January 18, 2022
How to Track Hiring & Retention Success
One of the most valuable assets that startups have is their employees. It’s people who come up with game-changing ideas, guide strategies, and execute day in and day out. Without talented peers, founders are often left with a head full of ideas and little ability to bring their visions to life.
That’s why hiring and retaining good people is critical for fast-growing startups. But these functions are harder than many realize. Running a business while pulling together a high-performing team can be like trying to build a plane while flying it. On top of that, one wrong hiring decision or one key team member walking away can cause major disruption.
Given this reality, leaders need to track specific hiring and retention metrics to evaluate their success on both fronts. Otherwise, destructive patterns and practices can persist, holding startups back from achieving their full potential.
3 Essential Hiring Metrics
Getting the right people to come work for you is paramount. Great hires can elevate your business in new ways. Wrong hires can kill your culture and chase away top performers. To determine how effective your recruiting efforts are, you should use at least the three following metrics.
Time to Hire
Time to hire refers to how long it takes a candidate to get through your entire recruitment process, from when they first enter the job pipeline to when they accept an offer. Time to hire contains a lot of insight that can be used to optimize recruiting strategies and forecast ahead of the startup’s needs.
Startup businesses, by nature, can be volatile and unpredictable. Hiring needs can skyrocket and plummet overnight depending on what’s happening in the world. A long time-to-hire cycle increases a company’s chances of falling behind or hiring new employees prematurely.
The time to hire metric can prevent these situations and serve as a tool recruiters use to align the startup’s capacity with the broader marketplace. They can initiate and pause hiring efforts based on what’s happening in the outside world, as well as determine whether it takes too long to hire new talent in general.
Qualified Candidates Per Job Opening
It doesn’t matter how many applications startups receive for job openings if a vast majority are low-quality submissions. Resumes take time to evaluate, so having lots of poor resumes only delays how long it takes to find the best hire out there. Startups can even miss out entirely on the perfect candidate if they spend too long wading through bad CVs.
Keeping track of qualified candidates per job opening can indicate whether job descriptions are misleading, ineffectively written, or posted in the wrong places. A low ratio of qualified submissions to total submissions typically means something has to change.
Pro tip: “Quality candidates” are people you move on to the next round or grant an interview. These are more than just professionally written applications or submissions from skilled individuals.
Candidate & Source Quality
One of the best ways to optimize your recruiting efforts is to focus on recruiting channels that produce high-quality candidates. Of course, it’s impossible to determine your best channels if you don’t track the quality of your candidates or how they come across your job openings.
Startups can choose how they define quality, so long as they tag people with accurate descriptors and know what channel referred them. The ultimate goal here is for startups to be able to filter out low-quality channels and double down on sources that produce excellent potential hires.
3 Essential Retention Metrics
Replacing top talent is expensive and painful. That’s why startups have to pay close attention to their ability to retain people. And the only way to confidently identify when something is wrong is to keep track of a few specific metrics. Below are three worth considering.
Startups need some way to measure whether employees are generally satisfied with their work. While this type of metric seems obvious, many organizations don’t conduct regular pulse checks or ask team members how they’re feeling. Some are worried about what they might learn. Others don’t want to have to make changes if worrisome trends do appear.
However, tracking employee satisfaction is crucial. One way to do this is to send our surveys people can fill out anonymously. You can also conduct interviews with individuals. The specific approach you take doesn’t matter, so long as you give employees opportunities to express their own satisfaction at work.
Turnover Rate (voluntary and involuntary)
Knowing your overall turnover rate is useful as a general benchmark for how well the startup retains people. But what’s even better is tracking voluntary vs. involuntary turnover. Voluntary turnover is when people choose to leave a company. Involuntary turnover is when people are let go or fired.
Voluntary turnover can call attention to deficiencies in the experience you offer to employees. People leave jobs for many reasons: they feel under-compensated, unfilled in their work, discontent with the culture, etc. A high voluntary turnover rate should signal that something is rubbing people the wrong way.
Involuntary turnover, on the other hand, can highlight problems in the hiring process. Too much involuntary turnover means you are bringing in people who aren’t up to snuff or are poor fits for the organization. It could also mean that the overall business is financially unhealthy or unclear about what type of talent it needs.
Voluntary Turnover By Employee Segment
Startups can also take the voluntary turnover metric one step further and apply ratings or additional descriptors to those who leave the organization. Keeping tabs on exactly who is opting out can provide insight into different types of employees.
For instance, startups can segment employees by tenure and monitor turnover by employees who have been at the company for 0-6 months, 6 months to 18 months, and longer than 18 months. Or, startups can apply performance ratings to understand whether it’s top performers, average performers, or below-average performers who are leaving.
Another way to segment is by job level: entry-level, manager-level, and senior-level. This segmentation will shed light on if there’s something wrong with how the business handles people at a specific career level. For example, if inexperienced teammates quit at a higher rate than senior executives, that could mean the startup isn’t supporting younger hires well.
How you dig into turnover depends on the composition of your business. The most important thing is to identify patterns that could lead to better decision-making around retention efforts.
Need Recruiting Help?
For some startups, it makes sense to keep recruiting in-house. Founders can vet every potential candidate and run whatever hiring process best suits them. At the same time, many startups should outsource recruiting to third-party experts who have the experience and network to find the best candidates available worldwide.
At Funded.club, we do precisely this for fast-growing startups that have little recruiting capacity. We take on the hard work of sourcing and vetting talent so that startups can focus on growing successful businesses. And we work on a fixed-fee basis of $3900 or €3300 or £2900 per hire, allowing startups to grow in the leanest way possible.
To learn more about Funded.club’s outsourced recruiting processes and approach, schedule a free 30-min call with our CEO and founder, Ray Gibson, today.