Right Choices - Right Now: Using Metrics in Recruiting
Part 3 of Our Recruitment ROI Series
By Raine Lunke
Recruiting metrics or KPI’s are used to track, benchmark and evaluate your results. There are many metrics and you can become overwhelmed with the process to track and measure results, which is why I encourage you to select three core metrics that can be informative based on where you are at with your recruiting initiatives and goals.
What Do Metrics Have to do with ROI?
Recruiting and hiring are crucial factors of growing and creating a thriving business or organization. Recruiting can be positioned as a cost center or a revenue generating cost center. But to change the narrative and elevate the decision-making in your company, you have to establish recruiting and hiring goals, determine the impact, evaluate and improve the processes. Then you need to measure success using KPI’s to align with business initiatives and revenue. All of that begins with some baseline metrics.
Where Should I Start?
Three metrics you can start with include Source of Candidates, Time to Fill, and Quality of Hire. We’ll define them and explain the formulas below. Metrics can be overwhelming for some HR and recruiting professionals. Don’t worry! All three of these recruiting metrics are relatively simple and can be tracked with a simple Excel or Google Sheets spreadsheet.
Do I Really NEED to Track Metrics in Recruiting?
If you don’t measure your activity and results you have no real insight to what is working and what is not. Metrics allow you to clearly identify areas of improvement and what is working well. Having metrics can create a unified goal - deepening conversation and accountability between HR, Recruiting, Hiring Manages and Executives.
How Do I Begin?
How that you have an idea of where to start and why metrics matter, let’s look at our favorite first step metrics individually. If you are a data geek/overachiever like me, you can learn more about metrics at this great blog from the folks over at Hirevue: https://www.hirevue.com/blog/seven-recruitment-metrics-that-matter
1. Source of Candidates
Source of candidates is defined by this question: Where are your candidates coming from? It’s super easy to track when you have a process, source codes, and a system. This is a foundational metric to track, especially if you are spending money on job boards, advertising channels, employee referrals, and outside agencies. Why? Because it allows you to identify where your hires are coming from and determine where your budget and hiring spend is giving you the best results.
Candidates can come from a variety of sources/channels. Companies often limit their channels/sources due to several factors. These factors exacerbate their existing challenges with attracting and hiring talent. Continuing to monitor your source report will give you an idea of what is working well and what you may be missing.
For a deeper understanding of sources of candidates and source of hire, check out this article from Workable: https://resources.workable.com/tutorial/source-of-hire
2. Time to Fill
Time to fill is when you track number of days from initiating the recruiting to the time it takes to select a candidate who accepts the offer.
Time to Fill formula:
Time to Fill = Total Number of Days Job Is Available and Unfilled
Average Time to Fill = Total Number of Days of Open Jobs / Total Number of Jobs Open
One of the best reasons to track your time to hire is to determine if your timeline of filling positions within your company, departments, hiring managers, etc. is realistic and attainable. It also allows you to drill down into your process to find out where delays are and address them. Remember, it is not always about how fast you can hire, but whether you are losing candidates in a broken or clumsy process.
We often refer to this metric as your “why and where.” To learn ore about date-driven recruiting and how it works, here is a great article: https://hire.google.com/articles/a-modern-take-on-data-driven-recruiting/
3. Quality of Hire
Lastly, we come to Quality of Hire. This is best defined as the “Performance and impact the hire has”. Quality of Hire can be much more complicated to track and measure because this metric is typically linked to individual’s performance review results. So it can also include turnover, promotions, churn, transfers, etc.
Why do the work of tracking this metric? Because HR leaders and good recruiters know that hiring quality talent results in greater company performance, employee engagement, stronger culture and less turnover. It is worth the hassle. Here’s how it works:
Quality of hire formulas:
Quality of Hire (%) = (Job Performance + Ramp-up Time + Engagement + Cultural Fit) / N
(All scored out of 100, N = number of indicators)
Overall Quality of Hire (%) = [Avg. Quality of Hire score + (100 – Turnover Rate)] / 2
Overall Quality of Hire (%) = (PR + HP + HR) / N
PR = Average job performance rating of all new hires
HP = % of new hires with acceptable ramp-up time within acceptable time frame
HR = % of new hires retained after one year
(The formulas in this blog can all be found at Jibe: https://www.jibe.com/ddr/recruitment-metrics-formulas/)
PRO TIP: Want to earn a seat and voice at the decision-making table? Here are strategic business performance metrics to learn, master, and lead your organization into!
Bonus Tool: Track Your Applicants!
Here's a great tool we found to help get you started if you don't have a tracking system in place yet.
The Last Word
It can feel overwhelming to get started but you’ll find it just takes one step at a time. This month, start tracking your sources to see where your most promising candidates are coming from. Next month, add in time to hire. Track that for several positions or departments. Once you have your ducks in a row, pull in the quality of hire data or other metrics that help your company get the best results. And if you get stuck, give us a call or send an email. R2R is your trusted partner in hiring and recruiting strategy.