HCMI’s CEO, Jeff Higgins, presented at the 2021 Paychex Thrive Business Conference on June 8 on the topic of “Bringing HR and Finance Together with Analytics.” Traditionally, HR and finance are two distinct departments that don’t always collaborate well with each other. Finance helps maintain a balance between cost and revenues, thus naturally views human capital as a cost element. HR regards human capital as an asset and focuses on hiring, motivating, and retaining the workforce to achieve the same goal. Due to their differing perspectives, the collaboration between HR and finance often doesn’t go very far. In his presentation, Jeff made the business case for how collaboration between HR and finance can help companies drive business results today and build a better workforce for tomorrow. Jeff also discussed the key reasons behind HR needs to build a better business case with data and speak the language of business. Video Recording HCMI CEO, Jeff Higgins, presenting “Bringing HR and Finance Together with Analytics” Recommended Reading To Find ROI with HR Analytics, Integrate HR, and Other Data Sources – Read article The Power of Combining Data Sources – Watch video Building a Business Case: A How-to Guide – Read article About Paychex Thrive Business Conference Paychex Thrive Business Conference is an online conference that brings together experts, insights, resources, and solutions companies need to build a better workplace, team, and business that will thrive in 2021 and beyond. Participants will hear directly from product managers, industry experts, and influencers. Discussions include industry trends and actionable solutions. Lastly, participants get the benefit of meeting with like-minded people who are trying to solve human resources and payroll challenges all via an online event platform. Further information about Paychex Thrive Business Conference is available on their website at Paychex.com. Interested in Learning More? If you’re interested in learning more about how bringing HR and finance data together can benefit your workforce strategy, contact us for an obligation-free consultation.

Labor is the heart of an organization. This makes labor cost, performance, and productivity essential topics especially when the goal is to run a highly efficient organization. As an HR or Finance professional, chances are you’ve been asked to compare your labor cost and output to other companies before. In order to make an accurate assessment, you’ll need the most recent benchmarks for various relevant topics such as labor costs, productivity, remote work, contingent labor, and more. For that, you’ll need these 52 benchmarks to help you create an optimal workforce strategy for your business objectives. Table of Contents Labor Costs Benchmarks Workforce Productivity Benchmarks Remote Work Benchmarks Contingent Labor Benchmarks Labor Shortage Benchmarks Labor Cost Benchmarks Besides wages and salaries, labor costs also include benefits, payroll tax, training, HR operating costs, contingent workforce budget, and more. HCMI recommends organizations use the Total Cost of Workforce metric to measure and track the organization’s total workforce spending. These benchmarks will help you build out your workforce strategy for maximum performance with the lowest cost. 1. From 2016 to 2019, global wages grew between 1.6% and 2.2%. (Source: ILO) 2. 43% of companies suspended salary increases in 2020 because of the pandemic. (Source: Robert Half) 3. The average benefit-cost for private industry workers accounts for 29.8% of total employer compensation costs. (Source: BLS) 4. 65% of companies are planning to reevaluate benefits in 2021. (Source: Paycor) 5. The average benefits per employee as of Q4 2020 is $12.07/hour. (Source: BLS) 6. The average wages and salaries expense per employee per hour as of Q4 2020 is $26.53/hour. (Source: BLS) 7. Compensation costs for private employees increased 0.7% while wages and salaries increased 0.9% and benefit costs increased 0.6% from September 2020. (Source: BLS) 8. Over 40% of workers in the U.S. are engaged in some form of alternative work arrangements. (Source: Global Payroll Management Institute) 9. Discover average revenue per employee by industry. (Source: Tipalti) 10. The average raise for a performance-based promotion in 2020 is 3.0%. (Source: BLS) 11. Labor costs in the nonfarm business sector increased at an annual rate of 6.0% in the last quarter of 2020. (Source: BLS) 12. Wages grew in 2020 largely because more than 80% of the 9.6 million net jobs lost were jobs held by wage earners in the bottom 25% of the wage distribution. (source: Economic Policy Institute) 13. The median hourly wages of workers grew 12% between 1979 and 2018 while wages toward the top rose 34%. Toward the bottom, wages have only grown 4%. (Source: Brookings) 14. Since 2004, output per hour worked has grown 1.4% annually. (Source: Brookings) 15. Companies spent on average $1,308 per employee for direct learning in 2019 versus $1,299 in 2018. (Source: ATD) Workforce Productivity Benchmarks At a time when many companies are starved for margin and growth, workforce productivity is a topic that HR can’t ignore. We strongly recommend HR use the Human Capital ROI Ratio metric to measure, track and benchmark their workforce productivity and impact on the business results. Below are benchmarks that encompass many aspects of workforce productivity. 16. 79% of companies say they’re under pressure to improve workforce productivity and 67% are under pressure to reduce labor costs. (Source: Fast capital) 17. From 1979 to 2018, net workforce productivity rose 69.6%, while hourly pay only increased by 11.6% during the same period. (Source: Economic Policy Institute) 18. Labor productivity has grown 6.0 times more than pay. (Source: Economic Policy Institute) 19. The average productivity of employees when working from home compared to when they’re in their workplaces is 68.3%. (Source: World Economic Forum) 20. High performers are up to 8 times more productive than average employees. (Source: McKinsey) 21. The average productivity of employees when working from home compared to in their workplaces is 68.3%. (Source: VoxEU) 22. 90.4% of surveyed employees reported that they are accomplishing at least as many tasks per hour while working from home as they did at offices. (Source: Statistics Canada) 23. During the pandemic, the number of meetings increased by 12.9% and the number of attendees per meeting grew by 13.5%. (Source: NBER) 24. Nonfarm labor productivity decreased 4.2% in the last quarter of 2020. (Source: BLS) Remote Work Benchmarks Remote work or working from home is becoming an increasingly common practice. In the United States, the proportion of employees who primarily work from home has risen significantly during the COVID 19 pandemic. The below benchmarks let you quickly compare the size, scope, and impact of your flexible work programs with others. 25. Results of a recent study show that working from home increased productivity by 13%. (Source: BBC) 26. 41.8% of the U.S. workforce remains fully remote while 15% is partially remote and 43% is not involved in any form of alternative work arrangements. (Source: Upwork) 27. 70% report that the reduction of non-essential meetings has worked better than expected, and 44% report fewer distractions at the office. (Source: Upwork) 28. Workers are spending 12% less time is drawn into large meetings and 9% more time interacting with customers and external partners. (Source: HBR) 29. 44% of employers now have official flexible working policies in place. (Source: ADP) 30. 83% of companies are planning to maintain and implement more flexible work policies after the COVID-19 health crisis has passed. (Source: SHRM) 31. 60% of employers are letting parents adjust their work schedules, with 22% saying they're letting parents temporarily shift to part-time status if needed. (Source: SHRM) Contingent Labor Benchmarks The use of contingent labor in everyday operations has been growing and became an indispensable element of many organizations’ workforce strategy. The below benchmarks will help you build out your optimal contingent labor strategy. 32. According to a 2017 report by the Bureau of Labor Statistics, 3.8% of the U.S. workers or 5.9 million persons held contingent jobs. (Source: BLS) 33. In 2020, it’s estimated that approximately 25 to 30% of the U.S. workforce is contingent (Source: Intuit) 34. More than 80% of large corporations plan to increase the use of contingent workers in the coming years (Source: Intuit) 35. 49% of companies said they decided to hire contingent labor because of the need for external expertise. (Source: Brandon Hall) 36. 42% of organizations plan to use contingent workers as a part of their future talent strategy (Source: Aon) 37. 83% of executives are planning to increase the use of contingent workers – both seasonally and on a continuing basis. (Source: Oxford Economics) 38. 3 in 10 U.S. adults engaged in at least one gig activity and 1 in 10 adults spent 20 hours or more per month on informal work. (Source: Federal Reserve) 39. 62% of executives say their contingent workforce is important or extremely important in meeting business needs. (Source: Business Wire) 40. Companies reported using independent contractors (51%), followed by paid interns (47%), part-timers (36%), and tempt workers from an agency or staffing firm (34%) most likely. (Source: Brandon Hall) 41. The average contingent labor budget makes up around 42% of workforce spend. (Source: SAP) 42. 90% of companies currently using contingent labor are expected to increase their contingent labor budget. (Source: Brandon Hall) 43. The average spend on contingent labor is nearly 28% of total workforce spend (Source: MBO) 44. Contingent labor spend is less than one-fifth of the total workforce budget in 76% of organizations, and one-tenth or less of the total workforce budget in 52% of organizations. (Source: Brandon Hall) 45. Among businesses that hire freelancers, 52.1% are offering remote work policies compared to 38% for those that don’t. (Source: Upwork) 46. 59 million Americans did freelance work in the past 12 months, representing 36% of the U.S. labor force. (Source: Upwork) 47. 36% of freelancers work full time. (Source: Upwork) Labor Shortage Benchmarks The world is facing serious skill shortages that could hinder future growth. Many organizations are already taking early steps to address their skills gap and maintain a high-quality workforce. Whether or not your company already has a plan in place, keep these benchmarks in mind. 48. 69% of U.S. companies reported having trouble filling vacated positions in 2019. (Source: ManpowerGroup) 49. 68% of HR leaders say that building critical skills and competencies is among their priorities. (Source: Gartner) 50. 74% of companies froze their hiring in response to COVID-19. (Source: Gartner) 51. Only 27% of small companies and 29% of large companies believe they have the right talent for digital transformation. (Source: World Economic Forum) 52. Skill shortages increased from 30% in 2009 to 45% in 2018. (Source: N Dawson) Conclusion Our workforce analytics framework focuses on optimizing labor costs and their impact on business results. We even developed a set of human capital reports modeled after the traditional approach of financial accounting called Human Capital Financial Statements. If you’re interested in learning more about how our framework can help you optimize your labor cost, performance and productivity, contact us.

Leading companies are leveraging external benchmarks and other HR data sources to find insights that can help them attract the right talent with the right skills at the right price. This form of recruiting analytics is particularly important during an ever-changing labor market like the one we’re experiencing today. To build an optimized recruitment strategy, you’ll need to be armed with the most recent and relevant benchmarks. For that, you’ll need these 60 recruitment benchmarks to help you better adjust and optimize your workforce strategies. Table of Contents Hiring Costs Benchmarks Hiring Process Benchmarks Hiring Sources Benchmarks Diversity Hiring Benchmarks Post Offer Benchmarks 2021 Hiring Trends Hiring Costs Benchmarks Hiring costs refer to the expenses associated with finding, screening, interviewing, hiring, and onboarding new hires. Being able to effectively manage hiring costs is a sign of a well-run recruitment team. The benchmarks below will help you understand how you’re doing relatively. 1. On average, the cost per hire for each recruit is $4,425. (Source: SHRM) 2. On average, the cost per hire for an executive position is $14,936. (Source: SHRM) 3. The average recruitment expenses to HR expenses ratio is 15%. (Source: SHRM) 4. The average recruiting agency fee is $20,283 per hire. (Source: Top Echelon) 5. On average, recruiting agency fee makes up 21.5% of the total recruitment budget. (Source: Top Echelon) 6. A relocation package costs companies between $21,327 and $24,913 for renters and between $61,622 and $79,429 for homeowners. (Source: Worldwide ERC) 7. Signing bonuses for managers and executives typically ranged from $10,000 to more than $50,000. (Source: The Program on Negotiation (PON) at Harvard University) 8. The average cost of a bad hire is up to 30% of the employee’s first year compensation. (Source: U.S. Department of Labor) 9. Companies lost an average of $14,900 on every bad hire. (Source: CareerBuilder) 10. The average cost of losing a good hire is $29,600. (Source: CareerBuilder) 11. The average cost per hire for a small business is $1,872. (Source: Monster) The average cost per hire for a recruit is $4,425 and $14,936 for an executive position. (Source: SHRM) Hiring Process Benchmarks Companies with a lean hiring process can find better talent faster and cheaper. In order to achieve this, HR teams need to perform well from the very beginning of the hiring process all the way to the job offer and onboarding stages. The benchmarks below will help you to evaluate the efficiency of your hiring process. 12. 62% of small business owners have reported making a wrong hire. (Source: Monster) 13. 74% of surveyed companies said they have hired the wrong person for a position. (Source: CareerBuilder) 14. In 2019, 49% of job searches were conducted on mobile, compared to 51% of job searches on desktops. (Source: Monster) 15. 42% of resumes companies receive are from candidates who do not meet skills requirements. (Source: Robert Half) 16. 40% of hiring managers say that the skills gap will be their top hurdle in 2021. (Source: Monster) 17. 8% of employers say they have difficulty filling openings due to skills gaps. (Source: Monster) 18. Job ads that have social media in their distribution receive 114% more views. (Source: Monster) 19. Companies receive 71% more applicants to jobs posted with social media strategy, compared to those without one. (Source: Monster) 20. 29 is the average number of applicants companies receive per open requisition. (Source: Jobvite) 21. 38 days is the average time to fill an open position. (Source: Jobvite) 22. The average percentage of applicants that move to the interview stage is 12%. (Source: Jobvite) 23. The average percentage of interviews that move to the offer stage is 28%. (Source: Jobvite) 24. The average percentage of offers that turn into new hires is 95%. (Source: Jobvite) 25. The average number of qualified candidates per hire is 23.1. (Source: Workable) 26. 50% of the jobs posted on job boards received the candidate that they’re looking for in the first week. (Source: Workable) In 2017, the average time to fill an open position is 38 days (Source: Jobvite) Hiring Sources Benchmarks Today there are multiple avenues that recruiting teams can use to source candidates. Each hiring source has its advantages and disadvantages, but which ones are best for your hiring needs? Use the recruitment benchmarks below to determine how your team is doing and where your best hiring sources are. 27. 30% of all hires overall in 2016 are from employee referrals. (Source: SHRM) 28. Employee referral hires stay 70% longer than non-referral hires. (Source: ICISMS) 29. On average, 74% of open positions are filled externally. (Source: SHRM) 30. On average, 24% of open positions are filled internally. (Source: SHRM) 31. The average internal hiring rate has increased by 10% since 2015. (Source: LinkedIn) 32. Since the onset of COVID-19, the internal hiring rate has increased by nearly 20% compared to the same time last year. (Source: LinkedIn) 33. Employees stay 41% longer at companies with high internal hiring compared to those with low internal hiring. (Source: LinkedIn) 34. The average percentage of new hires to the total employee population is 30.2%. (Source: ADP) 35. The average percentage of managers promoted internally is 17.2%. (Source: ADP) 36. The average percentage of managers hired externally is 15.6%. (Source: ADP) 74% of open positions and 24% are filled internally. (Source: SHRM) Diversity Hiring Benchmarks Diversity hiring is one of the most highly discussed and debated topics in the HR and recruiting world. Companies are trying to figure out what their goals for diversity hiring should be and which path they should take to meet them. Below is a wide range of hiring benchmarks that will help your team better measure, track, and compare your diversity hiring progress. 37. 87% of surveyed companies indicate that their management team believes diversity hiring is important and should be a priority. (Source: Yello) 38. 81% of respondents say their companies have diversity recruiting strategies. (Source: Yello) 39. 68% of surveyed companies indicate it’s a challenge to increase workplace diversity. (Source: Yello) 40. Women's workforce participation has already dropped to 57% - the lowest since 1988. (Source: Barrons) 41. On average, men earn 21.4% more than women. But when you take into consideration age, education, experience, job characteristics, and other factors, the gap shrinks to 4.9%. (Source: Glassdoor) 42. Tracking of diversity and inclusion supplier spending increased from 22% to 43%. (Source: Internet Association) 43. Corporate diversity and inclusion representation goals increased from 41% to 52%. (Source: Internet Association) 68% of surveyed companies indicate it’s a challenge to increase workplace diversity. (Source: Yello) Post Offer Benchmarks Post offer activities play an important role in new hire engagement, turnover, and retention, but most recruiting teams don’t track how much resources they spent and what impact they’re receiving in return. The below benchmarks will help you evaluate the efficiency of your onboarding and post-offer activities. 44. The average new hire turnover rate within the first 90 days is 30%. (Source: Jobvite) 45. The average new hire turnover rate within 1 year is 23%. (Source: HBR) 46. The average time to full productivity for new hires is approximately 8 to 12 months. (Source: Allied Van Lines and TrainingIndustry) 47. The average annual training investment per employee is $1,296. (Source: ATD) 48. Midsize companies spent less money on training ($829) than large ($1,544) and small ($1,511) companies. (Source: The Industry Report) 49. On average, employees received 42.1 hours of training per year. (Source: the Industry Report) 50. The average annual promotion rate is 8.9%. (Source: ADP) 51. 25% of companies reported that their onboarding process takes a day or less while 26% spend a week and 21% of companies spend a month. (Source: CareerBuilder) The average new hire turnover rate within the first 90 days is 30%. (Source: Jobvite) 2021 Hiring Trends The coronavirus outbreak has altered how recruiting teams work. Changes that were expected to take years are instead happening in months. The below statistics will help you stay on top of 2021 recruiting trends: 52. 82% of surveyed companies plan to hire in 2021. (Source: Monster) 53. 93% of surveyed companies are confident they will find the right candidates. (Source: Monster) 54. 50% or more of open positions are being filled with remote workers. (Source: Jobvite) 55. The median projected percentage change for total salary budgets from 2020 to 2021 is an increase of 3.0%. (Source: Conference Board) 56. 81% of talent professionals agree virtual recruiting will continue during post-COVID-19. (Source: LinkedIn) 57. 20% of the U.S. labor force worked from home full-time BEFORE the coronavirus outbreak. (Source: Pew Research Center) 58. 71% of the U.S. labor force are working from home full-time DURING the coronavirus outbreak. (Source: Pew Research Center) 59. 51% of the survey respondents indicated that they are able to work from home at an efficiency rate of 80% or more. (Source: Stanford University) 60. 65% of Americans reported having internet capacity fast enough to support video conferencing calls. (Source: Stanford University) 82% of surveyed companies plan to hire in 2021. (Source: Monster) Conclusion Combining these benchmarks into your reports and analyses can provide valuable insights into the efficiency and effectiveness of your recruitment process. Have questions? Talk to us. Find out more about our HR Consulting Services & HR Analytics Software

Time to Start is another top metric that every Recruiting and HR team should track and monitor regularly. Different from Time to Fill, Time to Start represents the number of days that a vacated position stays empty until a new hire is recruited and onboarded. The longer a position stays empty, the more productivity loss your team will experience, and the more the responsibilities of that job will be distributed to other team members. This guide will tell you everything you need to know about Time to Start, how to calculate it, and how you can best use this metric in reports and analyses. Table of Contents What is Time to Start? Why Measuring Time to Start Time to Start vs. Time to Fill How to Calculate Time to Start Using Time to Start to Make Better Workforce Decisions What is Time to Start? Time to Start measures the total number of calendar days from the date a job becomes vacant to the date a new hire starts work in the new position, summed across all hires or positions filled and expressed as an average number of days when divided by the total number of hires or positions filled. Time to Start is largely driven by internal recruiting planning, job requisition posting, onboarding time and other post-offer processes. Organizations typically measure the metric Time to Fill for externally hired positions, as opposed to Time to Start, which counts every day the position is vacant or unfilled instead of the time it takes recruiting to fill the position. Why Measuring Time to Start Time to Start is most commonly used as a measure of HR recruiting or talent acquisition efficiency. When using with other advanced recruiting metrics like Internal Hire Rate, Net Hire Ratio, and Cost per Hire, Time to Start is a great metric because it helps shine a spotlight on existing recruiting challenges and bottlenecks that leaders might miss. Time to Start is also an excellent indication and measurement of productivity loss due to vacancy. An excessive number of vacancy dates will negatively impact employee engagement, employee morale as well as workforce productivity. Time to Start vs. Time to Fill As illustrated in Time to Fill. If Time to Fill is an indicator of how efficient a recruiting team is at filling an empty position start, Time to Start is the efficiency measurement of the entire recruiting process from the date a job becomes vacant till the date a new hire finishes the onboarding process and starts the new position. You can visualize the differences and see a side-to-side definition comparison between Time to Fill and Time to Start below: Time to Start: Total number of calendar days from the date a job becomes vacant to the date a new hire starts work in the new position. Vs. Time to Fill: Total number of calendar days from the date a job requisition is posted to the date a new hire accepts the position. How to Calculate Time to Start Definition: Total number of calendar days from the date a job becomes vacant to the date a new hire starts work in the new position, expressed as an average number of days when divided by the total number of hires or positions filled. Using Time to Start to Make Better Workforce Decisions Example 1: Use Time to Start as a Recruiting Score and KPI Time to Start is often used hand in hand with Time to Fill as indicators of talent acquisition effectiveness and efficiency. This metric is most important when the organization is seeing an excessive number of vacancies or vacancy dates versus the industry average or when it begins to trend upward. We recommend that HR uses this metric with other talent quality metrics to ensure that the organization is filling empty positions quickly and with highly qualified individuals. Example 2: Cross compare Time to Start with Other Metrics for Additional Insights Similar to Time to Fill, we recommend that HR cross-compares Time to Start with other employee metrics such as the number of qualified candidates, employee engagement scores, and retention rates for better insights into the talent pipelines. Example 3: Discover additional Insights by Filtering Time to Start by various Workforce Dimensions When measurement dimensions such as workforce category, critical job group, business unit, performance category, and tenure category are added, Time to Start can be a predictor of improved Time to Full Productivity, cost savings from minimized overtime or open position lost revenue or productivity, reduced total cost of workforce and voluntary turnover. Below is an example of new insights can be found by drilling Time to Fill by job category.

Net Hire Ratio is a must-have recruiting metric in a data-driven HR culture. This guide will tell you everything you need to know about Net Hire ratio and provide some best practice advice. Table of Contents What is Net Hire Ratio? Why Measure Net Hire Ratio How to Calculate Net Hire Ratio Use This Metric to Make Better Workforce Decisions What is Net Hire Ratio? Net Hire Ratio represents the number of new hires for every termination in the reporting period. In other words, it shows the total net growth or loss of employee headcount for a given period. For example, a Net Hire Ratio of 1.2 means that the organization hired 120 recruits for every 100 departed employees during a reporting period. If Net Hire Ratio is greater than 1, it means that the workforce has grown in size. If Net Hire Ratio is equal to 1, it means that the workforce size stays the same. If Net Hire Ratio is less than 1, it means the workforce shrank. Why Measure Net Hire Ratio Net Hire Ratio is the most accurate way to tell if your workforce is growing or shrinking. Whereas Headcount reporting provides a snapshot of the workforce size in time, Net Hire Ratio takes into consideration changes from both hiring and turnover activities. It also shows the direction and the rate at which the workforce is growing or shrinking. ​ HR can also use Net Hire Ratio along with Cost per Hire as indicators of the need to increase recruiting efforts, resources, and/or hiring activity, as well as an indicator of the need to reduce uncontrolled voluntary turnover. ​ Organizations should have a Net Hire Ratio target that aligns with their talent strategy, whether it is expansion or reduction. In either case, we recommend HR track and compare historical Net Hire Ratio trends with the Total Cost of Workforce change rates to quickly spot any irregular workforce trends. How to Calculate Net Hire Ratio Definition: Comparison of new hires to terminations, showing the net growth at the organization for a given period. Use This Metric to Make Better Workforce Decisions Example 1: An Excellent Predictive Indicator for Skill and Headcount Gap Many organizations do not have an easy way to proactively spot negative turnover trends among critical and core job roles. Usually, these trends only surface when an immediate intervention is required, or knowledge loss risk becomes an apparent issue. ​ These job roles tend to be decentralized and scattered in various business lines and geographical location. A few examples of recent job roles with unexpected talent shortages are cybersecurity roles, lab technicians, and accountants. ​ Net Hire Ratio is a very effective metric that HR can use to take the first step in becoming more proactive in addressing their headcount and skill gaps. Example 2: Filtering Net Hire Ratio by Workforce Dimensions for Further Insights Where data allows, we recommend HR filter their Net Hire Ratio data by various workforce dimensions to gain valuable insight into the movement of talent across the organization. For example, HR can drill down Net Hire Ratio to the job category level to see which part of the workforce is increasing or decreasing in size. For a hospital, this approach can be used to check if critical and hard to fill Nursing roles are growing, shrinking or remaining flat. ​ A well thought out job classification framework will be important to identify changes by workforce dimensions quickly and easily. Example 3: A Strategic and Operational KPI for Workforce Planning Because Net Hire Ratio is a single metric that is very effective in capturing the changes in your workforce size, we recommend using this metric in combination with other workforce cost and productivity measurements such as Human Capital ROI Ratio and Total Cost of Workforce (TCOW) for workforce planning purposes. Recruiting teams can also use Net Hire Ratio to set hiring targets and monitor results for different job categories, business lines, and geographical locations. Below is an example of how layering Time to Fill with Retention Rate can help discover underlying recruiting issues. Find out more about our HR Consulting Services & HR Analytics Software

Despite the changing labor market, internal hiring remains one of employers’ best talent sources according to a recent study by the University of Minnesota. Not only does it incur fewer expenses, but employees who are hired internally are also more likely to be high-performers, highly engaged, and less likely to leave. ​ For these reasons, being able to monitor internal hiring activities and measure its impact on business results is critical for recruiting successes. ​ This guide will help explain what Internal Hire Rate is, why it matters, how to calculate it, and how to best use it. Table of Contents What are Internal Hires and Internal Hire Rate Why Internal Hire Rate Matters How to Calculate Internal Hire Rate Use Internal Hire Rate to Make Better Workforce Decisions What are Internal Hires and Internal Hire Rate? Internal hires occur when the organization fills open positions with existing employees. It includes both lateral and vertical movements of employees across the organization. ​ Companies use Internal Hire Rate to capture the total number of positions filled internally via promotion, transfer, or other moves (internal hires may or may not be accompanied by an increase in compensation), expressed as a percentage of total average employee headcount. ​ You can find examples of what are considered internal hires below: ​ Internal Hires ✔️ Promotions ✔️ Transfers from one department to another ✔️ Transfers from another business unit ✔️ Relocations ✔️ Reassignments ​ NOT Internal Hires ❌ Contingent workers ❌ Direct sourcing ❌ Agency / outsourcers ❌ Advertising ❌ Internet ❌ Employee referral Why Internal Hire Rate Matters Internal Hire Rate is commonly used to measure, track, and benchmark the level of internal mobility and career opportunity inside the organization. ​ Internal Hire Rate is a strongly linked leading indicator of reduced cost per hire since internal movements are considered very low-cost sources for new hires compared with most external hire sources. Benefits of internal hires vs external hires include: External hires cost 18% more than internal hires External hires are 21% more likely to leave during the first year Employees stay 41% longer at companies with high internal hiring How to Calculate Internal Hire Rate Definition: The total number of positions filled internally via promotion, transfer or other moves, expressed as a percentage of total average employee headcount. Use Internal Hire Rate to Make Better Workforce Decisions Example 1: Examine Internal Hire Rate by Different Workforce Dimensions We recommend examining Internal Hire Rate by measurement dimensions such as workforce category, critical job groups, performance category, tenure category, and business unit. By analyzing the data this way, you can assess if hiring internally is a superior predictor of higher levels of performance and success for new hires at the organization. Example 2: Combine Internal Hiring with Other Data Sources for More Insights When analyzed in combination with Human Capital ROI Ratio, performance levels, turnover, tenure, and career path metrics, Internal Hire Rate can be a predictor of decreasing cost per hire, increasing or decreasing quality of hire, high performers, new hire engagement, and new hire turnover. Example 3: A Case Study on the Impact of Internal Hires You can follow this link to download our case study on measuring the impact of internal hires for a regional healthcare provider. Summary: Integrating recruiting with other HR data sources enables a multi-hospital healthcare provider to pinpoint their best talent sources and optimize their recruiting strategy. Key Questions: Is it better to build, buy, or rent talent? What recruiting source yields the greatest number of high performers? Is internal mobility a source of value or turnover and cost? Can we model our workforce to optimize cost, profit, and productivity? Impact: 10% increase in internal hiring resulting in $7.1 million in predicted salary cost savings Find out more about our HR Consulting Services & HR Analytics Software

Cost per Hire is among the list of most important recruiting metrics that all HR teams should measure. Not only does this metric help organizations track and benchmark the expenses associated with the process of hiring, it also serves as an indicator of how efficient and effective their recruiting teams are at filling empty positions quickly with qualified hires. We put together this guide to explain what Cost per Hire is about, how to calculate it, and how you can best use this metric in reports and analyses. Table of Contents What is Cost per Hire? Why Measure Cost per Hire How to Calculate Cost per Hire How to Use This Metric to Make Better Workforce Decisions What is Cost per Hire? Cost per Hire measures the expenses associated with the process of hiring such as recruiting costs, sign-on bonuses, and onboarding costs. The majority of recruiting costs typically apply only to external hires, but some costs may be allocated to internal hires depending upon recruiting activity analysis. ​ They include the internal expenses of running a recruiting department and external expenses associated with hiring activities such as travel reimbursement, testing fees, external agency fees, etc. ​ To get a list of examples for internal and external expenses, please go to the "How to Calculate Cost per Hire" section. Why Measure Cost per Hire SHRM’s 2017 benchmark report showed that the cost to fill a position has risen 36% over the previous 5 years. With the increased volume of hiring activities and rising talent shortages, HR teams can expect this number to continue to increase. Measuring and tracking Cost per Hire is an excellent way for HR to ensure that hiring cost is under control and stays within the budget. ​ HR can also use Cost per Hire’s historical trends to project recruiting expenses for the next calendar year and create an appropriate budget. For example, if the average cost per hire is $1,000 per hire this year and HR is planning to hire 100 new employees, HR can expect to spend approximately $100,000 in recruiting cost plus room for error, inflation, and rising service fee for next-year budget. ​ Additionally, Cost-per Hire is a strongly linked leading indicator of the Total Cost of Workforce in terms of the time, cost, quality, and volume of hiring activity in the organization. How to Calculate Cost per Hire Definition: the total amount of dollar resources spent on recruiting new hires. Examples of hiring expenses: Compensation for recruiters. This includes salary, wage, and benefits for your recruiters. Compensation for onboarding staff. This includes salary, wage, and benefits for your onboarding staff. Training expenses for recruiting and onboarding staff. Any training or continuing education expenses for your recruiters and onboarding staff should also be included. Office overhead expenses. If you have a separate office for your recruiting and onboarding team, rent and utilities to operate this building or office should be included in the hiring expenses. Agency fees. This refers to the expenses that the companies pay a recruiting agency to attract, evaluate, and screen potential candidates to fill open positions. Advertising and marketing expenses. If your recruiting team paid to promote your job listing on LinkedIn and Monster, these expenses should be counted toward your Cost per Hire. Sign-on bonuses. This refers to the one-time payments given when an employee begins a new job. Travel expenses. If your recruiters travel to other cities or if you paid to fly candidates to your office locations for interviewing purposes, these expenses should also be included in Cost per Hire Referral bonus. This is an award set in the employee referral program to motivate employees to recruit candidates from within their network. Relocation expenses. Your organization may choose to offer a relocation package to incentivize candidates who are currently living in a different city or region to join the organization. These expenses should be included in Cost per Hire. Onboarding expenses. This refers to any overheard expenditures that the company pays to onboard a new hire. ​An extensive list of hiring expenses can be found in this SHRM’s article. How to Use This Metric to Make Better Workforce Decisions Example 1: Benchmark Cost per Hire against Industry Average and Peers We recommend HR teams to use this metric as an indirect indicator of their recruiting department performance in executing the organization's talent and hiring goals. ​ SHRM’s 2017 Talent Acquisition Benchmark Report showed that the average Cost per Hire of their surveyed members was $4,425 and has consistently risen over previous years. This is well in line with Bersin by Deloitte’s earlier report of $4,000 Cost per Hire in their 2014 Talent Acquisition Factbook. Example 2: Tracking Cost per Hire by Different Dimensions for More Insights Cost per Hire is significantly impacted by the job categories or job groups recruited. Higher level, critical or technical job roles carry substantially higher costs to hire up to a factor of 100 times the cost of lower-level administrative and other lower-level job roles. Thus, being able to track Cost per Hire by various dimensions such as job category, geographical location and business line is critical for effective recruiting management. ​ In the same SHRM report, the average Cost per Hire for an executive position is 3 times higher than a non-executive position ($14,936 vs. $4,425). Click here to access the full report. Example 3: Cost per Hire as an Indicator of HR Efficiency and Effectiveness Cost per Hire is driven by the types of positions that the organization is filling as well as the hiring strategy and methods. To better evaluate hiring performance, we recommend using Cost per Hire in combination with other measurements such as Voluntary Turnover Rate, Human Capital ROI Ratio, and Total Cost of Workforce (TCOW) as predictors of HR efficiency and effectiveness at filling positions quickly with high quality hires and reduced workforce costs. ​ Below is an example of how layering Time to Fill with Retention Rate can help discover underlying recruiting issues that otherwise wouldn’t be discovered.

While the economy continues to recover, many businesses struggle to regain pre-COVID levels of workforce and financial performance. We’d like to help! This webinar will review 3 actionable ideas you can adopt to optimize your workforce size, cost and productivity: (1) Find the best talent at lower salaries with labor market intelligence. (2) Grow existing talent internally with solid career paths and talent benches. (3) Use workforce and financial modeling to select optimal workforce investments. Webinar Video Presentation Slide Deck View the presentation slide deck HERE. About the Presenter Stephen Weltz- Workforce Analytics Manager, HCMI As a workforce analytics consultant at HCMI, Stephen specializes in synthesizing, analyzing and visualizing seemingly disparate data sets to uncover key workforce insights that link to business results. Stephen combines experience in workforce analytics applied statistical analysis, and organizational research to help companies make better data-driven decisions.

Most organizations believe intuitively that their managers are a critical contributor to business success, yet few know how to measure their impact or to optimize their performance to improve service, sales, and profit.   Workforce Analytics can change this. In this deep dive webinar, we'll uncover how organizations can use Workforce Analytics to measure the impact of leadership on the business and discover opportunities to improve overall manager performance. Topics will include: 1. What you need to know about management analytics 2. How to show the impact of managers on turnover rate, engagement score and more 3. Why data integration is the key to assessing manager performance Webinar Video Presentation Slide Deck Click here to download About the Presenter Stephen Weltz- Workforce Analytics Manager, HCMI As a workforce analytics consultant at HCMI, Stephen specializes in synthesizing, analyzing and visualizing seemingly disparate data sets to uncover key workforce insights that link to business results. Stephen combines experience in workforce analytics applied statistical analysis, and organizational research to help companies make better data-driven decisions.

Starting November 2020, publicly-traded companies in the U.S. are required by U.S. Securities and Exchange Commission (SEC) Regulation S-K to disclose information on the impact of human capital on the company’s performance. Where human capital is considered material to the business and its performance (which is the case for most companies), the disclosed information should include details for each area of talent management deemed material (i.e. talent attraction, talent development, talent retention, productivity). These new rules require a significant change in what and how the majority of U.S. companies report on human capital today. Here are five key reasons why companies need to act now: Compliance liability exposure Risk falling behind leading ESG companies Mounting pressure from institutional and ESG investors Leadership in adopting global standards Potential new requirements in the near future #1. Compliance Liability Exposure With the SEC’s new human capital disclosure requirements, companies will have to go beyond adding a couple of HR metrics to their earnings reports. Because the SEC did not provide specific metric guidance on which metrics to include in reporting, companies will have to select the “right” human capital metrics and explain how the results support the company’s narrative on its business strategies. As with traditional financial statements, companies should seek third-party verification from an independent external source on the accuracy of their chosen HR metrics prior to including them in public reporting as well as verification as to whether the metrics chosen add value or add confusion and risk. All of this must be done when the new human capital requirements become effective in November of 2020. We recommend companies go through a 5-step human capital reporting compliance process to validate their numbers and develop the storylines that link disclosures to business intent. You can learn more about this process here. #2. Risk Falling Behind Leading ESG Companies Leading ESG companies such as Allianz, Edwards Lifesciences, and Samsung among others have been including more human capital metrics in their sustainability reports in recent years. Examples are included below. Allianz – 2018 People Fact Book Edwards Lifesciences – Sustainability Report Samsung – Sustainability Report In addition, socially conscious investing continues to gain momentum even amid the COVID-19 crisis and spreads beyond small and specialty funds. According to a recent survey, the number of global ESG-data driven investment assets has doubled in the last four years surpassing $40.5 trillion in 2020. Here are some notable facts about ESG investing: The number of ESG consideration funds has grown to 564 funds in 2019 Many large institutional investors like CalSTRS and CALPERS have been advocates for more transparency around human capital reporting disclosure ESG index funds hit an all-time high at $250 billion Together with the growth in ESG reporting and social investing, the new SEC disclosure requirements provide companies with a big incentive to disclose more detailed HR metrics and more fully explain the role of human capital in achieving their business goals. #3. Mounting Pressure from Institutional and ESG Investors Large institutional investors have been a strong supporter of human capital disclosure leading up to these new rule changes. One of the leading voices is Human Capital Management Coalition (HCMC). Launched in 2017, HCMC is a group of 32 global institutional investors with over $6 trillion in assets under management created to advocate for better human capital management practices and disclosure. HCMC is co-chaired by the UAW Retiree Medical Benefits Trust and the California State Teachers' Retirement System (CalSTRS). In HCMC’s official response to SEC’s Regulation S-K announcement, they stated that “under the new rules shareholders would still face difficulty in obtaining information that is clear, consistent, and comparable in order to make optimal investment and voting decisions. While the rulemaking represents important progress in acknowledging the importance of the workforce, the new rules give public companies too much latitude to determine the content and specificity of the human capital-related information they report.” You can read HCMC’s completed response here. The trend extends globally. In the U.K., Pensions and Lifetime Savings Association, previously known as National Association of Pension Funds (NAPF), published an extensive whitepaper in 2015 calling for clearer reporting and disclosure around human capital. #4. Leadership in Adopting Global Standards Since the SEC did not provide specific guidance on what human capital measures to report there is an opportunity for interested companies to establish industry leadership positions by adopting more transparent global human capital reporting and disclosure standards that highlight their commitment to human capital as a competitive differentiator. There are several sets of human capital reporting standards that companies can look to for guidance. One globally recognized source is the International Organization for Standards (ISO) and its’ human capital reporting standard 30414:2018. Launched in 2018, the standard contains 59 metrics covering 11 different talent management areas. One benefit of adopting ISO 30414:2018 standards is that an organization can be certified that it has complied. (Information on HCMI’s ISO 30414 certification is available here.) Other human capital reporting guidelines are also in development. Sustainability Accounting Standards Board (SASB), a nonprofit organization working to develop sustainability accounting standards, announced its Human Capital Research Project in 2019. They will “identify key human capital management issues to set up potential standard-setting activities.” Most recently, the World Economic Forum released a set of 21 sustainability metrics aiming to make ESG reporting mainstream. People or human capital is among the four central pillars of their recommendations. #5. Potential New Requirements in the Near Future The SEC’s Regulation S-K was approved on a 3-2 vote. However, the divergence of votes among the SEC commissioners was more about the lack of specificity in metric requirements than whether or not companies should disclose this information. SEC Chairman Jay Clayton noted in his statement, “I do expect to see meaningful qualitative and quantitative disclosure, including, as appropriate, disclosure of metrics that companies actually use in managing their affairs.” With the support from SEC commissioners, ESG funds, and institutional investor community, it’s only a matter of time until companies will be required to disclose specific human capital metrics and related information to support the impact of human capital on business performance. In Conclusion The new SEC human capital disclosure requirements are effective November 2020. Now is the time for public companies to act to determine what to measure and disclose to ensure compliance, and to assess the impact of the reported results on their industry competitive standing. As much of this will be new to most organizations, there will be a substantial effort required to identify and gather the underlying data and systems necessary to calculate certain metrics and create the storylines to support how these metrics reflect upon business performance. Here are some additional resources: What companies should know and do now More on human capital disclosure and reporting ISO 30414 certification Webinar: Incorporating HR & ESG In Corporate Strategy Have questions? Click on the button below and fill out the form to talk to one of our associates

On August 26th 2020 the U.S. Securities and Exchange Commission (SEC) announced that it adopted new Human Capital Disclosure Requirements for public companies reporting / listing on the U.S. exchanges, opening a new era of human capital reporting and disclosure. Here is a quick FAQ to help companies like yours better understand what it means for them. Q1 - What does this mean for my company now? Less than a month from now, public companies will be required to describe in more detail how human capital impacts their business results, including human capital risk factors that have or in the future could be expected to have a negative impact on the company. Prior to this adoption, the SEC only required companies to disclose the number of its employees. With the SEC ruling companies now will need to determine: Which metrics to disclose to accurately reflect the business impact of their human capital investments and management practices, How to pull together data from myriad systems to calculate those metrics, and How Investor Relations communicates the link between the metrics results and business strategy. Keep in mind that the rules become effective 30 days after publication in the Federal Register, currently anticipated to be published in September 2020. Q2 – How can we comply with the new disclosures? The SEC did not specify an exact set of measurements or objectives. Instead it let companies decide what is best for them based on the nature of their business. This creates both confusion and opportunities. One option for companies is to leapfrog a minimum response to SEC requirements by adopting the recently released ISO 30414:2018 human capital reporting and disclosure guidelines. The ISO 30414:2018 guidelines provide a set of recommended human capital metrics and show how to calculate them. Many may view it as a “safe harbor” type approach for meeting the new SEC human capital disclosure requirements. Q3 - What should we do now to prepare? As noted above companies will need to determine which metrics to disclose, how to pull together data from myriad systems, and how to communicate the link between the metrics results and business strategy. To determine the best compliance approach for your company and help prepare for disclosure, we recommend a 5-step Rapid Readiness Assessment to examine the gap between current disclosures versus the SEC’s new rule amendment and to determine how to fill any gaps. These steps would include: Assess current Human Capital risk disclosures vs. the new SEC human capital disclosure requirements Identify potential disclosure gaps Adopt ISO 30414:2018 reporting standards or select alternative metrics Evaluate enterprise data availability and system reporting capabilities Link Human Capital disclosures to business strategy and results Some companies will find themselves further ahead than others. For example, many leading global companies already disclose extensive human capital information as part of their Environment, Social and Governance (ESG) reporting. Samsung, Deutsche Bank and Allianz report on human capital separately or as part of their annual sustainability reports. Other companies may already have adopted workforce analytics across the enterprise and have the systems in place to integrate data, calculate standardized metrics, and identify the key drivers of changing trend rates or performance vs. industry benchmarks. Most U.S. companies, however, are in the early stages of human capital measurement and will find themselves with a significant amount catch-up to do. Q4 – What does the long-term future look like for Human Capital Disclosure? For many years, institutional investors have been asking for more information on how companies are managing their human resources. COVID-19 also has pushed companies get a better understanding of all aspects of their workforce as has an increased focus related to diversity and inclusion in the US. This amendment is part of SEC’s larger effort to modernize public company disclosure and begin to include more ESG elements. Also, the number of ESG funds and demand for ESG investing has been rising consistently in recent years. In 2018, the amount of ESG-mandated assets was at US $12 trillion, which is expected to grow at a 16 percent Compound Annual Growth Rate (CAGR) to a total of US $35 trillion by 2025. With human capital being a part of the “S” element of ESG, companies can expect investors to be looking for them to be taking a more active role in providing enhanced measurement in the ESG area. If you’re interested in learning more about how to prepare, what to do next and whether adoption of ISO 30414:2018 is right for you, we’d be happy to show you how to move rapidly from assessment to compliance in a few easy steps. Click here start a conversation with us. Additional resource: Webinar - Incorporating HR & ESG In Corporate Strategy

Workforce diversity has become an increasingly important priority for management but it is challenging to achieve without knowing what works and doesn’t work today. Here are 5 ways analytics can help boost your diversity recruiting and business performance: Develop insights to support a diversity hiring strategy Build diverse candidate recruiting profiles Assess current recruiting and retention efforts Integrate HR and financial data to measure the ROI of diversity initiatives Inform leadership on the financial impact and succession planning Watch this webinar to get the details. Webinar Video Presentation Slide Deck Click here to download About the Presenter Steven Maxwell - President, HCMI Steve helps organizations around the globe grow faster and perform better by changing the way they build, deploy, value and manage their workforce. His background includes Founder, CEO and Partner roles in Human Capital Technology and Management Consulting firms ranging from start-ups to global businesses with over 2,000 employees. A frequent speaker and business adviser on workforce strategy, Steve also serves as a Coach and Mentor to early-stage entrepreneurs through MassChallenge, a global non-profit startup accelerator and competition. Carl Kutsmode - SVP Talent Consulting, Talent Rise Carl has spent the last 25+ years helping employers from startups to global organizations optimize their talent practices, processes, technologies and strategies. A pioneer in the digital transformation of recruiting, Carl helps employers gain competitive business advantage by equipping them to succeed in attracting, recruiting and retaining the best talent. To see more client successes, innovative thinking and practical advice about Workforce Analytics and Planning, visit HCMI's Learning section