As an employer, you can usually tell intuitively whether or not your hiring practices are working. Maybe you see that too many employees are leaving after 6 months, or you notice more new employees are struggling to complete the training process. But before you can come up with a solution to fix the problem, it helps to have some data to clarify and quantify exactly what the issue is.
That’s where HR metrics come in. Metrics not only help you prove that your hiring tactics are working, but they can also point out areas where you can improve, and even provide hints about what changes you can make to move the needle in the right direction.
As it relates to pre-employment testing, hiring analytics can help you quantify the powerful business results you’re achieving from administering assessments in the hiring process. Companies can experience enormous improvements in their hiring goals by using tests – who wouldn’t want to achieve a 65% reduction in turnover or a 63% improvement in employee productivity? By keeping track of general HR or hiring metrics both before and after you implement a pre-employment testing strategy, you can demonstrate these dramatic improvements to the rest of your organization.
Tracking metrics isn’t easy. It’s especially difficult for smaller companies that don’t have enough of a headcount to make for meaningful statistics. But it helps to start somewhere. Here’s a non-exhaustive list of some of the most useful hiring metrics you might want to track:
1. Cost Per Hire
This metric helps you identify how efficiently you’re using funds to make hires. A simplified calculation involves finding the total cost of hiring (including the cost of any software, job boards, labor hours, etc.) and dividing that by the number of hires within a given period.
2. Time to Hire
Also called Time to Fill, this metric captures how quickly you’re able to fill open positions, typically calculated as an average across all of the jobs for which you’re hiring. It provides a general indication of how efficient your hiring process is.
Turnover isn’t specifically related to the hiring process, but it can signal issues that are happening in the recruitment phase. The simplest way to calculate this number is to take the number of employees who left the company in a given period and divide by the total number of employees. You can calculate this figure for both voluntary and involuntary turnover. Retention is a related metric that you can use to calculate how many people are still at the company after a period of time, such as 90-day retention or 6-month retention.
4. Employee Training Completion Rates
Training completion rates signal how well new hires are able to complete training. Low training completion rates might indicate that current hiring tactics aren’t identifying the right types of employees for the role, or possibly that the training process needs serious improvement. This is a simple rate dividing the number of employees who successfully complete training over the total number of new employees.
5. Employee Performance
Employee performance may not seem like a hiring metric, but different hiring tactics can have a major impact on average employee performance within an organization. Typically this is measured by some sort of employee performance rating assigned by managers.
6. Offer Acceptance Ratio
This metric indicates how likely a candidate will be to accept a job offer. All you need to do is take the number of accepted offers and divide by the total number of offers. A low offer acceptance ratio might be a signal that your comp or benefits package might be lacking, or that your employer branding could use some polishing.
Your applicant-to-hire ratio is a measure of how many applicants you get in comparison to how many hires you actually make. High applicant-to-hire ratios could signal that you get a high volume of applicants for a relatively small number of positions. To calculate, just divide the total number of applicants by the number of hires.
This relatively straightforward metric just measures the amount of absenteeism you experience in your organization; in other words, how often are employees missing work? This metric can be more relevant for certain industries compared to others.
9. Employee Engagement
Employee engagement is a bit more complicated because there’s no universal way to measure it. How you want to capture it depends on the particulars of your organization, but internal surveys are one way to gather this type of information. As long as you continue to measure it in a consistent way year after year, you will be able to pick up on any changes or trends.
10. Sales Revenue
Sales revenue might seem a bit far removed from hiring, but decisions made in the hiring process can dramatically boost this number, particularly when hiring salespeople. You can usually get this number pretty easily from your sales team, since it’s likely that they're rigorously tracking it already!
Productivity is another organizational metric that can be impacted by the hiring process. The way each company measures productivity can vary widely – manufacturing companies can measure output, while call centers often measure calls-per-hour. For other companies, productivity can be a little more amorphous.
Keeping track of these hiring metrics, and continuing to measure their progress year after year, is a great foundation for improving your hiring process. While this list is by no means comprehensive, many of these metrics are particularly useful for measuring the results your organization gains from using pre-employment tests. Having analytics on your side gives you more confidence when presenting new solutions to improve your organization’s metrics.