So here’s the situation… you are the Chief Talent Officer (CTO), overseeing all aspects of the workforce at your midsize financial company of 5,000 employees. This includes both HR and talent acquisitions (TA) teams.
Business leaders have been expressing concerns about employee performance and the effect it is having on the business. You decide to establish KPIs for your teams that are built on HR metrics. Not only will the KPIs help measure performance, but they will also help to identify where the problems are.
The HR team’s main KPI is keeping turnover at or below the industry benchmark of 10% annually. Unfortunately, turnover is at 13%, which validates the business leaders concerns. The team begins to work on meeting their KPI by implementing solutions found in stay and exit interviews.
For the TA team, you established KPIs around time-to-offer and cost-per-hire. The team has been meeting the KPIs and they’re actually below industry benchmarks. But, leaders are still complaining that their open positions are not being filled.
So now what? The TA team seems to be performing based on current KPIs but not according to business leaders. This tells us the problem is somewhere else in the recruitment lifecycle. Time-to-offer looks at most of the lifecycle, but only up to the point an offer is made.
Acceptance rate provides insight into whether candidates are accepting offers. To calculate divide the total number of offers made by the number of accepted offers. Multiply it by 100 to get the percentage.
You decide to have the TA team calculate the acceptance rate from the past year. The metric shows only 75% of offers are being accepted. Industry standards state acceptance rates should be over 90%. It seems that TA’s problems are lie within the last stages of the recruitment process.
So now that you have the metrics, it’s time to do some analysis to find the why behind the numbers. The main question here is why are people not accepting the offers. Are the offers too low? Maybe the benefits are not attractive to candidates. Maybe there’s an issue with the company’s brand or they had an unpleasant experience during the interview process.
You ask your team to start documenting why offers are being declined. After six months, it comes to light that most candidates are accepting offers with better pay. Additionally, for one team, candidates are turned off by the hiring manager’s interview questions.
Now you can implement solutions. It would be beneficial to adjust the salary ranges to ensure they are competitive within the market. Unfortunately, that may not be an option for most companies. If salary ranges can’t be raised, try finding creative benefit offerings. Like childcare services, student loan repayment, flex-work options, or generous PTO policies.
Another solution to implement would be training for hiring managers. Managers should be provided guidance on the types of questions to ask and what to avoid. Even soft skills and body language should be covered. All of the little things can make a big impact on candidates.
There are many reasons why candidates turn down offer letters. Especially in today’s job market. Acceptance rate is a good metric to review when there are breakdowns within the recruitment lifecycle. To make life easier, an HR dashboard can provide the data visualizations for your metric. Check out a free demo of our automated HR dashboard and see how your data can be transformed.