For HR today, it’s all about metrics. Not only does measuring your HR performance and looking at your data show you how successful your initiatives are, but it should also guide your future activities. Doing more of what works well, identifying other opportunities or spotting areas for improvement are all essential to future success.
The problem for most HR professionals to decide is exactly what to measure. Which metrics are the most important and where should your focus be? There are literally hundreds of metrics to choose from with countless ways to measure every area of HR but we simply don’t have the time to track them all. This is especially true for metrics in recruitment, one of the most costly and time-consuming processes for HR.
There isn’t one blanket answer for every business. The metrics of recruitment that are important to you will depend on your company and your workforce. Some industries may find sourcing talent in the first place to be a challenge while others may find that keeping new hires past their first year is a struggle. Metrics are also always changing, with new HR initiatives to measure and new ways to measure old ones.
Sourcing the right talent is essential to business success but it’s also one of the most costly and time-consuming HR processes. This means its especially important to track recruitment initiatives closely including costs and effectiveness. Understanding which recruitment sources produce the most successful candidates and which cost the most money can help you make the right decisions to improve efficiency and success in the future. The key here is to look beyond the candidate stage and use recruitment metrics in combination with long term employee performance ones to gauge the true cost and value of your recruitment initiatives.
Take a look at some of the best metrics in recruitment below along with why they’re so essential and how measuring them could help you optimise your recruitment strategy:
This is the number of days between publishing a job opening and hiring the candidate. The more efficient this process is, the less costly it is ultimately to your business. As well as looking at the average time to fill a position across the company, you should break down your time to fill numbers. Look at the time to fill for specific departments or specific times of the year. Are there any patterns which could help streamline your recruitment efforts?
Similar to time to fill, this is instead the number of days between the moment a candidate is approached and the moment the candidate accepts the job offer. Again, the more efficient this process, the better. With this metric, you may identify some simple changes that could make it more efficient on your end, such as having paperwork and interview processes completed quicker with a streamlined automated system and with a paperless process.
Divide the total number of people who have completed an application by the total number of people who started an application do get your application completion rate. This metric is often overlooked when it could reap some of the fastest rewards. If your application completion rate is low then you know exactly where the problem lies; within your application somewhere. You’ll need to test the length of your application and look to see if there is any pattern to when applicants are dropped off. If you’re spending the money sourcing new applicants, then you’ll want as many of them as possible to actually complete them to make your recruitment process more cost-effective.
Simply divide your total hiring costs by the number of new hires. This metric is more for tracking your performance rather than identifying patterns for future changes. You can use it as a KPI to make sure your recruitment efforts are within budget and remain profitable.
You can look at which sources produce the most new hires, but you should compare with employee performance and look over a long period of time to identify which sources produce the most successful employees long term. For example, looking at the hiring source of all the employees that have been promoted in the past year. Is there one that stands out?
You can work out the cost efficiency of various sourcing channels by dividing the ad spend per platform by the number of successful applicants per platform. This should help to identify which channels are the most cost-effective and will ultimately help you distribute your recruitment budget more effectively.
For this metric simply divide the number of applicants that have accepted a job offer by the total number of applicants that were presented with a job offer. This is a great metric to measure as it is a strong indication of your competitive success. If you have a low acceptance rate, it’s a good indication that your competitors are probably offering something more attractive than you. Alternatively, it could mean there is something especially unattractive about your offering as this final stage. Maybe it’s finding out the working hours or the final salary, but either way, you’ll need to look at the final package you’re offering.
You can work out the quality of new hires by combining recruitment metrics with your performance metrics. However you measure satisfactory performance overall for each employee, you can divide the number of new hires that are considered satisfactory by the total number of candidates hired. A low overall quality score here means you have a problem with bad hires, one of the most costly aspects of HR and almost any other business initiative. While there isn’t one simply fix here, you’ll want to keep a close eye on this metric overall so you can immediately see when bad hires are becoming a problem for your business.
To calculate the vacancy rate, divide the number of open positions by the total number of positions in the organisation. This metric is a good highlight of a problem within your recruitment process but it won’t necessarily pinpoint the problem. It could mean a variety of things, from a problem sourcing talent or something in the package you are offering to potential applicants. You will need to look at your other deeper metrics to source the cause of the problem.
Simply divide the number of new recruits that leave within the first year by the total number of new recruits for the year. This is an extremely important metric in recruitment. Turnover, especially in the first year, is one of the biggest total costs to businesses across any function. With most employees deciding whether to stay with a company or not in this first year, it’s one of the biggest concerns for companies all over the world. The good news is that unlike overall turnover rate, first-year turnover rate at least narrows down the cause of the problem a bit more. With a high first-year turnover, you know that problem lies somewhere within that first year. You will need to look at your employee experience over that time to understand why this problem is occurring, but starting with your company culture and looking at the types of employees to recruit is a good start.
You may be wondering why you would need to look at your first-month turnover rate as well as your first year. Well, just like with first-year turnover, first-month turnover narrows down the cause of the problem even further. If this number is looking a bit high, then you know the problem lies within the first month rather than the first year. That means there’s a good chance you need to look at your onboarding process.
Whether you want an HR platform that can help you track metrics easily unparalleled data collection and intuitive dashboards including handy forecasting tools, or if you’re ready to step up your recruitment to start improving the metrics you’re already tracking, SuccessFactors is here to help. Contact us today to find out how you could transform your HR or book a free demo and see it action here.