Don’t recruit blind when you can use data to make informed decisions and optimize your recruiting strategy. The benefits of tracking key performance indicators (KPIs) for recruiting go beyond allowing hiring managers and recruiters to make more better decisions, however. “KPIs set expectations and improve communication” says Walter Rogers, CEO of CCI Global Holdings.
By tracking KPIs, you can more easily see how recruiters and hiring managers are performing, as well as communicate expectations and improve subpar results. Here are some of the top recruiting KPIs explained, to provide you with the framework for collecting data for strategic recruiting.
Recruiting KPIs Defined:
What it is: Reach includes the total number of contacts in a company’s email database, as well as a company’s social media following and blog subscribers.
It’s important to know your audience. It’s trickier to account for the reach of recruiters and employee referrals, but if you can estimate values for those sources of contacts, include them in your reach.
Example: If your company’s database has 2,350 contacts, your LinkedIn has 547 followers, your Twitter has 11,200 followers, your facebook has 849 followers, and your blog has 612 followers, your reach is 2,350 + 547 + 11,200 + 849 + 612 = 15,558.
If your employee referral program connects you to an addition 193 potential candidates and you’re not using a recruiter, your total reach is 15,558+193 = 15,751.
Percentage of Calls Within Optimal Call Window
What it is: This is the percentage of calls that are made at optimal calling times.
Just as there are best times to call potential customers in sales, there are best times to call potential candidates. Track what times generate the best responses to calls, in terms of calls answered, willingness to stay on the phone, and displayed interest.
Example: Let’s say that you find that calling between 5pm and 8pm on a Tuesday generates the most positive response. In that case, you want to make sure that you aren’t making the bulk of your calls at 4pm on a Friday. Tracking when calls are being made can help you organize your schedule in a way that maximizes value from time spent on calls.
Net New Candidates
What it is: This measure is the total number of new candidates that enter your system.
It tells you how successful you are at getting your company in front of jobseekers as a potential employer and, once you have their attention, how attractive your employer brand is. If your net new candidates value is low, your company either has poor visibility as an employer or there is something off-putting about your employer brand, career site, or recruiting strategy.
Example: If you have a total of 213 candidates for a position and 34 were previously in your system, your net new candidates value is 213 - 34 = 179.
Total Qualified Candidates
What it is: This is the number of candidates who have all the qualifications needed for the position.
It’s not only important to track how many candidates you’re attracting, but also how many of those are the candidates that you want to attract. If your total candidates number is high but your total qualified candidates is low, either you’re looking for candidates in the wrong places, utilizing the wrong social networks for recruiting, or describing posit
ion requirements poorly in your job posting.
Example: Let’s say you have 213 candidates for a position, as in the example above. Of those candidates, 7 have the required training, experience, and expertise for the position, as well as compatible salary expectations. That’s a problem. You might be looking for candidates in the wrong places or describing the position poorly, or your expectations for a candidate’s qualifications may be out of line with the salary you’re willing to provide.
Total Job Applications
What it is: This is the total number of applications you get.
This metric, when paired with Total Number of Candidates, mirrors Traffic to Lead Ratio in sales. Traffic to Lead Ratio is what percentage of visitors to your job related sites turn into sales leads.Typically this conversion is by signing up for a demonstration or giving an email address to receive more information.
Just as a low Traffic to Lead Ratio indicates that something is unappealing on your sales page, a low Total Job Applications to Total Number of Candidates ratio suggests that something in your application submission process is confusing or off-putting to candidates and is preventing you from accessing as much of the talent pool that you could.
Example: If you got 43 applications for a position from a recruiter and 89 independently, the total job applications value is 89+143 = 132.
Candidates accepted by hiring managers
What it is: This is how many of the candidates that a recruiter presents for a position that the hiring manager requests an introduction to.
This measure maps to Sales Accepted Leads in sales, which is a metric that measures how many sales leads are accepted by the sales team as viable sales opportunities. These are the leads that the sales team reaches out to.
It’s important to measure how well recruiters are communicating with hiring managers and delivering the candidates that they are looking for. A low candidate acceptance rate suggests either poor communication of desired candidate qualities and experiences between the hiring manager and the recruiter, overly lax screening by the recruiter, or unreasonable expectations by the hiring manager.
Example: If a recruiter presents 16 candidates and the hiring manager requests an introduction to 11 of them, then the value is 11.
Phone Screen to In-Person Interview
What it is: This is the ratio of number of candidates who undergo an initial phone screen to the number of candidates who are invited in for an in-person interview.
If candidates selected for phone screens are strong and phone screens are being conducted in a candidate-friendly way, you would expect a high ratio for phone screens to in-person interviews. If the ratio is low, hiring managers may be wasting time by not being selective enough about who to phone screen. Alternately, some aspect of the phone screen may be putting off candidates so that they decline offers to come in for a second, more in-depth interview.
Example: If you have initial interviews with 45 candidates and invite 9 candidates in for an in-person interview, your phone screen to in-person interview ratio is 5:1.
What it is: The total number of job offers extended, including both accepted and declined offers.
The recruiting process’ goal is to match employers with the candidates whom they want to employ. Total offers is thus an incredibly important metric, because it measures how well the process is working at connecting the right employers and candidates.
Example: Let’s say you make a job offer to candidate A and it is declined. You also make offers to candidates B and C and they are accepted. The value for total offers is then 3.
In-Person Interviews to Total Offers
What it is: This is the ratio of in-person interviews conducted to total job offers extended.
The in-person interviews to total offers ratio measures how well hiring managers are screening candidates before inviting them in for an in-person interview. “An ideal interview-to-hire ratio is 4 to 1 or less” says Keith Cline, founder of VentureFizz. A high ratio indicates poor pre-interview screening and a waste of hiring manager hours, and thus salary dollars, on excess interviews. Not every candidate who is interviewed will be the right fit, even with the best recruiting process, but interviewing dozens of candidates in-person to fill a single position is typically not a good sign.
Example: If you conduct 12 in-person interviews and make two job offers, your in-person interviews to total offers ratio is 6:1.
Total Offers Accepted
What it is: Total offers accepted is the number of offers extended that are accepted by candidates. This can also be described as number of hires.
Total offers accepted is best considered in comparison with total offers. If that ratio is low, the recruiting and interviewing process is likely doing a poor job of generating interest in your company as an employer among top candidates. Improved courtesy during the process, such as quick response times, clear communication, and friendly interviewing, can help improve the ratio.
Example: If you extend three offers and two candidates accept, the total offers accepted value is 2.
Candidates per Channel
What it is: This is how many candidates you’re getting from the different channels you use for recruiting.
Track where your candidates are coming from. Look at LinkedIn, Facebook, Twitter, paid ads, referrals, etc. “This can show which channels are most effective in attracting candidates to your organization” says Sajjad Masud, co-founder and CEO of Simplicant. “It can also highlight how the various sources compare in terms of quality, quantity, speed and overall effectiveness in the final outcome.”
Especially when it comes to comparing paid versus free channels, informed strategy can help you avoid spending money that isn’t converting into results. It can also help you invest more time and money into channels that are producing either a lot of candidates or disproportionately high quality candidates.
Example: Break it down into as specific channels as you can. Instead of just saying ‘100 from social networks’ say 40 from LinkedIn, 30 from Twitter, and 30 from Facebook. Instead of just saying ‘98 from paid ads’ say 76 from Google AdWords and 22 from Facebook ads.
Cost per Hire
What it is: Cost per hire is the total cost associated with filling a position, including everything from recruiting fees to pay for hiring manager hours.
Cost per hire in recruiting is the equivalent of cost per lead in sales. Though there may be better ways to track cost per hire than how it has traditionally been measured, it is still important that you are tracking how much you are spending to fill each position, in order to optimize for a cost efficient recruitment strategy.
Example: If a hiring manager’s hourly salary breakdown is $45/hr and a recruiter’s fee to fill a position is $10,000, then if a hiring manager spends 20 hours on filling the position and there are no other costs associated with filling the position, like advertising costs or job listing fees, than the cost per hire for that position is (20*$45) + $10,000 = $10,900.
Quality of Hire
What it is: Quality of hire is how much value the hire adds.
In sales, you track customer value to see how much value each customer you acquire is bringing your company. In recruiting, you track quality of hire to see how much value each candidate you hire is bringing your company. Top performing workers can create multiple times as much value for a business than average workers, so optimizing for top quality hires can have enormous impact on your company’s bottom line.
Example: If hire A produces twice as much value as hire B, then hire A has a double as great quality of hire than hire B.
Time to Fill
What it is: This is how long it takes to fill a position, from the beginning of the sourcing process until the new hire joins the company.
You don’t want to rush to fill a position and end up hiring the wrong candidate, but you also don’t want to dawdle and either lose great candidates to speedier competitors or miss out on the work that the vacant position is supposed to produce. Tracking Time to Fill allows you to compare your recruiting timeline against industry standards and determine whether you’re taking too little, too much, or just the right amount of time to choose new coworkers.
According to a recent SHRM report, larger companies typically fill a position in 43 days while smaller organizations take 29 days to fill a position. The difference in timeline can be explained by the more entrenched bureaucracy in larger organizations and the greater number of people who need to sign off on a new hire. If your company is small but takes more than a month to fill a job, or if your company is large and takes more than a month and a half to fill a job, you may be moving too slowly.
Result: If you start looking for someone to fill a position on October 1 and fill the position on December 1, the time to fill is 2 months.
Cost of slow hiring
What it is: This is the sum of all costs associated with hiring more slowly than standard.
From losing high demand candidates, to increased hiring costs, to excessive position vacancy days, slow hiring can be extremely costly. Top quality candidates typically don’t stay in the job market for very long before someone hires them. If your hiring process is slow, your competitor will get the most desirable candidates and you’ll be left choosing between average to subpar candidates.
Slow hiring is also associated with increased hiring costs. More manager and employee time spent interviewing means more salary dollars going into the hiring process and fewer into revenue-generating activities for your company.
Lastly, excessive position vacancy days cost your company whatever value the position is supposed to produce. “For example, the economic damage caused by having a revenue-generating position vacant longer than necessary may be as much as $5,000 per day simply because a vacant seat in a sales job or revenue collection job can’t create or capture revenue” says Dr. John Sullivan, CEO of DJS. If a critical position is being filled by a temp or employees from other roles, the quality of work may go down during the position vacancy position and cost your company in reputation and/or return business.
Example: Let’s say a job takes 10 days longer than standard to fill. Let’s say, also, that the position generates $5,000 in revenue when filled. Because the decision comes so slowly, the top candidate, candidate A, takes a job with a competitor. You must hire candidate B instead, who brings the company $75,000 less per year in value than candidate A. The expected tenure in the industry is two years. The extended process also means the hiring manager spends 10 extra hours on interviewing and job-related tasks, at a salary of $45/hr.
Then the cost of hiring slowly is $5,000 + (2 * $75,000) + (10 * $45) = $155,450.
Cost of a bad hire
What it is: This is the total of all costs associated with making a bad hiring decision.
Whether it’s due to hiring too quickly, hiring too slowly, interviewing ineffectively, neglecting to check references, or poor communication, a bad hire can cost your company tens of thousands of
Dollars. In a 2014 FastCompany survey, 41% of companies surveyed said a bad hire had cost them at least $25,000. 25% of companies surveyed said that a bad hire had cost them at least $50,000. When the stakes are so high, it is essential to include the costs of poor decision making in your evaluation of your recruiting process.
Example: Let’s say you hire candidate C, who has a poor work ethic and generates $45,000 less in revenue per year than a standard employee. Imagine also that you candidate C upsets employee A so much that employee A takes a new job elsewhere. Replacing employee A costs $150,000. After a year, you fire candidate C for continued poor performance. Replacing employee A costs another $150,000.
The cost of a bad hire is then $45,000 + (2 * $150,000) = $345,000.
What it is: Retention is a measure of what percentage of hires stay with your company.
Tracking employee retention allows you to compare your ability to hold on to employees against the industry standard. While standard tenure varies from industry to industry, if your company’s turnover rate is significantly higher than the norm for your industry, you need to evaluate whether the problem is in who you’re hiring, how you’re hiring, how you’re onboarding new employees, or how you’re managing and developing employees. Replacing an employee can cost up to 200% of that employee’s salary, so poor retention can drive up your overall recruiting costs substantially.
Example: Let’s say you have 65 employees. Every year, 5 employees leave. Then your retention is (65 - 5) / 65 = 92%.