Talent, employee retention, and the hiring process are not typically aspects of a company that finance executives pay attention to, but should they?
On the surface, these factors may seem to only be relevant to human resources professionals. However, understanding the impact of talent acquisition can give finance executives many meaningful insights that can ensure these processes are being handled efficiently and cost-effectively, leading to informed decision-making and resource allocation.
The importance of communication between HR and Finance teams
While HR and finance executives each have their own strategies, very few companies have an established and formal strategy for the two departments to work together.
Finance executives should pay close attention to talent acquisition strategies as these can play a major role in revenue, productivity, and resources spent. Communicating with the HR team, and working together to identify areas for improvement can lead to a streamlined process that results in lower costs and improved retention statistics.
Talent Acquisition KPIs
Factors such as high turnover rates and a long hiring process can cause high costs associated with talent acquisition. Tracking certain metrics can help finance and HR teams create strategies that eliminate inefficiencies and lower costs. Christine Nichols, founder and CEO of People Science, suggests tracking the below metrics to gain an important insight into the talent acquisition process:
Time to fill
Tracking the duration of time from when a job position is open to when a candidate accepts the offer offers important insights into the recruitment process. When a job posting is filled quickly, it suggests an efficient process with lower costs and lower productivity and revenue loss.
Cost per hire
It can cost up to $4,700 to hire one new employee. Tracking this cost, and developing strategies to lower it, can directly influence profitability. Ensuring the company is efficiently allocating resources throughout the recruitment process, while still acquiring high-quality talent, reflects highly on both the finance and HR teams.
Acquisition funnel metrics
In addition to tracking time to fill and cost per hire, which can sometimes be inaccurate, companies should also track key acquisition funnel metrics, including:
- Time to find a candidate
- Time to engage with a candidate
- Time to interview
- Time to offer
- Time to onboard
Tracking these more specific metrics can give an even closer look into talent acquisition, and demonstrate small, but important, areas to improve.
Cost of vacancy
Each unfilled position produces costs for the company. This metric considers the loss of productivity, overtime costs of current employees, and the potential revenue loss incurred throughout the duration of the open position.
Turnover rate
When companies experience high turnover rates, they incur more costs. Higher turnover means more vacant positions, which means more resources spent trying to fill those positions, and a loss of productivity and revenue generation from the open role. Improving employee retention rates lowers talent acquisition costs while maintaining productivity, benefiting a company’s bottom line.
Quality metrics
These metrics assess an employee’s performance in their role, their productivity level, and their job satisfaction. Higher ratings for these metrics suggest an effective recruitment process that hires quality candidates, which positively influences revenue, customer satisfaction, and organizational performance.
When finance executives work together with their HR departments to analyze these talent acquisition metrics alongside financial data, including profitability and revenue, companies can get a closer look into the impact of their talent acquisition strategies and how they may be affecting financial performance. This can lead to an increased level of confidence that talent strategies are being maintained in the best way possible, ensuring the best interests of employees, customers, and stakeholders.
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Colleen Douglas
Senior Marketing Coordinator
Executive Platforms
Colleen joined the Executive Platforms team in May of 2022. She has five years of experience in event marketing, with an emphasis on copywriting and digital strategies.
Colleen has a BA Honours in Business Communications from Brock University and a Diploma in Digital Media Marketing from George Brown College.