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Key Talent Metrics: How To Create A Data-Driven Hr Process

David Law

Fri, 10 Jan, 2020

  • Reading Time:
    ~ 4 minutes
There’s no doubt about it: data science in business is rising and companies are starting to recognise the rich goldmine that data can become. The key point? Data helps you make better strategic decisions that are based on fact instead of emotion. It minimises errors. And, in a marketplace where the competition is adopting data-driven processes, not keeping up means you lose.
But what about HR? Conventionally, we’ve thought of HR as a more human, intuition-driven sector, right? But however common sense that might seem, the field of HR is also starting to shift towards data-informed practices. 
If you’re thinking, ‘Should we implement data analysis in HR or keep things as they are?’, let’s make the case for data.
What’s the role of data in HR? What does it have to do with the talent lifecycle? 
Collecting and analyzing data from the talent lifecycle gives you the chance to understand what’s truly going on under the surface of your human strategy. It also offers the means to make better, more objective decisions in your hires and management.
Tracking HR data allows you to grasp the impact of your decisions and, ultimately, upgrade your entire process.
1. Because beginnings matter— Quality of hire.
This is the first metric you need to track. Its purpose: to evaluate your new hire’s adjustment and performance, as well as to objectively assess whether they’re a good addition to the company. 
Of course, it’s not one simple number— you have to work to obtain it. First, define a set of criteria that dissects your hire’s success. Include performance, culture fit, skills and competencies (plus other relevant markers). Keep questions as specific as possible, as this will give you more accurate, on-the-ground data.
Define your scale: survey scores can go, for example, from 1-5. A coherent scale is important for calculating the final ratio.
Get all leadership on the same page: there should be a clear understanding of when to evaluate the new hires (this can vary in different teams or departments) as well as on the standards you’ll use on the standardised survey. Take leaders’ insight into account when defining criteria and evaluation protocol.
When you have quantifiable data results to your survey, it’s time to calculate the quality of hire rate. It’s simple: add up all the scores from the different survey sections, then divide that result by the number of sections. That average is your quality of hire rate. 
Consider it against your chosen scale. For example,  on a 1-5 scale, a 4 (or above) is a quality hire. What percent of your new hires are in this category? How does that  evolve over time? Maybe you’ll find you’re going in the right direction or, perhaps, you discover you need to refine your interview and selection criteria.
2. Analyse growth— Career path ratio.
After the employees you hired have been in the company for a while, they should be able to grow and develop— in fact, career development is one of the top priorities for the new generation of talent. 
There are two types of employee growth within the company: lateral (on a horizontal level, expanding their skills in a new area) and vertical (moving upwards via promotion to a position with more responsibility and agency).
The function of the career path ratio is to track the way employees move through the company and identify how the organisational structure is changing. This helps find problematic gaps, strategically plan new hires and promotions, and assess whether the structure is a-okay, too top-heavy or lacking in leadership.
To calculate the career path ratio, start by defining the different job levels in your organisation. When you understand the structure, continue by identifying ascensions (vertical growth) and expansions (lateral growth). Finally, divide the number of ascensions by the total sum of role changes (the result will be lower than 1). 
A healthy proportion: four lateral transfers to one upwards promotion, translating to 0.2 (or lower). If it’s anywhere over 0.5, your structure is probably not allowing talent to grow and expand in an organic, lateral way.
3. Inbuilt warning system— Top performer retention rate.
Retaining top performers should be a priority for any company (we’ve already talked about the high cost of employee turnover). Retention means your hires keep creating value for the company as their skills and careers grow.
Your top performer retention rate speaks of the overall health of your company— they’re the most coveted by others and the hardest to retain. Are you providing enough development opportunities? Is the culture solid or toxic? The better the rate, the better your organisation is doing.
Naturally, you want your top performer retention rate to stay higher than your retention rate for average employees. The reason is simple: you want the best talent to stay and grow with you, raising the stakes and the results.
To track this metric, you’ll first have to define what ‘top performer’ means in your organisation (or in a specific role). Consider goal achievement and create standards for managers to measure their teams’ performance. With that basic data, identify your top performers. 
After tracking for a set period, subtract the final number of top performers from the initial one (without considering new hires). Multiply that result by 100— that’s your final rate. Ideally, it should be over 90% (and higher than your average employee retention).
Top performer retention rate can act as your alarm system. If it starts going down, something is going wrong. Meaning, you should start a dialogue to find and implement strategic solutions.
Tracking these three crucial HR metrics, you can keep your finger on the organisation’s pulse. You’re on the path to a better talent lifecycle driven by more objective and effective decisions. 

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