The hiring process, until recently, had mainly been based on guesswork. With candidates, you could never really be sure if they were going to do a good job. Manual resume screening and gut feeling can only take you so far after all. So, it shouldn’t really be a surprise that up to 75% of all hires is a bad hire.
The same unscientific approach results in a lot of other losses, too. The hiring process can, for example, be overpriced, long, and failing to meet candidates’ expectations. With a traditional recruitment process, you’ll end up interviewing countless unqualified candidates, wasting both the company’s time and resources.
With a data-driven approach, however, you can make the entire process significantly easier, more efficient, and in the end, cost-effective. So let’s take a look at the benefits of data-driven recruiting, as well as some tools you can use for collecting and analyzing recruitment data.
What is data-driven recruiting?
In a nutshell, the data-driven approach to recruiting is the act of using data to optimize the entire hiring process.
Many large organizations have a boat-load of data available on their recruiting process:
- Percentages of bad hires
- The average length of a hiring process
- Costs of each new hire
- Hiring source from each candidate
- Referral data, and so on.
While there is a wealth of insight hidden in the data, for most companies, it tends to simply go to waste.
There are, however, a lot of ways in which using data-driven recruiting could improve your hiring process. You could, for example, improve the process efficiency by cutting out unnecessary interviews. This will end up decreasing the time to hire and lowering associated costs.
Or, you could use the knowledge of where each good hire came from to optimize your sourcing channels. If the very best of your applicants come from social media, for example, why spend thousands of dollars on an agency?
To help you understand how data-driven recruiting can be beneficial for your hiring process, we’ve compiled a list of the top 7 benefits of data driven recruiting, as well as the strategies you can use to get there.
Before you continue
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1. Eliminate gut-feeling decision-making
As you probably already know, anything in business that’s based on a gut feeling rather than logical and reasonable decision-making has a chance to backfire.
While a candidate can be the most charming person you’ve ever met, that doesn’t mean they’re going to do well in your company. So instead of making hiring decisions based on a resume and a candidate’s likeability, try and see what recruitment software and/or tools are out there to help you datafy this part of the process.
This way you can actually decide on someone’s skills, culture/personality fit and many more variables. Data-driven decision-making cuts out most of the uncertainties within your selection process, allowing you to be more confident in your decisions.
2. Improve the quality of hire
There’s a huge difference between an A-player and a C-player. Hiring the very best employees will significantly improve your company’s performance both short-term and long-term.
With traditional hiring, though, this can be tough. However good a candidate may seem on an interview doesn’t always translate into how well they’ll perform. Using data-driven recruiting, however, you can significantly increase your chances of making the right hires.
There are a lot of different approaches you could use to improve the quality of hire, depending on what data you use, how you use it, etc. We will, however, explain one of our favorite methodologies.
The data you’d need to collect is:
- Percentage of good hires – In any given department, what percentage of your hires are top performers?
- Turnover rate – What percentage of your new hires quits within a few months?
- Time to productivity – How long does it take for a “successful” hire to start performing as well as promised.
- Hire source – Where the employee applied from.
Once you have the data, you compare the first three metrics between different sources. This way, you can understand which recruitment channels work best.
So for example, you might learn that the employees you hire through referrals have a much lower turnover rate and high productivity. In that case, you might decide to create a better incentive for your employees to refer people. Or, the case might be that a certain job board gets you significantly better talent than the other. In that case, you’d increase your budget for that specific job board.
Once you’ve made any changes to your recruitment strategy, you benchmark the new data to the old metrics.
3. Decrease time to hire
As a start, you’d want to map out your entire recruitment process and gather the following data:
- How long does it take to hire a person in this field?
- What’s the process? Do you use agencies? Job boards?
- How long does the vetting process last? How long is each step of the process?
If you’re using agencies for all the staffing needs, you’d simply benchmark one agency’s process with another and invest more to the more efficient one (as long as there’s no loss on quality).
If you’re doing hiring in-house, however, you’d want to analyze the exact steps taken to process completion.
You’ll need to figure out:
- Which of the process steps takes longer than it should?
- Can the step be skipped?
- Can the step by automated?
So for example, if your company does 2 soft-skill interviews and one technical, you might simply establish harsher standards for one of the soft-skill interviews and cut out the other.
In another case, you might realize that the interviewees who get to the final technical interview are usually unqualified. In that case, you could either hold the tech interview first or even create an online test that disqualifies anyone that doesn’t know the basics within their field of work.
4. Decrease cost per hire
As with decreasing time to hire, you can also make your recruitment process cheaper by using the right data.
Specifically, you’d need:
- Cost per hire per source
- Average employee performance per hire source
So as a given, you’re analyzing each hiring source (agency, website, social, etc.) for the amount spent on it, as well as the quality of employees gained. Whatever source ends up being the best for the price, you’ll invest more there. You might realize that Facebook is best (and cheapest) for marketers, for example, so you’d put more money there.
Other than the hiring sources, you can also work on your recruitment process itself. You might realize, for example, that the first interview screens around 80% of the candidates. That might mean that you need an online pre-screen.
Harver users, for example, can choose from a wide variety of custom branded pre-screening tests to measure how well a candidate fits with the company.
This allows you to:
- Rate hires – Depending on how well an applicant passes your tests, they get an assessment score. This allows you to sort the candidates based on their relevance to the company.
- Root out unqualified candidates – The applicants who simply don’t have the right skill-set will be screened out before the interview.
If you manage to significantly reduce the number of interviews scheduled, you’ll be saving a lot of time and manpower (and hence, costs).
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5. Improve candidate experience
The very best hires have a lot of options. They’re the ones getting bombarded by recruiters and job offers, making them harder to get.
If your hiring experience is long and tedious, they might just skip over the application process and move on to the next potential employer. To fix that, you can improve the entire candidate experience & make it as easy as possible for someone to apply.
Here are a handful of best practices we recommend:
Over 60% of all searches are done on mobile. So, if your job ads and vacancies aren’t optimized for mobile, you might be losing a lot of potential hires. This is especially true if most of your job descriptions are housed on the company website.
To get the best out of recruitment, you’d want to optimize your website, as well as any ads you post, for mobile. Be sure to measure behavior on your website before and after changes. You can use the bounce rate on your company website for this.
You can find your bounce rate within Google Analytics (if you’re not using GA yet, try asking around on the marketing department). What it does is measure what percentage of users leave the site within seconds after visiting it. The lower the bounce rate, the longer people stay on your website (in general) – and thus – the more engaging your pages are.
Make your application process fun
If your organization has its custom online application process, you’d want to make it as clear and engaging as possible. Add videos, skill games or fun questions. Keep all the legalities, bureaucracy, and so on for post-hire & ensure that the process you have in place is engaging.
Here’s, for example, the candidate experience McDonald’s has created using the Harver platform. It’s short, engaging, informative, and very different than the classical resume-based application.
Many organizations tend to have a giant, 7-8 page static application form you need to fill in. This, needless to say, is a big detractor. The very best candidates have other options. If you make them spend time on a single dull registration form, they’ll probably not want to stick around for long.
If, however, your company really needs to have a complicated application form, you can at least add a progress bar and the ability to save. This way, the candidate will know from the get-go that they need to spend a certain amount of time with the application, filling it at their convenience.
Whether you decide to spice up the application or add in a progress bar, you can use the applicant drop-off rate as a benchmark. Compare what percentage of candidates started the application to that of those who finished it. If you manage to improve the number by even 10%, you’re already seeing a lot of potential long-term benefits.
6. Remove bias from hiring
It’s human to be biased. Let’s say you’re given a choice between two candidates:
- Extremely skilled, top-in the field professional who’s not that good at passing interviews.
- A charming sweet-talker who’s “OK” at the job.
There’s always a chance that you’d overlook the first candidate and go with the second, simply because you really hit it off.
The thing is, though, that a few months in, 66% of new hires tend to realize that they’ve gone way above their head. Some people are simply more likable – that doesn’t mean that they’re the right fit for the job.
Data-driven recruiting arms you with the knowledge you need to minimize bias and hire based on skills and competencies. We’ve detailed the topic in the articles below.
7. Improved forecasting
For the average company, predicting anything about recruitment is guesswork at best. You can’t for example, approximate how much money should be spent on recruiting new personnel since you don’t know how many employees might end up quitting.
With data-driven recruitment, however, forecasting becomes a breeze.
For this, you would want to track:
- Turnover rate annually
- Movements between departments annually
This allows you to make several interesting conclusions. You can, for example, get a better approximate on what the recruitment budget should be. If statistically, X employees are going to leave the company within the year, we’d need Y budget.
This will ensure that whenever there’s a need to hire a new employee ASAP, the HR department has the money for it. Another useful thing to forecast is the hiring time.
It might be very critical to a certain department to know when the new hire will come in so that they can plan around it. This holds especially true if we’re talking about a key hire, someone who’s needed to push a project forward.
By using historical data on time, you can figure out a pretty accurate estimate of how long any hire could take.
Whatever your company does, it’s very likely that you’d benefit from using data-driven recruiting.
Whether it’s for improving new hire quality, decreasing hiring costs, or simply creating a better recruitment process, there are a lot of different strategies you could derive from the right data. All you have to do is jump right in and start experimenting!
If you’d like to see how Harver can help you improve your recruiting strategy by taking a data-driven approach, you can book a demo below.