What are Talent Management Metrics?
Talent Management metrics are specific HR metrics that help you measure your talent management functions; including new talent, and employees, over time. These metrics give you the ability to make informed decisions based on data.
Why Are Talent Management Metrics Important?
The reality of the business environment is constantly evolving- for example the shift to remote work during the pandemic, and the demographic shifts in the workforce to name just a few. The old ways of recruiting, hiring, and keeping talent have shifted, and talent has become increasingly a scarce resource. But what remains is the fact that strong talent makes a difference. Thus, a strong talent management function and tracking key talent metrics in a company can be ultimately at the heart of that company’s success, as the right employees can be a driving factor in accomplishing company goals.
How to Use Talent Management Metrics
Using talent management metrics means looking at the various parts of the talent funnel (sourcing, recruiting, developing talent, retention, etc.), HR metrics that evaluate those parts to decide how to move forward and maintaining talent management KPIs. This can help your company decide what’s working, and what’s not.
Talent Management Metrics You Should Be Using
Given that talent management can span across different departments, and functions, you will want to consider metrics that track specific moments in talent cycles. Meaning from the first interactions candidates has with your company, all the way to how employees ultimately retain. We’ve broken down HR metrics by the type of data they track, so you can see the wide array of data potentially available to you, and what that data can tell you about your talent.
One function of talent management is the overall performance of talent, often referred to as performance management. These talent metrics can help you track performance at different points of the talent cycle.
2. New Hire Failure Rate
Learning if a new hire is “failing” is incredibly useful for your recruitment process. In fact, according to research, 46% of new hires will fail, so chances are your failure rate might be higher than you originally thought. The failure rate of new hires can be influenced by the sourcing, your final interview processes, or your onboarding process and culture. Knowing what the failure rate is can help you decide what changes you can make to lower that failure rate.
3. Quality of Hire
To measure the quality of each hire is a bit more complicated. Different companies choose to do this in a variety of ways. Many companies actually take multiple talent metrics such as turnover, performance rates, and employee engagement all together to measure the quality of hire. Knowing all of these metrics can help give your company a competitive advantage.
4. Work Quality
This performance metric is also a combination metric, taking both the overall performance and a manager review to create a “score” or work quality on a whole. Creating a scoring system with multiple metrics can help your talent management team get a sense of where employees stand.
5. Cost to Hire
Given that hiring can be such an important, and expensive part of the talent management process, evaluating the cost to hire is incredibly important. Breaking down the specific costs within hiring can also tell you where you could potentially cut costs or vice versa where you can invest. For example, some companies spend a large investment on their sourcing tools, while others do multiple rounds of interviews ultimately making it expensive by using more employee time on the process. Knowing the specific costs put into hiring can help you evaluate if a cost ultimately makes sense or not.
The cost per hire is the sum of all external costs, all internal costs over the total number of hires in that time period.
This includes all spending outside of your organization, this could be advertising, job boards, recruiting firms, travel, or any other fee associated with recruiting.
This refers to all costs internally, which often refers to all the time of employees, their salary/benefit from that time, and any other costs internally.
The total number of hires in a time period:
Looking at the specific time period you are measuring, the total number of hires is anyone that you hired during that time.
This equation gives you a cost per hire within that time period.
6. Yield Ratios
Similarly, yield ratios can tell you a lot about your recruiting process. Yield ratios specifically are able to break down certain moments in the recruiting process. For example, you might have a really great ratio of folks that go from interview to offer but a really low ratio of those that go from applied to screened. Honing in on specific ratios and talent metrics helps you see different points of the recruitment cycle and identify the effectiveness and efficiency of the process.
Applicant to interview yield Ratio
Applicant to interview ratio is taking the number of candidates that interviewed over the number of candidates that applied. Learning more about this ratio can help you determine what sources are working well, and which are not.
Interview to job offer Yield Ratio
The interview to hire ratio is taking the number of candidates that have been interviewed over the number of candidates that received a job offer. This way you can start to get a better sense of the quality of interviewees, and the fit of those interviewing.
For example, the average ratio is 4:1 or 5:1. If you are below this, it could mean you are getting solid candidates in the interview process, and candidates are attracted to job offers. If you are above this, it could mean the candidates are less of a fit for the ultimate job offer. Overall this can indicate how many total hours your team is spending for each hire, and indicate if more or less are needed, and how you can optimize.
Job offer to hire Yield Ratio
Finally, you will also want to look at the offer to hire ratio. Meaning how many offers are you putting out there vs. how many are becoming hires. This can be another metric that’s helpful to determine this final step of recruiting process. Similar to the other metrics comparing to the industry standard can help give you a benchmark on where you land.
For example, if your company is putting out lots of offers that aren't becoming hires, you may want to reevaluate your final steps and the offer that you are putting out there. On the other hand, if you have a competitive offer to hire rate it can tell you about the strength of your talent management in those final steps.
Aside from important recruitment metrics, overall company and talent management can be telling on your talent once they’ve arrived at your company and how they function and grow within your company. As talent management isn't solely about talent acquisition, metrics such as turnover are for overall company culture, and performance. Talent review metrics can help here. Measuring how many employees are turning over within certain periods can be telling.
To measure the turnover rate you use the average headcount as headcount can fluctuate and this also includes all employees vs. just full-time employees. This is meant to give a more accurate depiction of turnover.
Another important talent metric for the general talent health of the company is retention. Retention measures how many employees have stayed, and can be measured by average retention. Although they are similar, retention is different from turnover as it measures overall how long people stay at a company, while turnover measures the number of people that left within a specific time period. This can be measured by talent development metrics. Look at the equation below.
Retention rate = (Total number of employees-number of employees who have departed)/Total number of employees
9. Employee Satisfaction
Employee satisfaction is a bit more difficult to track with solely a metric- given that employee satisfaction can depend on different factors or look different for different employees. Talent analytics metrics come in play here. Many companies look at a variety of metrics or surveys including
- Absenteeism: Absenteeism is measuring how often employees are missing work. You may want to consider measuring this as research has shown that there is a positive relationship between satisfaction and missing work is related
- Cultural fit: Cultural fit is simply about if employees feel as if they belong at the company. Although hard to track and often overlooked, culture fit can ultimately influence an employee's decision to stay or leave the company.
- Rate of turnover: As we’ve stated before, turnover can tell you a lot about overall employee satisfaction.
- Employee recommendations: Tracking how many employees give recommendations can give you a good sense and how much they enjoy the company. For example, there is a reason so many surveys ask "would you recommend this to a friend?" because if someone is willing to vouch for something, chances are they are satisfied with their experience- working in the same way!
Because you have to analyze a variety of factors to determine talent satisfaction there is no one equation, but often a combination of data points to determine an overall “score”.
10. Time To Productivity
Time to productivity is how long new talent goes from being hired to making meaningful impacts on your company. This is important because you can tell the success of the hire, onboarding programs, and job training. If you have a slow rate of productivity chances are one of these factors is influencing the ability of the hire to be successful. Providing a strong onboarding process is crucial for a new hire's success.
This also is not an exact equation, but typically relies on a variety of equations such as overall performance, a check-in throughout onboarding, and other factors.
As you can see, talent metrics or talent management KPIs can tell you a lot about your potential talent, your current employees, and the future of your workforce. Human resources and HR Leaders should consider talent metrics to be a greater part of their talent management strategy. Ultimately knowing these talent metrics and analytics can give you more insights into the percentage of candidates to hires, internal culture, and satisfaction of employees, and help you decide the critical changes needed to fuel your company into the future! Work with us to manage your key talent metrics.