Credentials, education, and training are all types of financial metrics used in hiring.
Building a company requires finding the best-matched people. The team is an integral factor in your startup’s success.
But when it comes to finding and attracting talent – it’s a war zone out there. Motivated, qualified candidates are in extremely high demand.
What kind of intel helps you bring the right people on board?
4 Financial Metrics to Improve Hiring, Training, and Retention
Employment represents a mutually beneficial relationship. Both the company and the employee must be aligned for the arrangement to work long-term.
Fortunately, the correct data can help you assemble the right team for your organization. Here are four essential financial metrics to help you get hiring, training, and retention right.
Revenue and Profit Per Employee
These two metrics are helpful from two separate angles. Your revenue and profit per employee indicate:
- How much you can afford in terms of the total benefits package.
- The financial impact you should expect from each new hire.
Instead of relying on “average salary” figures for your industry and region, you can start the hiring process knowing what your startup can afford to pay a new team member. The ability to drill into the data and see these metrics by position or function is beneficial.
With this info, you may feel comfortable offering more pay or different benefits, depending on how much additional value each new talent should bring.
Revenue or profit per employee can also help you evaluate your new hires after a reasonable ramp-up period. What impacts are they driving? Have these metrics leveled off or improved since the new hire started?
Use data instead of gut feeling to see when you need new people (and how well you can compensate).
Salary and Benefit Compensation
Beyond comparing revenue per employee, when combined with other metrics, salary and benefit compensation data can provide a wide range of insights.
Have a high turnover? Why? Is it related to pay and benefits?
In some ways, pay and benefits factor heavily into employee turnover. While work environment, opportunities for growth, and the team are all critical factors in employee satisfaction, most people are working to earn money.
No one appreciates feeling undervalued, and people can’t stand the feeling that they’d earn more or enjoy better benefits working for someone else.
But don’t rely exclusively on Indeed or other salary sites. Find out how your direct competitors pay their team.
Forecasted Revenue (and Other Growth Metrics)
Forecasting is about attempting to accurately predict future performance. (Of course, the keyword here is “accurately”).
Some companies don’t properly plan for growth, meaning they easily fall behind in hiring (or they just don’t grow). Or, their growth creates a disaster situation that alienates customers who are no longer satisfied by the level of service.
Preparation is a crucial success factor, and knowing what the future holds for your startup is essential for being prepared. Your expected growth will help determine how many of which type of employees you’ll need in the next 3, 6, and 12 months.
Planning is critical because scaling up a team of knowledge-type workers can be challenging. Even in America, with at-will employment contracts and short termination notices, there’s typically a lag time for finding good people.
Only rarely can you post and fill a position within a few weeks. Hiring the right people who fit your organization takes time and shouldn’t be forced.
Predicting growth and human capital needs also makes onboarding new employees easier. Gradually grow your employee base in line with revenue growth.
You want employees to feel appreciated and stick around. Make sure they don’t get lost in the chaos of starting with a huge, unmanageable cohort.
Training Costs (Plus Average Length of Tenure)
Knowing how much you spend on training, plus the average amount of time each person spends with you, are great metrics.
They don’t directly affect hiring, but they do help you assess and improve:
- Company culture
- Training and onboarding programs
- Ongoing employee retention strategies
Do new team members integrate quickly and stick around? Are your onboarding programs effective at making new employees feel welcome and empowered?
Monitoring length of tenure also gives a data-based indicator of how often you need to hire new employees in a stable environment.
Ready to Know Where You Stand?
Building the right team is a critical factor in building a successful business.
To attract the talent necessary for a competent, cohesive team, you need to know where you’re going, what resources you need, and what you can offer future employees. While much of human capital management relies on soft skills, there are also many quantifiable factors.
Founder’s CPA understands the headcount and hiring needs of fast-moving startups and how they can help by tracking, reporting, and advising.
Contact a Founder’s expert to set up a complimentary consultation if you’re ready to know where your startup stands.