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Ideas and insights for today’s people-centered leaders.

Talent acquisition is arguably the one HR area that provides the biggest advantage to a business. People are the driving force behind every organization, and hiring the right people is a critical factor for success. Research backs this up: According to one study, the ability to deliver on recruiting had a larger impact on revenue growth than all other HR areas, including onboarding and retaining new hires, managing talent, and developing leadership.

It’s no surprise, then, that spending on talent acquisition by U.S. organizations continues to climb. Research by Bersin indicated that in 2011, the average cost per hire was already $3,500 —and just three years later in 2014, that figure had grown by 28% to $4,500.

Because hiring the right people for the right role is so important, quality of hire stands out as a metric that organizations care deeply about. The average cost of a poor hiring decision can equal 30% of the individual’s first-year potential earnings — not just from the turnover, but also lower productivity, a damaged employer brand, lower employee engagement, and higher manager time spent on mitigating underperformance.

Attempting to predict the quality of employees you hire—before you hire them—is a fast-growing industry. There are countless experts, consultants, and vendors that claim to enhance your ability to pick the right candidate. But without workforce analytics, it’s difficult to accurately identify what makes a strong hire.

Without talent analytics, it’s difficult to accurately identify what makes a strong hire.

Many recruiters rely on their Applicant Tracking System (ATS) to tell them about a candidate’s viability, but these systems have an inherent flaw: none of their analytics are built using data from the full employee lifecycle. In other words, they haven’t followed the successes and failures of your employees—from the moment they applied for their jobs until they left your organization years later—and connected the dots to see which candidates ended up being the best employees in the long-term.

Your ATS can’t measure long-term quality

Although many ATS vendors include analytics that attempt to measure applicant quality, they are at an inherent disadvantage. Their tools cover only a small piece of the employee lifecycle—the pre-hire phase, and often only a part of that. Worst of all, they stop tracking at the point of hire.

Because workforce data inevitably lives in multiple, disconnected systems outside of the ATS, there’s no way to tie ATS data to indicators of long-term quality of hire like job performance or promotions—events that happen quarters or years after the time of hire and continue to happen for the length of an employee’s tenure.

Using a spreadsheet to try to bridge the gap between systems is time-consuming and error-prone, and starting a business intelligence (BI) project to integrate workforce data from multiple sources is a multi-year, multi-million-dollar proposition that frequently fails.

Using a spreadsheet to try to bridge the gap between systems is time-consuming and error-prone, and starting a business intelligence (BI) project to integrate workforce data from multiple sources is a multi-year, multi-million-dollar proposition that frequently fails.

Ultimately, then, your ATS lacks the ability to tell you the two things about talent acquisition that are most important to your business:

    1. Who the best hires will be for the long term
    2. What recruiting programs drive the best long-term results

If you’re relying on your ATS to be the main source of information for recruiting, it’s important to note that those aren’t its only limitations. Because it can only see the information in its own silo, your ATS won’t be able to help with other critical aspects of the hiring process. It can’t:

    • Help you fix hiring bottlenecks
    • Accurately predict how fast you’ll hire for a given role
    • Tell you why good candidates drop out of the hiring process
    • Track whether you’ll hit your hiring and diversity targets
    • Help you optimize spending on talent acquisition
    • Give stakeholders enough visibility into the status of open positions

Go Beyond Your ATS To Succeed at Talent Acquisition

The entire HR function is making strides to use data to inform workforce decisions involving the entire employee lifecycle — from identifying the best recruiting sources to get quality hires from to creating hiring plans for impending retirements.

Savvy talent acquisition teams recognize the limitations of their ATS and are actively looking for new technologies that will pull all the data from their disparate systems together so they can hire better, faster, and also get ahead of business demand.

About the author: Ian Cook

Ian is an advocate for the crucial role that people play in helping companies thrive. His career has focused on enabling people, teams and companies to perform at their best. For the last 15 years Ian has been helping leaders elevate their HR strategies and programs through the effective use of people analytics. At Visier, Ian led the development of our market leading solution and is now focused on the overall strategy for the people analytics business.

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