Which Recruitment Metrics You Should Track And Why
It's important to measure your progress with recruitment metrics when going through the hiring process. Analysing your performance through quantifiable data will help you keep things results-driven, alerting you to any weaknesses and helping you to improve your hiring process and strategies.
But working out which hiring KPIs to focus on can be a headache. This short guide will explain which recruitment metrics it is essential to track and why.
Tracking #1: Sourcing channel
Sourcing channel is one of the most important recruitment metrics. In order to optimize your hiring process, you need to know where candidates are coming from and which source(s) provides the most qualified candidates. You're probably advertising through multiple channels – agencies, job boards, social media, printed media, your own newsletters or website. You need an ATS that can break down not only how many applicants come through each channel, but how many were qualified, short-listed, successful, etc.
Understanding this information will help you plan and budget for future campaigns, maximise the most effective channels and eliminate any that aren't working.
If, for example, you get 100 candidates from a paid ad on a job board but only two of them are qualified, yet you get 20 candidates through free social media advertising yet 8 are qualified, you'll have evidence that social media is a more effective tool.
This could help you save money as many job boards charge for placing ads (ranging from around $50 - $350 for single posts although most sites offer cheaper deals for multiple postings).
Tracking #2: Qualified candidate rate
Another important hiring KPI closely associated with the sourcing channel is the overall qualified candidate rate. Are your job advertisements attracting sufficient numbers of qualified candidates? Having data that shows total applicants altogether is all well and good but it's more of a vanity metric – you want something that tells you about quality rather than quantity.
The easiest way of working out the qualified candidate rate is totalling the number of candidates who make it past the initial screening stage. If you find yourself with low numbers of qualified candidates, it can highlight a number of things. For example, it could be that:
- the job description is not accurately detailing the skills needed for the role
- the job is being advertised through the wrong channels
- the way the job is being advertised is attracting the wrong type of candidates
All of these things are quite easily fixed with a few minor tweaks. Another good way of improving skilled candidate numbers is to use a skills test, which is something that a number of companies have started to use to attract the most suitable candidates.
Tracking #3: Time to hire
The time to hire is simply the amount of time it takes to get an employee on board, from the time the job ad goes live until the time a suitable candidate is confirmed in post. You can measure this recruitment metric in total number of days. If you want more in-depth understanding, you can also break it down in a number of ways:
- time between when candidate first makes contact and when they are hired
- time it takes for the candidate to actually start the role
- average time to hire across a number of different positions
- differences in time to hire between different positions
This is a useful recruitment metric because it can help you identify if and when your hiring processes might be a bit slow. Avoiding slow hiring is important for two reasons. Firstly, it saves money in admin costs and prevents you from having vacancies unfilled for long periods. Secondly, it can help improve your candidate experience, as research has shown that candidates can be put off by arduous processes or employers taking weeks to get back to them.
Tracking #4: Job application performance metricsIf you're using a skills test as part of your application process, this is an essential hiring KPI which will help you hone your tests and improve the quality of your hires going forward.
Hundred5 allows you to measure a range of performance metrics relating to test completion time, score, pass rate, completion rate, etc. These metrics will tell you how well the test is performing and whether it is doing what it's supposed to do. For example, if the average test score is high and the completion time is low, this indicates that the test might be too easy and needs tightening up. If the completion rate is low, maybe it's too long, complicated or dull. Knowing this will help you optimize your automated job simulation tests, which in turn will help you learn more about your candidates and better select the ones most suited to your needs.
Performance-based recruitment metrics such as this will help to ensure that you end up with the most skilled candidates for the role. This is one of the biggest advantages of using skilled tests rather than resumes which can't be assessed in this way.
Tracking #5: Offer acceptance rate
What percentage of candidates that are offered a role accept the position? This recruitment metric can tell you valuable things about the overall success of your recruitment process and how well you are performing on candidate experience. If the rate is low, something's going wrong along the line and you need to rectify it.
Unfortunately, this metric alone won't tell you exactly what the problem is so you'll need to dig a little deeper. Maybe the salary or incentives weren't competitive enough? Perhaps candidates are deterred by a lengthy recruitment process or something is wrong with the interview format?
Tracking #6: Cost of hire
All companies should be tracking this hiring KPI in order to plan their recruiting budget and look for ways of reducing costs, but it's important to include all associated internal and external costs. These include:
- advertising costs (job boards etc.)
- administration costs
- labour costs (time spent by recruitment staff from writing the job description to conducting interviews)
- candidate expenses
- background checks
- productivity losses incurred by post being vacant
- any other associated costs
Adding all these costs together and dividing by your total number of hires will give you your cost per hire. If your costs are high, you can look for ways to reduce them, e.g. by advertising through cheaper methods than expensive job boards (especially if sourcing metrics tell you job boards aren't particularly effective) or by replacing resumes with more cost-effective skills tests.
Tracking #7: Employee retention rate
High staff turnover is a costly problem for businesses that experience it, with studies showing that turnover costs can be higher than 200% annual salary costs for some highly-skilled work. If you are experiencing high turnover of employees, you'll want to sort the problem out quickly. The problem could be with you as an employer, or it could be that you're attracting less committed applicants to the role.
You can calculate your retention rates for a given period as a percentage using the following formula: [No. of employees at end of period / No. of employees at start of period] x 100.
Tracking #8: Diversity
Good companies will take proactive measures to ensure that they maximise diversity among their workforce. There is evidence to suggest that a more diverse workforce improves company performance.
Most organizations will now collect base level diversity statistics to show overall numbers regarding gender, ethnicity, disability, age, etc. But those who really want to benefit from diversity hiring can go further and measure recruitment metrics around diversity regarding retention rates, sourcing channels and acceptance rates as well as tracking changes over time. Understanding these metrics will help you overcome any barriers that may exist and will help make sure that your company recruits the very best people available.
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