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External hire rate

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What is External Hire Rate?

External Hire Rate refers to the percentage of hires in an organization that come from external sources, as opposed to being promoted or transferred from within the organization.

In the context of Professional Service Automation (PSA), it’s crucial to understand this metric as it can impact resource allocation, project management, and overall operational efficiency.

Importance of External Hire Rate

Understanding the External Hire Rate is pivotal for several reasons:

1. Resource Management: A high external hire rate might indicate a lack of internal talent or growth opportunities. This can be addressed with tools like employee 360 to better understand internal talent.

2. Operational Efficiency: External hires often require more training and onboarding time. Efficient project management can help integrate these new hires faster.

3. Financial Implications: External hiring can be more expensive due to recruitment and training costs. Proper financial management can help in budgeting for these expenses.

External hire rate

Why External hire rate is so important?

Calculating External Hire Rate


External Hire Rate = (Number of External Hires/Total Hires) × 100


Let’s say a PSA firm hired 100 employees this year. Out of these, 70 were sourced externally. Using the formula:

External Hire Rate=(70/100)×100=70%

This means 70% of the hires were external.

External Hire Rate vs Internal Hire Rate

While External Hire Rate focuses on hires from outside the organization, Internal Hire Rate looks at promotions or lateral movements within the company.

1. Cost: External hires can be more expensive due to recruitment and onboarding costs. Internal hires, on the other hand, save on these costs but might lead to vacancies in their previous roles.

2. Knowledge: Internal hires already understand the company culture and processes, requiring less training. External hires bring fresh perspectives but might need more time to adjust.

3. Growth Opportunities: A high internal hire rate can boost employee morale as it shows growth opportunities within the organization. On the flip side, a high external hire rate might indicate a skills gap internally.

Aspect External Hire Rate Internal Hire Rate
Cost Typically higher, as external hires often command higher salaries or contract rates due to experience and expertise. Typically lower, as internal hires may already be on the company’s payroll, reducing recruitment and onboarding costs.
Onboarding Time Longer onboarding time as external hires need to acclimate to the company culture, systems, and processes. Shorter onboarding time as internal hires are already familiar with the company’s culture, systems, and processes.
Industry Expertise External hires may bring valuable industry expertise and fresh perspectives. Internal hires may have company-specific knowledge but may lack broader industry expertise.

Application of External Hire Rate in PSA

In PSA, the External Hire Rate can influence several areas:

1. Resource Allocation: With tools like Gantt charts, PSA firms can plan projects considering the skills of both internal and external hires.

2. Training and Development: Using resource management software, PSA firms can identify training needs for external hires to ensure they’re up to speed.

3. Financial Planning: Finance management software can help PSA firms budget for recruitment and training costs associated with external hiring.

Ready to Optimize Your External Hire Rate?

KEBS, a leading PSA software, offers tools to help organizations optimize their External Hire Rate. With KEBS, firms can get a holistic view of their resources, helping in making informed hiring decisions. Tools like employee exit management and timesheets can provide insights into workforce dynamics.

KEBS aids in optimizing project financials, ensuring that the costs associated with external hiring are well-managed. With KEBS project management tools, integrating external hires into projects becomes seamless.

KEBS Expense Management

KEBS Expense Management

Ready to optimize your External Hire Rate? Contact us or request a demo to see how KEBS can transform your hiring strategy and overall PSA operations.

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