People analytics and hiring: what to analyze

Interview between two people

Within people analytics, recruitment analytics is a big focus because lots of time is spent on recruitment. With recruitment analytics, I am referring to the recruitment funnel. Typical metrics to analyze are Time to Fill, Time to Hire, Time to Start, etc. You can even zoom in further and scrutinize the different steps in the funnel to optimize the entire recruitment process. However, in this blog I would like to focus on what to analyze post-hiring.  

Why? Hiring has a profound impact on your organizational culture, future revenue, and costs. The first two aspects naturally speak for themselves, but the costs associated with hiring are even broader than most people realize. These costs encompass labor of recruiters or agencies, vacancy advertisement expenses, labor and opportunity costs of everybody involved in the hiring process, and not to mention onboarding costs. It also takes a while before a new employee is up to productivity so there is a cost attached to that period as well. In conclusion, reviewing the post-hiring process is crucial. 

So, how would you answer the question “how are we doing with hiring”? First things first, you need to establish the criteria of what success in hiring looks like: who do we want to hire and what do we expect of them? Subsequently, analyze whether you are meeting those expectations. So where should we begin? Let’s imagine you are a new member of your organization, and you are eager to explore the hiring success of your company. 

1. How many people are we hiring? 

When doing a review of your hiring success, you should start with getting a feel for the sheer volume of hiring at your organization. Are we talking about dozens, hundreds, or thousands of individuals being hired? It makes sense to put these numbers into perspective by comparing them with your current headcount. For instance, you might be working for a vibrant 1,500-person advertising agency that brings on board 180 new hires annually or for a bustling 10,000-person fulfillment center that recruits a staggering 7000 individuals each year. Understanding this context is key. Additionally, it is worth considering whether these new hires represent an expansion of your organization or if they solely serve as replacements for departed employees. By gaining a clear sense of the scale and context, you’ll be able to delve deeper.  

2. Where in the organization are we hiring? 

When considering hiring for your company, it’s not just about the high-level figures. Start by breaking it down across different functional areas, business units, and locations. Are there particular roles or locations that demand more attention in terms of hiring? Going into these details can provide valuable insights into where your hiring efforts are focused. Perhaps it’s software engineers in France or factory workers in the Netherlands. Or maybe you’re establishing an entire organization with diverse roles in a specific country. By examining the percentages and absolute volumes, you can gain a better grasp of the task at hand. Another way to segment is by job grades. Are you primarily hiring juniors or mid-level professionals? By answering these questions, you are already getting a good feel for what’s going from a quantitative perspective.      

3. What type of people are we hiring?

The next step is to consider how new hires stack up against our current workforce. For some organizations it is fine to continue an existing path while others must adapt due to changing market conditions. Hence, you want to know who you are hiring in terms of background: work experience, education, skills, etc. to meet your business objectives. Take the software industry, for instance. Since enterprise products have become more complex, software vendors seek salespeople who excel at consultative selling rather than just transactional selling. Another important aspect is diversity. Many organizations strive to become more diverse in various aspects so it’s crucial to know whether they are making progress towards those goals. 

4. Are we able to retain our new hires? 

Understanding whether the people you hire stay with your organization is crucial. As mentioned earlier, hiring is expensive, so minimizing turnover is vital. The primary metric to consider is first-year turnover, also known as the hire fail rate. It’s important to know how many people leave within the first year, when they leave, and why they leave. While some level of first-year turnover is expected, a high turnover rate of 40% can have a significant financial impact. By reducing turnover, even by a few percentage points, you can achieve substantial benefits. 

Properly documenting the reasons for employee departure allows you to identify trends. If this information is lacking, you can still gain insights from the timing of employees’ departures. If people frequently leave within the first month, it might indicate a selection problem. On the other hand, if employees tend to leave after 3-4 months, there may be an issue with onboarding. Addressing first-year turnover is a critical task. Additionally, connecting this data to hiring channels can provide valuable insights into which channels work well and which ones don’t. 

5. How do our new hires perform? 

In addition to understanding whether or not your new hires stay at your company, you need to know how they perform. Many organizations do a performance appraisal once a year or once every 6 months. Connect your hire data with performance reviews to gain insights into whether you are attracting strong performers. Split the analysis across functional areas, business units or even individual managers to examine whether there are pockets in the organization where there might be issues. It’s important to note that if you identify such pockets, low performance scores be caused by quality of hire as well as the specific organizational/team setting. However, by recognizing and acknowledging the issue, you can delve deeper and find effective solutions. 

In conclusion, discovering what happens with your new colleagues after they are hired can unlock powerful insights. Armed with these insights, HRBPS are empowered to have strategic business conversations in one of the most crucial domains of any organization: finding and retaining the right talent. Tackling challenges like reducing first-year turnover or achieving diversity goals not only enhances the employee experience but also brings positive financial impact to companies. Follow the five steps outlined in this blog and you will be up for a good start.