External hires as a percentage of average headcount during the reporting period.
External hires I Average headcount * 100
External Hire Rate measures the percentage of the current workforce hired from external sources (may include recruits from outside the public service as well as from other public service agencies) within the reported period, indicating both the relative newness of an organisation’s workforce and the relative volume of recruiting activity of the staffing function.
When paired in analysis with the termination rate, an organisation can monitor the renewal of the workforce or the extent to which certain populations are passing through a revolving door of employment with the organisation.
A very low figure may indicate low turnover or contraction of the workforce. A very low level of new entrants into the employer ‘s workforce can also potentially foster insularity, thereby inhibiting innovation and creating a stagnancy of skills and ideas.
A very high External Hire Rate may indicate expansion of the workforce or high turnover. Generally, organisations will always have some external recruitment activity, which is beneficial for the fostering and growth of new ideas.
However, high levels of external recruitment reflect large costs to the organisation, including the direct costs of hiring as well as the indirect costs of productivity ramp-up and dilution of organisation culture.
Organisations typically source data related to hires from payroll systems, but information may also be sourced from thee-recruitment system.
It is helpful to analyse this measure by the employee populations for which the employer wishes to monitor churn and growth. Such dimensions often include age, ethnic background, employment level, job family and organisational unit.
External Hire Rate does not indicate the extent to which external hires serve as replacements for separated employees or those moving to new positions. The measure does not indicate how long new hires remain with the organisation or how many external hires were previously employed.
While the measure broadly indicates the relative hiring activities of the staffing function, it does not measure any of the activities involved in filling vacancies efficiently and effectively.
For most organisations, the majority of external hires are brought in to replace separated workers. For these organisations, hire rates are correlated with separation rates; therefore, a common target is to move results toward the 25th percentile of a relevant benchmark group.
However, organisations that are growing rapidly, launching new businesses or locations, or fundamentally changing the workforce through external hiring, are likely to set a higher target to move results toward the 50th percentile or higher.
Where absolute targets are set, such targets are typically based on consideration of Separation Rate targets as well as growth or contraction strategies.