10 Hiring & Retention Metrics for Fast-Growing Startups
In talking with entrepreneurs who are considering partnering with OpenView, we often hear that the most serious impediment to growth is being able to hire the right employees and grow the company’s headcount according to plan. In response to this trend, over the past three years our talent acquisition support has become the fastest growing group within OpenView Labs, as we seek to screen thousands of applicants and fill over 100 positions (and growing) at our portfolio companies every year.
Given the extremely competitive market for top talent today, our CEOs and founders have to also consider striking the right balance between aggressively adding to their teams, successfully retaining and providing the right career paths for top performing employees, and terminating non-performing employees.
Most of the time though, as far as startup growth planning goes, “growth in headcount” is the primary focus. But this number does not take into account factors such as terminations, defections, promotions etc. Therefore, it typically represents a very simplistic take on the human resourcing strategy of the company.
After all, even if a company is enjoying an incredible growth rate, the goal is never simply to find more warm bodies to fill positions. It is about hiring the most qualified employees for the most important positions in the most effective manner possible.
Therefore, once the company has achieved a certain size — typically about 50 employees — it will make sense for the HR leader to start tracking various metrics to develop a better sense of the overall strength of the work force, and to apply the right strategies for building the best team to help take the company to the next level. The question is — what are the right metrics they should be tracking?
10 HR Metrics for Fast-Growing Startup Companies
The following are 10 crucial statistics that will give a startup a much more comprehensive picture of their hiring, retention, and team development practices.
- Annual turnovers: Number of employees who leave the company each year.
- Annual voluntary turnovers: Number of employees who leave the company voluntarily.
- Annual performance-related terminations: Number of employees who are asked to leave because of low performance
- Number of new positions available
- Number of positions filled: New positions, backfills, and internal promotions
- Number of new positions filled
- Average tenure of employees
- Average cost of hire: Including job posting costs, sign-on bonuses, external recruiter fees, internal recruiter compensation, internal time cost for interviewing and deliberation, etc.
- Average time to hire: From job posting to position filled.
- Number of internal promotions
All of these numbers can also be calculated as percentages (such as of total employee base), and benchmarked against other companies. However, just like other operational benchmarks, you should not blindly attach to any specific numbers because it can often create the wrong incentives and behaviors in the organization. For example, for years Microsoft had the practice of cutting the bottom 10% of their employees, a practice universally criticized as creating a toxic culture.
Do you track any other metrics around hiring and retentions for your business? Do you know of any benchmarks that companies can follow? Please share your insights with us in the comments.
Ramp Up Your Hiring the Smart and Scalable Way
Photo by: woodleywonderworks