Organisations have seen a tectonic shift in the way they perceive the Human Resources Department. From being a support function, it is now viewed as an equal business partner. With advanced tools like recruitment metrics, the HR department is providing key insights and driving the growth of businesses.
Talent is a key differentiator and can propel an organisation towards its strategic goals. For this reason, organisations are spending more resources towards bridging this gap. Reviewing the current recruitment strategy can give useful insights into understanding if it is giving the desired results or needs tweaking. A data-driven approach is all the more powerful as organisations can make informed hiring decisions.
What is a recruitment metric?
Recruitment metrics is the measurement of hiring KPIs to assess the overall ROI. If used correctly, it is a powerful tool that can help in determining the success of hiring within an organisation. It also helps in analysing if the organisation is hiring the right people and through the right sourcing channels. Moreover, it can help in filling the gaps and streamlining the hiring process for a higher success rate.
In this data-driven business world, recruitment metrics is an effective way to make informed hiring decisions by using interactive HR dashboards.
Why is recruitment metrics important?
A recruitment dashboard can give you a host of figures and numbers. However, it is the information hidden behind them that is powerful and important. A data-driven approach is slowly transforming the way of recruitment. These dashboards can answer some key questions like:
- How long does it take to close open positions?
- How much money is your recruitment team spending on the hiring process?
- Which is the most effective channel for posting the open jobs?
- What is the efficiency of your recruitment team in the hiring process?
- How many candidates are applying for an open job?
- How well does your new hire perform at the job?
You can even compare your internal recruitment metrics with the global average and analyse where you stand.
Types of recruitment metrics
Here are some of the most insightful recruitment performance indicators that you can track.
Time to Fill
The time to fill is typically measured as the number of days between publishing a job and hiring the candidate. It is a critical metric that can tell you how fast you are sourcing and if your job advertising is working as expected. It is also an important indicator used in business planning. This metric can give a realistic idea to the business leaders about filling an open position or expanding their teams. With this information in hand, they will be able to chart a more realistic growth plan.
The formula for calculating Time to Fill:
Time to Hire
The time to hire is only slightly different from the previous metric but is powerful in its own sense. The time between contacting a candidate and his offer acceptance is known as time to hire. It can tell you about the efficiency of your recruitment team or if there is a significant delay leading to the loss of talented candidates. Also, it can tell you about their speed of screening candidates, interviewing them and giving them the offer. Automating your hiring process can lead to faster screening and better engagement of candidates.
Cost per hire
Hiring a new employee comes at a cost and this includes both external and internal expenses. For example, internal costs may include your recruitment team’s salaries and the expenses on their learning and development. External costs include expenses like the external agency fees, advertising costs, assessment centres, relocation fees etc. It is an important metric that can help in allocating the recruitment budget. It can also help you in determining which sourcing channels are working the best for you.
Cost per hire is a tricky metric and must be seen in tandem with other metrics. The goal is not to minimise the costs but to reach an optimum cost to get the best quality hires. For example, your organisation’s cost to hire may have doubled in the last two years but the quality of the new hires may have improved. Secondly, you have hired more executives in the last two years and hence your costs may have increased. Both these scenarios point to a healthy recruitment output though the costs may have escalated.
Cost per Hire formula:
Quality of hire
The quality of a new employee can be measured by his performance which is often represented by his first year’s performance rating. Conversely, a bad hire is an employee with low first-year performance ratings. A low-performing employee can add to unnecessary direct and indirect costs. Quality of hire is one of the inputs required for determining the success ratio of the recruitment function.
A low success ratio indicates that the selection process or the sourcing channels are not appropriate.
Offer Acceptance Ratio
The entire recruitment effort can go down the drain if the candidate does not accept the job. It is a simple metric that shows the percentage of candidates who accept the offer. A low offer acceptance ratio can indicate that something is not right. The candidates may not be happy with the salary, company’s policies or are being snatched away by the competition. This metric can be an important input for benchmarking these aspects with the market. For instance, you can match your salary range with that of the competition.
Source of hire
This is an important metric for the organisations that use external sources for hiring. This can indicate the sources that are the most effective and can help with future hiring. For instance, if you find that referral is an effective channel, you can implement more attractive referral schemes. On the other hand, if you feel a particular external agency is better at closing executive-level positions, you can work more closely with them.
Data Analytics is driving the businesses worldwide and can give useful insights about recruitment as well. You can refer to this easy guide for making a comprehensive recruitment dashboard for your team. With this information, you can concentrate on the strong factors for a more effective recruitment strategy. At the same time, you can work more on improving the weak areas.