Which recruiting metrics are you using to assess recruiting efficiency in your organization? Perhaps you’re using time to hire and cost per hire, but are you looking for something deeper?
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There are a lot of aspects to assess when it comes to recruiting. Let’s take a look at some of the simple and some of the more involved recruiting metrics you can use to truly assess and benchmark where your organization stands—and perhaps gain some insight into where you can get even better results.
- Time to hire. Perhaps one of the most widely-used metrics, time to hire (also known as time to fill) is as simple as it sounds. This looks at the average amount of time it takes to fill a vacant role. That answer is usually then compared to relevant benchmarks, such as the industry average or perhaps the organization’s time to hire in months or years past.
- Cost per hire. Since this metric directly shows the impact of recruiting efforts on the bottom line, it’s a favorite among executives. Simply calculate the internal and external costs accumulated during the hiring process, and divide by the number of people hired during that period. Which costs you include is somewhat subjective, but be sure to be consistent in order to compare across different time frames.
- Quality of hire. This metric aims to make up for the shortcomings of the ones before it. Simply assessing costs and time required to fill a role does not take into account the success of the person hired—and therefore the success of the organization in finding the right talent and reducing overall turnover. How you measure the quality of each new hire depends in part on what role you’re hiring for. For example, if you’re hiring sales people, it may be relevant to assess the revenue they bring in or the profitability of the new business they generate. If you’re hiring someone to do manual tasks that can be measured in terms of rate of speed or some other productivity measure, that may be the relevant aspect to quantify. Or, if you’re hiring someone for a more subjective role, it may make more sense to assess quality based on performance reviews or other performance indicators.
- Retention. While an obvious thing to measure, retention rates can make a big impact in recruiting efforts—keeping a good employee is obviously more cost-effective than finding a new one, no matter how good the recruiting team is! Retention also matters when looking at quality of new hires; if a new hire comes on only to leave within a few months, that individual’s contribution will be minimized, meaning that he or she was not a high-quality hire because that person did not stay. (Of course, this is a complex issue when it comes to retention, as hiring processes are not the only factor!)
- Candidates per hire. It may seem counterintuitive, but most organizations will benefit when the number of candidates received for each role is not too high. This is because a high volume of candidates actually means much more work for recruiters and HR personnel to assess the individuals and determine who to interview. When the number of candidates is far too high, it can mean that the job description was not clear in terms of job requirements, or it may mean that the recruiters and/or managers are unclear about what they’re looking for if they cannot narrow down the list efficiently (noting, of course, that in situations where high unemployment exists, the number of candidates will increase regardless of the recruiter’s efficiency or efforts to be clear on job requirements.) Conversely, there should be enough candidates to have a few to choose from to help ensure that the right level of talent can be secured.
This is just a start! In tomorrow’s Advisor, we’ll continue to review even more possible recruiting metrics to use. Stay tuned.