Is Your Recruiting Function Data-Driven? – Use This Quick Scorecard

A survey of the top 10 elite talent management firms found that their #1 investment area is to be data-driven. Unfortunately, at most companies, “becoming data-driven” is merely a pipe dream. It requires the recruiting team to shift away from intuition and past practices. They must rely on “what works” data to choose hiring criteria, job posting channels, sources, assessments, and branding approaches. If you’re curious about which recruiting metrics qualify for a “data-driven” function… I have provided a quick checklist/scorecard of the 8 strategic metrics that would qualify for a truly data-driven function. Knowing whether your current function is data-driven can also be important to individual recruiters. Working at a data-driven recruiting function will dramatically expand your future career opportunities. 

A Data-Driven Recruiting Function Would Utilize Most Of These Strategic Metrics

This list of strategic metrics also includes some links on how to implement them. The highest impact strategic metrics are listed first.

  1. You formally calculate your new hire success rate (i.e., quality of hire) – this is the foundation strategic metric. You simply can’t be data-driven without it because it reveals whether your recruiting process results in higher-performing new hires each year. Using this new hire performance data, you can then accurately determine which sources, hiring criteria, and recruiters directly lead to better-performing new hires. And, if you gather this new hire performance data, remember that you can’t be strategic unless you actually use the information to improve each of the key elements of your recruiting process. (Calculation tips)
  2. You formally measure the failure rate of your new hires. The value of hiring better performers is offset by the tremendous costs (including customer impacts) resulting from a single hiring failure. Calculating this failure rate is important because the failure rate of the hiring processes can approach 50%. To begin, recruiting must first clearly define a hiring failure (i.e., they don’t show up on the first day, early turnover, they must be placed on a performance management program, or they are fired). And then, conduct failure analysis on each major failure, so that you can quickly identify and fix the factors that may lead to future costly failures. (Calculation tips)
  3. Project delays and missed strategic opportunities resulting from excessive position vacancy days – are important for everyone involved to realize this for key jobs. Every single day a key position is unnecessarily vacant (due to a slow hiring process) is severely damaging to a company’s performance. It is especially true for revenue-generating positions and open jobs that are never filled. The cost of a vacancy (COV) metric calculation merely involves counting the number of “vacant position days” in key jobs and then comparing it to a predetermined standard. You should also work with the COO and hiring managers to place a credible dollar amount on the annual cost of excessive position vacancy days. The number and the cost of project delays resulting from weak recruiting should also be calculated. Do that by surveying project managers on a quarterly basis to identify if any projects have been negatively impacted by weak recruiting. The survey should cover the number of project delays, the number of days lost, the cost of those delays, and whether the delays were caused by slow or low-quality hiring. (Calculation tips
  4. You quantify recruiting’s over-all business impact in dollars – this metric is also essential. The dollar impact of a function is one common denominator that allows different business functions to be compared side-by-side on their overall dollar impact. Recruiting must work with the CFO to determine and quantify the dollar impacts that result from filling prioritized positions faster with higher-performing new hires with longer retention rates. The ROI and the dollar impact of great recruiting are especially obvious when hiring exceptional salespeople, product developers, and innovators. (Calculation tips
  5. Diversity hiring rates in higher-level positions – there is now abundant research showing that a diverse workforce directly impacts corporate productivity and profit. So, if your organization places a high value on diversity, it’s important to measure recruiting’s contribution to increasing diversity. But rather than including all positions, I recommend that you focus your metric on recruiting into positions where diversity can have its greatest business impact. Usually, that means restricting the metric to recruiting into managerial, professional, executive, and sometimes key exempt positions. (Calculation tips
  6. The percentage of innovators and game-changers hired – if your organization is among the many that realize the tremendous economic value added by those that innovate and improve product development. It’s important to determine if the recruiting process is successfully targeting and hiring innovators and game-changers. The best metric covering the hiring of innovators involves surveying hiring managers six months after hire and asking them to assess whether this individual’s work qualifies them as an innovator or game-changer. If the percentage of innovator hires falls below the expected standard, a reassessment of the hiring process is warranted.
  7. You continually measure user satisfaction rates – every business function needs to satisfy its customers, whether they are internal or external. So, recruiting must have a formal process for identifying “what worked,” major problems, and for measuring “user satisfaction with the hiring process.” Satisfaction must be assessed among each group of its users, including prospects, applicants, candidates, candidates that dropped out, new hires, and hiring managers. (Calculation tips
  8. You minimize recruiting surprises by providing forward-looking predictive analytics. Every metric calculated in most corporate recruiting functions is historical, which means that they exclusively report what happened “last month or last year.” Unfortunately, in a fast-changing world, to avoid costly surprises and missed talent opportunities. You also need to alert managers and executives about upcoming trends, changing unemployment rates, and upcoming recruiting problems and opportunities. Predictive metrics can include upcoming months where the recruiting competition is likely to be low, and the changing skill sets that most new hires will soon need to make changes in your industry. (Calculation tips)

If you’re a recruiter, and you don’t use data, you’re going to be unemployed.

Final Thoughts

Let’s face facts. Most corporate recruiting functions are not even on a path toward becoming data-driven. The metrics they use now are almost exclusively tactical because they relate to recruiting efficiency, rather than what executives really care about, which are the business impacts generated by the recruiting function. It is especially problematic because of all HR functions; recruiting has proven to have the highest impact on corporate revenue and profit. So, if you want to get the attention and economic support from your executives, you have no choice but to follow every other business function’s lead. And become data-driven and focused on increasing and revealing your business impacts. 

Author’s Note: Please pass this article throughout your team and network. Next, please follow and/or connect with Dr. Sullivan on LinkedIn, where you can also leave comments on this article. His 1,300 other talent management articles can be found at www.DrJohnSullivan.com.

© Dr. John Sullivan 1/4/21 for the DJS Aggressive Recruiting newsletter

About Dr John Sullivan

Dr John Sullivan is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high business impact; strategic Talent Management solutions to large corporations.

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