Renowned management consultant Peter Drucker once said, “If you can(’t) measure it, you can(’t) improve it.” This holds true in every industry, including recruitment. By measuring each process and strategy, recruiters can optimize recruitment programs and ultimately help companies hire the best talent.
Thankfully, technology has made it easier to gather relevant data to measure the effectiveness of hiring tactics. There is also a wide range of metrics that can offer valuable insights that can steer recruiters towards the right direction in order to achieve their clients’ goals. Do note, however, that “effectiveness” can be subjective. Different companies have different objectives, so the KPIs will definitely vary.
That said, here are some of the most crucial metrics that every recruiter should monitor to make sure that they’re always recruiting the right people:
Quality of Hire (QoH)
Quality of hire or QoH is one of the most important recruitment metrics since quality employees have long-term positive effects on any business. Not only do good hires usually stay longer, but they’re also more productive and fit the company culture better.
The main issue with this metric is that quality is a little tricky to evaluate. Thus, there needs to be quantifiable metrics to provide objective measurements. For example, real estate agents can be appraised based on their sales figures and time to sell.
Fortunately, there are plenty of available tools that can help gather these important numbers. Following the example above, real estate recruiters can use Get Brokerkit, which can be tied in with BrokerMetrics. These tools provide access to agent and broker metrics such as leads generated, listings taken, listings closed, net income and new agents joined, among others.
Factors such as hiring manager satisfaction and even promotions within a specified period can also be used to measure QoH.
Time to Hire (TTH)
Time to hire or TTH is the number of days from the beginning of the recruitment until the candidate gets hired. The “official” beginning of the recruitment process is usually marked by the date when the candidate is first approached by the hiring team.
Essentially, TTH measures the speed with which you hire good candidates as soon as you receive their application. The faster you can hire top talent, the faster they can contribute to the company. A shorter, faster process also helps you attract more quality candidates.
A slow TTH likely means that there are some snags within your hiring process. Study each stage and identify whether there are redundant items or if there are any parts of the process where recruiters are struggling. After making the necessary changes, perform another evaluation to see if the TTH has improved.
Time to Fill
Compared to time to hire, which is measured from the start of the process, time to fill is measured from the time that the job opening is posted. This can be influenced by factors such as supply and demand, especially if there have been recent events that directly affected the job market.
Time to fill can also be used to measure how effective job ads are. If they aren’t receiving enough attention from applicants, perhaps something can be revised in the messaging. Make sure that you’re using clear, concise language so that there won’t be any confusion or unreasonable expectations.
Cost Per Hire (CPH)
As its name implies, cost per hire or CPH is a metric that lets you know how much a company is spending to recruit one person. CPH involves not just recruiter fees, but also all adjacent expenses like software and equipment, training, ad spend, as well as administrative costs. If the company has a referral program, it should also be factored in.
Obviously, a too-high CPH is not ideal. Check if there are any areas that can be optimized cost-wise. You should also check the turnover rate (see below). Remember that it costs more to recruit an employee than to retain them. If you need to hire new people more often, this can affect the overall CPH.
Acceptance Rate
The acceptance rate is simply the percentage of candidates who ultimately accept the job offer. If there are applicants who reach the end of the recruitment process but don’t ultimately accept, it’s possible that they received a better one. They may also be unsatisfied with the compensation package, probably due to a mismatch of expectations and what the company is able to provide.
To help address this issue, consider asking for feedback from those who have rejected offers before. This can help eliminate the guesswork when you’re drafting job offers for future applicants.
Candidates per Opening
Having a high number of applicants for a job opening likely means that the ad is getting a lot of attention. However, the more important metric is the number of qualified candidates per opening. If a lot of applicants make it through the screening process, it means that you are sourcing from the right platforms. Ultimately, you won’t have any problems with candidates who don’t meet the minimum qualifications.
If the opposite is happening, you may need to adjust the language in your job ads so that the qualifications are much clearer. You also need to check where you’re sourcing candidates. You might not be on the same platform as the candidates you’re looking to hire.
Turnover Rate
Last but certainly not least, recruiters should keep track of the turnover rate of their hires. A high percentage of people leaving the company within a year (or even 6 months) is usually an indicator of a bad match between the candidate and the company. This costs a lot of resources, so it’s best to address the problem as early as possible.
Other metrics you can use to measure the effectiveness of recruitment strategies include candidate satisfaction upon hiring, candidate experience, and process completion rate (regardless of acceptance). You may also want to look at the time to productivity. This measures how long it takes for a new hire to reach the expected level of productivity for the post. Using these metrics, you’ll have an easier time refining your recruitment programs and processes to meet your own metrics and exceed your client’s expectations.
