of an organization’s recruiting efforts. Not every employment offer is accepted or acceptable. Also, there are those who accept an offer and then change their minds and may never communicate that declination to the organization. If an organization has a high rate of declined offers, then, there is a clear indication that there are larger organizational issues to resolve. It will be important to glean why. If on the other hand there is a higher-than-expected offer acceptance rate, there is also something amiss. Some key indicators were misread.

Quality of Hire

Quality of hire is perhaps the most important analytics in determining effectiveness of the talent acquired. This metric is rather difficult to measure because it is backward, static, and forward looking. Most organizations get their analysis by looking at various metrics that include the manager satisfaction, the new employee’s engagement, and productivity levels, and how long those took to achieve, as well as the overall fit of the hire within the organization. According to SHRM’s November 15, 2015, article “The Holy Grail of Recruiting: How to Measure Quality of Hire,” each organization’s metrics differ, but there is commonality in using “job performance, employee engagement and cultural fit measured by 360 ratings.”

Retention Rate

Finally, first-year turnover rate is vital to understanding the efforts made to recruit talent. A low turnover means that the recruitment efforts match the talent acquisition for the roles, function and competencies sought.

A high turnover is disruptive, expensive, and wasteful. It could mean that the new employees are not happy with the roles they were hired for or that what they thought they were getting was not what they got in culture, fit and function. It could also be that the employee’s claims were exaggerated or untrue.

The organization should review its recruitment process, its onboarding, training, benefits, pay and overall company culture as well as Diversity Equity and Inclusion efforts, and make every effort to identify where the problem arose so that corrective measures may be taken.

The legal angle

Hiring is where many employment claims begin. Screening criteria that are neutral on paper can still be unlawful if they disproportionately exclude a protected group and are not job-related, a theory known as disparate impact. Both New York and California prohibit asking applicants about their salary history. In New York City, employers that use automated or AI tools to screen candidates must have those tools independently audited for bias and must notify applicants. Tracking source quality, time to fill and acceptance rates is sound HR practice; tracking who is screened out, and why, is what protects the organization if a hiring decision is challenged.

Related reading: Equal Opportunity in Compensation