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Understanding the Lag and Lead Metrics of Recruiting

Understanding the Lag and Lead Metrics of Recruiting

Strategic recruiting is much more like sales than traditional recruiting. Correspondingly, how recruiting results are best analyzed is similar to how sales and marketing metrics are analyzed. Recruiting metrics can be broken down into two broad categories: lag and lead metrics.

Lag vs. Lead Metrics

Lag metrics are output oriented. They’re great for analyzing how your bottom line is doing, but they analyze history. For example, a lag metric in sales would be what your total sales revenue was in a given month. Because lag metrics look at past results and thus study the success of past strategies, they’re all looking at where you’re coming from.

Lead metrics are input oriented. For example, a lead metric in sales would be number of introductory sales calls made per day. Lead metrics study what your strategies are and how you’re executing them. They look at the present and help you plan your future, but they don’t measure the results of your strategies, since the correlating results are yet to be realized.

Traditionally, lag metrics have been the main type of metrics analyzed in human resources, including recruiting. But times are changing. “Lead indicators will become very important” says Richard Todd, regional HR director at Hilton Australia. “Metrics like the back-up talent ratios, qualified applicants, performance reviews, training... will need to play a much stronger role moving forward."

So which recruiting key performance indicators fall into each category? If you’re familiar with the recruiting funnel, it’s helpful to sort key performance indicators to different steps in the funnel. Key performance indicators associated with the bottom of the funnel are lag metrics and key performance indicators further up the recruiting funnel are lead metrics.

Recruiting Funnel

At the very top of the recruiting funnel is sourcing. That includes everything around attracting candidates, gathering contact information, driving job applications, etc. Some of the key performance indicators to consider here are how much traffic career sites are getting, how long visitors are staying on the sites, how social media followings are growing over time, and how many net new candidates are entering the job application system, among others.

These indicators are important for analyzing what you’re currently doing and how good you are at doing it, but they don’t tell you how those efforts will convert into new hires. They are lead metrics.

At the very bottom of the funnel is hiring. This is includes how many total offers are extended to applicants and how many offers are accepted. These metrics tell you how successful your recruiting process is at converting candidates into hires, but it doesn’t tell you what along the way is working for you. These are lag metrics.

Given the high cost of employee turnover, retention can potentially be considered another step in the recruiting funnel, just below hiring. “If you’re losing people, particularly high performers, you must find out why and quick,” says James Kemper, president of W. H. Meanor & Associates. Employee churn rate is a lag indicator, because that value is a response to past strategy, but should be analyzed in combination with lead indicators from HR.

Lead and lag indicators work together to give you a more comprehensive evaluation of your recruiting strategy’s performance. “A lead indicator is a measure that suggests how another measure, the lag measure, might behave in the future” says Stacey Barr, performance measurement specialist. The key to understanding your results, based on the strategies you implement, is using a healthy balance of lead and lag indicators in your analysis. Lag indicators allow you to identify the effect and lead indicators allow you to narrow in on the cause.

In the example of the employee turnover lag indicator, HR lead indicators that might be useful to consider include the length of the onboarding process, the percentage of new hires assigned a staff mentor, the frequency of scheduled check-ins between a new-hire and their supervisor, etc.

“Look at the business vision, mission and strategic imperatives, success factors and key measures that will drive results” says Roslyn Courtney, President and CEO of LaserBeam Consulting. “You look at strategy and internal organization and not just the financial results to determine success.” Shifting value from an overemphasis on lag indicators to a more even balance of attention between lead and lag indicators is key to optimizing your recruiting process.

If anything, the skew should be in favor of lead indicators. “Using metrics that measure past events is like driving while looking through the rear window” says Ian Gotts, founder and CEO of Nimbus. “It’s easy not to see an opportunity or threat on the road ahead until you’re upon it.” Lag metrics are important, but several lead indicators can be paired to the analysis of a single lag metric.

So if lead indicators are so important, why have lag indicators received a disproportionate share of the attention historically? “Lagging numbers are the easiest to find in the corporate databases and regular monthly reports” says Gotts. “They are the easiest to identify, especially if you do not have intimate insights into the operation of the business.” Don’t let laziness define your approach to strategic recruiting.“Nothing against lagging indicators, but if you are overly focused on these kinds of measures, then you will get a lot of it without necessarily improving the outputs or results” says Scott Edinger, founder of Edinger Consulting Group. Knowing where you’re coming from is important, of course, but you also want to know where you are and where you’re going. That’s where lead metrics come into the equation.

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ABOUT THE AUTHOR | Danai Kadzere

Danai is a Content Marketer at Happie. Before Happie, she worked as a freelance writer, ghostwriter, and children's book author, after graduating from Harvard University with a BS in Human Evolutionary Biology. If she's not working, she's probably reading, baking, or getting lost.

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