The Recruiting Numbers Game

Workforce analytics has taken center stage in the human resources industry, as companies employ big data tools to help assess and predict their workforce needs.

To stay ahead of this trend, Talent Management is producing a series of special reports this year, tracking the effect that analytics is having on HR strategies. In this latest installment, we explore the impact of big data on recruiting, and how companies are using workforce analytics to lower their costs, hone their recruiting strategy and better predict hiring needs in the future.

Six years ago, Tom McGuire, the recently retired head of recruiting for Coca-Cola Co., began reviewing hiring metrics as part of a revamp of Coca-Cola’s recruiting process. While doing so, he made a surprising discovery: Turnover was twice as high among senior employees hired by outside recruiting firms than those hired by the in-house team.

He had always suspected in-house recruiters did a better job of bringing in top candidates, though he was taken aback by the size of the gap. “A lot of people know something intuitively, but at the end of the day, the data makes it objective,” said McGuire, who now does talent management consulting work for Designs on Talent in Atlanta.

The difference, McGuire said, is that in-house recruiters are better at finding people who will be a good culture fit, and they can poach talent from competing companies — something outside firms are often blocked from doing. “When you use a search firm, 20 to 40 percent of their other clients are firms we want to source from,” he said.

The metric led McGuire to build a global in-house recruiting team, which led to improved retention among key staff while cutting the overall cost of hiring. Instead of paying a search firm 50 percent of the employee’s salary, his division charges 15 percent to cover overhead.

The use of workforce data is becoming increasingly popular as organizations see the benefits that such tools bring to the recruiting process. A recent recruiting trends survey by benchmarking organization the American Productivity & Quality Center shows organizations that use data to make recruiting decisions report fewer recruiting challenges overall.

Which data they consider, how they analyze it and the outcomes they seek from these analytics varies widely.

The APQC study shows the most common use of data for recruiting is tracking the best recruiting sources based on where successful hires were found (31 percent). Other popular applications include benchmarking their recruiting process against other organizations (21 percent), using data from candidate surveys to improve the candidate experience (18 percent), and using recruiter performance data to improve recruiter training and development.

All of these applications of workforce analytics can add strategic value to the recruiting process. In each of the following examples, companies used different data points to streamline their recruiting process, and in every case they were able to improve hiring outcomes, often while lowering costs.

Narrowing the Search