There’s a lot of talk currently about the use of analytics in recruiting. Unfortunately, in my experience many talent acquisition leaders seem to be confusing analytics with reporting and metrics.
Reporting is not the same as analytics. Dashboards, visualizations, and reports that are thicker than War and Peace are fine, but they are focused on the past, fail to answer why something is happening, and are one-dimensional in comparison to the insights offered through analytics.
As I’ve written on these pages before, talent acquisition is the ideal shop window for analytics within HR. It is typically high volume, comprised of repeatable processes, and filled to the brim with data crying out for insights. Moreover, hiring great people is critical to the success of any organization.
The importance of hiring is borne out by research from BCG (at that link, see exhibit two on the right), which found that of 22 HR processes studied, it is excelling at recruiting that provides the biggest differential between leaders and laggards in terms of revenue growth (3.5 times) and profit margin (2.0 times).
Analytics is the key for talent acquisition leaders to unlock the insights within their respective organizations that can generate the levels of return identified by BCG.
Reporting vs. Analytics
The difference between reporting and analytics is illustrated in the graphic you see.
While reporting tells you what has happened, analytics provides insights as to why it is happening and what can be done to make the outcome more favorable. Using the analogy of a long car journey, reporting tells you how many miles you’ve traveled so far, how long you’ve been on the road, and how much petrol you have left in the tank.
Analytics, on the other hand, will determine the best route to take for the remainder of the journey and predict your arrival time. No driver uses only the first two gears of a car, so why are so many organizations content to do just that with talent acquisition?
Reporting vs. Analytics Maturity
Reporting Tells You “What Happened” But Not “Why It Happened”
For instance, what is the percentage of new hires who leave voluntarily or non-voluntarily in the first 12 months? Let’s say your talent acquisition dashboard tells you it is 22.3 percent. That’s great (or not), but why did they leave? Possible answers include:
- Poor selection
- Poor onboarding
- New hire performance
- New hire engagement
- Culture and line management
- A combination of some or all of the above
So while it is helpful to know your first-year attrition rate, it begs the question, why? Gaining insights as to why people are leaving means you can then take steps to remedy the situation and achieve positive outcomes for the business.
Focusing on Less-effective Metrics
Recruiting functions that restrict themselves to reporting tend to be mostly reactive and focus almost exclusively on efficiency metrics such as time to hire and the infamous cost per hire. Too much emphasis on the latter metric can be counterproductive with Bersin by Deloitte’s most recent study of talent acquisition functions finding that the most mature companies spend twice as much per hire than the lowest ranked. This extra investment translates to organisations with the highest level of maturity enjoying 40 percent less new-hire attrition and 20 percent faster time to fill than those with least capability.
My blog post “The Absurdity of Cost Per Hire’” uses the findings of the Bersin study to demonstrate that a spendthrift approach to recruiting proves far more costly in the long run.
Analytics and Business Outcomes
Using the insights identified by analytics enables talent acquisition leaders to be proactive, focus on understanding the importance of quality (as well as efficiency) metrics, and make decisions to help address the business challenges of their organization as they relate to hiring.
Analytics can help talent acquisition leaders and the business:
- Predict the most successful hires
- Predict the most effective sourcing channels
- Proscribe the optimal location for situating a new team
- Gain insights on the reasons for first-year attrition and the best measures to address these
- Predict retention of candidates in the recruiting process
- Predict the new hires who will be high potentials
Indeed, the list could be infinite. The insights derived will help talent acquisition leaders make their functions more efficient and effective. This trumps fancy visualisations and colorful dashboards, which while easy on the eye fail to tell you why something is happening.
Need Some Inspiration to Get Started?
Head over to the excellent HR Open Source (#HROS) site to read how Opower embarked on a journey that saw them progress from simple dashboards to an optimised talent acquisition team driven by data, insights, and analytics.
Final Thoughts — an Opportunity and a Responsibility
These days, omitting analytics from a talent acquisition strategy is akin to the Spiders of Mars trying to have got by without Ziggy Stardust back in the day. Analytics provides talent acquisition leaders with an opportunity to raise their game. But more important than that, these leaders should also embrace the responsibility analytics provides: to enable their organizations to make better hiring decisions that improve business performance and competitive advantage. Moreover, a proficient use of analytics as part of a data-driven approach will help provide better experiences for candidates, hiring managers, and recruiters alike.
Reporting dashboards are a useful indicator of what has happened, but they don’t even tell you half of the story. Analytics tells you why something has happened and what you should do in the future, and therein lies the difference.