“The competition to hire the best will increase in the years ahead. Companies that give extra flexibility to their employees will have the edge in this area.” – Bill Gates
Recruiting high-quality job candidates takes a lot of time and money. From getting your job postings in front of the right people to interviewing qualified applicants and eventually, onboarding the right hire, recruitment can be a big investment.
As with any significant time- and financial investment, you want to be sure your money and energy are being spent wisely––especially in a time when resources might be scarce due to the sudden economic downturn.
According to some popular statistics, about 70% of companies are experiencing challenges when it comes to sourcing and hiring skilled candidates while 45% of employers are anxious about the right skills and for particular roles.
Tracking recruiting metrics enables you to provide a data-driven evaluation of your hiring process. Tracking recruiting metrics will tell you which aspects of your recruiting process work well, and which don’t.
This will help any organization establish its best-recruiting practices, and also spot bottlenecks that need to be dealt with.
This is why HR professionals use recruitment metrics – to make factual and data-driven decisions and to make hiring the ideal candidate easier and faster.
According to LinkedIn research, HR teams who track and measure recruiting metrics are 2 times more likely to find talent faster and more efficiently. Recruiting paradigms have changed. It now incorporates marketing, too. Today there is a whole new area of so-called recruitment marketing that also needs to be captured and measured. This is why we strongly suggest you start tracking at least some of these recruiting marketing metrics, too. Tracking these basic metrics will give you an insight into the overall success of your recruiting process.
How you recruit for a new CEO will be very different from how you recruit dozens of employees for a new call center or a tech company. Employer brand and referrals might play a big role in recruitment to attract good talent. The recruitment strategy differs according to the industry you’re operating in and the roles that you’re hiring for. How many applications you expect, how long it takes to fill a vacancy, and so on – it all comes down to context.
That’s why there’s no one-size-fits-all approach to measuring recruitment success. The best hiring KPIs for you might be very different from the business across the street. Context is key. So, instead of starting with the KPIs themselves (and we will get to them), start by putting your recruitment into context. What are your key goals around recruitment? Are you aiming to become the number one employer brand in your industry? Or do you need to cut recruitment costs? The most meaningful recruitment metrics for you are those that tie into your overall recruitment goals.
That’s why we always start with strategy and goals, not data or metrics. Only once you work out what you want to achieve, and what questions you need to answer in order to deliver those goals, can you work out what exactly you should be measuring.
Recruitment metrics can answer any question you want them to. At a macro level, you probably want to know the quality, cost, and productivity of your hiring process. More specifically, we could ask the following questions:
- How good are we at spotting the right candidate and how long does it take us to hire them?
- How many qualified candidates do we need to make a hire and how quickly do we move them from one stage to the other?
- Do we effectively engage the best candidates and getting them to accept our job offers?
- How much money do we spend per hire and how does our spending change depending on the role we’re hiring for?
- How efficient is our hiring process and which steps or stages are most productive?
In short, recruiting metrics provide valuable insights into the efficiency and effectiveness of your recruiting process.
There is no dearth for a pool of talent available in the market however, the recruitment industry has its challenges in connecting the right candidate to the right role; this is the perineal challenge every recruiter faces. That’s where recruitment metrics come into the picture and ensure efficacy in talent acquisition.
What recruitment metrics should matter most to a Talent Acquisition team?
Corporate recruiters can use almost every metric to help them improve the recruiting process, though some recruiting metrics will be more useful than others.
So how do you track your recruitment efforts? Which metrics should matter most to an external recruiter?
External recruiters are usually evaluated on two fronts:
- How quickly they provide candidates.
- And the quality of the candidates they bring in.
Tracking the quality of hire and time to fill over time can help recruiters determine whether they are delivering value to their clients. For example, if their time to fill starts increasing, then they may need to revisit expectations with hiring managers or try new sourcing techniques.
Recruiting teams can track many more metrics. Ultimately, what you choose to measure depends on your company’s unique goals and needs.
It is important to warrant that the talented job seekers fit into the organization’s purview of functioning, not just skill-wise but culturally as well. The right use of HR dashboards and Analytics would help aid in the hiring process.
So what metrics would help leverage recruitment effectiveness? Here are some of the best metrics for CorporateRecruiters:
- Time to Fill – It is measured by the amount of time it would take to locate and hire a potential new employee from the time the job specification is shared. A good benchmark would be 40-42 days on an average. This number could vary from industry to industry as the demand and supply vary as per industrial demands. Some industries might have a longer standard for this metric. For instance, the Engineering industry has a global average of 62 days. Some tips for reducing this time is to create a database and a pipeline of resumes to have it handy as and when there is a requirement. Another good tip for recruiters is to reinforce a good referral system within the organization to make the hiring process faster. Taking stock of the time each stage of the recruitment will help plug loopholes to improvise this metric.
- Quality of Hire – It is used to measure the performance of the hire and helps the organization identify the quality of hiring, by identifying ROI. Candidates who score a high performance reflect on a successful hiring process while the opposite holds for candidates who are low performers. ROI is calculated as the Net Benefit divided by the total cost invested by the organization. The quality of the source of the hiring is also a good metric to determine the quality of the hire.
- Source of Hire – Using the right channels for hiring also contributes to the success of the recruitment cycle. Not all hiring happens through job boards and social media platforms. A few examples are job boards, the company’s career page, social media, sourcing agencies, and referral systems as well. Identifying the effectiveness of the source of recruitment is important as it helps plan a budget and utilize the right source for effective hiring.
- Cost per hire – Allocating a budget for manpower resourcing and making sure that each hire, attributes to the bottom lines of the business is what this metric is all about. This metric is most important and is calculated as the total cost per hiring divided by the total number of hires. Again we need to take into consideration the total cost involved, internally as well as externally.
- Candidate Job satisfaction – As much as the hiring manager’s positive feedback is important, the selected candidate also needs to be content with the role. This helps map the employee’s goals with the organizations’ goals for improved business revenues and deliverables. The consequences of a poor candidate experience go beyond simply losing great candidates. According to the Talent Board, 41% of candidates who gave their experience the lowest rating said they would take their business elsewhere. These candidates are less likely to recommend positions to their networks, narrowing your total pool of applicants. Candidate experience is an essential part of building a good employer brand. Companies can benefit from setting up candidate surveys to discover what candidates liked or disliked about their hiring process.
- First Year Attrition – The first-year attrition metrics determines the success of the recruitment process to a large extent. This metric can be managed or unmanaged based on whether the contract is terminated by the company or if the employee leaves the company. Candidates who leave the organization in the first year of hiring attribute to unproductivity and huge losses to business operations. Unmanaged means that the candidate leaves on their own while the managed ones indicate that the company has not managed the expectations and helped them utilize their skills to the best potential. In other words, one way of identifying this metric is by reviewing the retention rate. The new hire turnover rate measures the percentage of new hires who leave your company before their onboarding period ends (usually three to six months.) If you compare turnover rates over time, you can pinpoint when there’s an issue and look into your onboarding or candidate screening processes.
- Applicants per opening – Not every applicant matches your job description well. Making the job description more relevant and specific is very important to ensure we have more relevant applicants applying for the job vacancy. Listing out specific skills – functionally and behaviorally that is required to execute the job role is essential. This will increase the number of relevant profiles per job role.
- Hiring Manager Satisfaction–Identifying how satisfied the hiring manager is with the employee’s performance is critical to business performance and can be measured by using Net Promoter Score (NPS). The Net Promoter Score is a simple but powerful customer loyalty metric. Itis a tool to measure client satisfaction with one single question, an indication of the growth potential of your company or product.
- Recruitment Process Effectiveness – With more technology-based touchpoints, and candidate assessment methods, the recruitment tunnel effectiveness is measured as yield per step and this tunnel should give refined results. The metric needs to be calculated from the sourcing stage to the hiring stage. The yield ratio can be calculated by identifying the total number of candidates who completed the hiring stage by the total number of candidates who entered the hiring stage.
- Conversion rate – The overall success of a recruiter is determined by the conversion rate. This is measured by the total recruitment cost divided by the total number of hires. Here we need to include the internal cost along with the external cost for completing the hiring process to get a clear idea of how successful the conversion rate has been.
- Adverse impact – We always want to be aware of our biases when hiring a new team member. One great way to do this is by measuring adverse impact. Adverse impact lets you identify if there is a bias against a protected class, measuring if that protected class is hired at a less than 80% rate. To find adverse impact, divide the applicant success rate of Group A (your protected class) by the applicant success rate of Group B (your non-protected class). This number can help identify if you need to make the recruitment process more inclusive and diverse. Adverse impact is a negative consequence in the job screening process, affecting protected classes with bias. Perhaps one of the most crucial talent acquisition metrics, recruiters can evaluate for adverse impact with the “four-fifths rule.” This rule states that bias exists within the hiring process if a protected class, such as women, are hired at a less than 80-percent (4/5ths) rate compared to the demographic with the highest selection rate. The ramifications of adverse impact are felt at every future step of the hiring process and will manifest a less diverse workforce across your organisation. When checking for adverse impact, consider all protected classes, such as workers over 40 or LBGTQ job candidates. You may not be mandated to track these classes, but doing so will provide a much better understanding of biases in your hiring process. Workforce diversity has proven correlations with increased happiness and employee performance. It’s important for recruiters to make sure that the selection methods you use do not inadvertently screen out a protected group. If one of your top recruiting KPIs is to increase diversity, then calculating adverse impact is a must. If you discover an adverse impact, you need to audit your entire recruiting process to see what causes it. Ensure that your screening approaches aren’t accidentally biased. For instance, say you discover that only 25% of disabled applicants pass a screening. What can you do to solve this? Double-check where you’re sourcing candidates from; see if other recruitment channels help you find more diverse sources of talent.
New ways to boost recruitment effectiveness
The traditional metrics listed above are all tried-and-trusted ways of monitoring your recruitment success. But now, the extrapolative capabilities of artificial intelligence (AI) is helping recruiters be even more strategic in their activities.
That’s because AI tools can understand more about us humans than ever before: our personality traits, our intelligence, our likes, our dislikes, our reliability – even whether we’re telling the truth or not. In light of this, hundreds of AI-based tools (apps, platforms, chatbots, etc.) are coming onto the market to help companies streamline their recruitment, to make the entire process more effective.
Having AI-driven software that makes the selection process much more seamless and reduces human effort is the new trend in the global market. The right tools blended with human interfacing is what makes the whole process more actual and holistic and frees up recruiters to focus their efforts elsewhere. The recruitment industry will go through a paradigm shift in 2021 as there will be a need for competence with as many lesser risks involved in the business. To bring out the best from your KPIs, you can use real-time recruitment dashboards that will let you track and visualize the metrics that are the most valuable for your hiring methods.
Recruitment as a job is like ‘finding a needle in the haystack’ and the use of AI only makes looking for the needle easier. For eg., AI-powered preselection software uses predictive analytics to calculate a candidate’s likelihood to succeed in a role. This allows recruiters and hiring managers to make data-driven hiring decisions rather than intuitive decisions
Whatever metrics you choose, measuring your recruitment effectiveness and gearing up with the global trends will help you to do more, identify what works along with areas for improvement – and, importantly, it will help to demonstrate HR’s unique, value-adding role in the organisation.