Recruiting metrics are measurements that can be used by businesses trying to reduce the amount of time and money spent on job hiring while getting better recruitment results. These measurements indicate which recruitment functions are performing well and which could use improvement. There are dozens of recruiting metrics, but some of the most common include cost to hire and time to fill, for example.
Human resources (HR) costs consume an average of 28 percent of a company’s total operating expenses, according to research by PwC. HR departments are under increasing pressure from management to show business value. Meanwhile, talent acquisition (TA) tools are making it much easier to quantify recruitment metrics for optimizing HR spend.
The main tool for reporting on recruiting metrics is the applicant tracking system (ATS). Some 94 percent of companies that use an ATS say it’s improved their hiring processes, according to a study by Capterra.
Key stakeholders for recruiting metrics include HR departments, the hiring managers who are also involved in selecting job candidates, and the candidates themselves. However, the entire organization is also a stakeholder, in a sense, because hiring someone who is well suited to the job can create a huge return on investment (ROI). Here are ten of the top recruitment metrics you need to know about.
Source of hire is a metric which shows how many of your total hires came from various recruiting channels, also known as sources. Data from your ATS can provide the percentage hired though channels such as referrals, job boards, recruiters, social media, and career fairs, for example.
Source of hire information can help you direct more HR resources to the most valuable channels while dropping or giving less emphasis to less productive ones. For example, if it turns out that a large percentage of hires came from referrals, and you don’t have a formal referral program set up, you might consider establishing one.
If agencies aren’t resulting in many hires, you might want to re-strategize the agencies your company is working with or put more resources into less costly channels like social media. Many ATS come with an option for sharing your job postings on multiple social media with a single click.
Time to fill measures the amount of time that elapses between the day a job requisition is approved and the day a candidate accepts a job offer. It’s a very significant metric because it indicates the efficiency of your recruiting process.
Average time to fill is 41 days, according to data from the Society of Human Resources Management (SHRM). Yet time to fill a job varies across industries from 14 up to 63 days. Some organizations fill certain positions immediately, the same day they open. To improve team performance on time to fill, you need to determine and meet a time to fill benchmark for your company. AI tools in your ATS can help.
By shortening time to fill, your organization can also improve performance on other metrics. You can lower cost to fill because recruiters will be spending less time on each requisition. You can also increase the productivity of hiring managers.
This metric breaks out time to hire by the amount of time a job seeker spends in each step of the hiring process. Process steps include resume screening, submissions to the hiring manager, and interviews, for example.
The time in process step metric helps you to reduce time to hire by identifying bottlenecks in the hiring process. For instance, you might discover that hiring managers are taking weeks to bring job candidates in for interviews.
Once you’ve pinpointed trouble spots, you can alleviate many of them with talent acquisition software. Many ATS also have AI-enabled capabilities for ranking resumes, for example, to help speed up the resume screening process.
Cost per hire measures the cost effectiveness of your recruiting process. This information can be invaluable in helping to guide your recruiting budget. To calculate cost per hire, divide the sum of all internal and external recruiting costs by the number of hires in a specific time period, according to a formula from SHRM.
Examples of internal costs are expenses related to office rentals, employee referral bonuses, and payment for recruiters and hiring managers to interview candidates. External costs include advertising fees, recruiting event costs, and the cost of technology such as recruiting software, as well as candidate-related costs for travel, relocation, and signing bonuses, for instance.
To determine whether your company’s cost per hire is high, low, or average, you can compare it to a variety of benchmarks. Average cost per hire across all industries is $4,129, according to SHRM.
You can also calculate how much your company is paying by job position, department, leadership level, and source of hire and compare your costs to benchmarks available in those areas. For example, according to Ideal.com, benchmarks for source of hire amount to $1,248 for a major job board; $803 for a niche job site; $513 for a Job aggregator; $616 for a social network; and $285 for Glassdoor.
The quality of hire metric is designed to indicate the first-year performance of the new hire. According to conventional wisdom, disappointing first-year performance points to a “bad hire,” who is likely to cost the organization tens of thousands of dollars in direct and indirect costs.
Quality of hire is important not just because it’s such a widely used measurement but also because it’s the input for another metric, known as the success ratio. To calculate the success ratio, you divide the number of hires who perform well by the total number of candidates hired. Industry best practices say that a low success ratio is a sign that you need to make changes to your hiring process.
You might take quality of hire (as well as the success ratio) with a grain of salt, however. That’s because the quality of hire metric is based on the performance rating, which generally represents the opinion of just one person. If an employee isn’t getting along that well with his manager for some reason, the person might conceivably receive a bad or mediocre performance rating, even though other co-workers think he is doing a fine job.
What’s more, managers are bound to differ in how they apply performance ratings. Job performance that one supervisor rates as “outstanding” might be viewed by another as simply “very good,” for instance.
First-year attrition is another metric used for measuring success. However, attrition is regarded as something that can be a sign of either a bad hire or an imperfect fit with team requirements. In first-year attrition, the new hire leaves during the first year of employment, usually costing the company a bundle of money, as well.
There are two types of attrition. In managed attrition, an employee is asked to leave. In unmanaged attrition, the employee leaves on their own.
In determining the first-year attrition metric, if a new hire quits, this is taken as a sign that the job description isn’t accurate about the duties required, and that a more realistic description is needed. If an employee makes it through the first year, that’s regarded as hiring success.
Here, you measure the percentage of candidates submitted by recruiters who are ultimately hired. This shows how well recruiting is performing in sourcing and screening applicants.
To determine the interview to hire ratio, calculate the average (arithmetic mean) of numbers of interviews a hiring manager at your company performs before making a job offer. You’ll probably obtain different numbers for different departments.
A 3:0 ratio is generally regarded as good. If your scores are much higher, consider what kinds of you changes you might make to your sourcing and screening processes. For example, you might want to introduce video interviewing as a screening method.
Candidate job satisfaction is another way to tell whether the hopes raised during the recruiting procedure are in line with reality. A low score on candidate job satisfaction score can indicate either an inaccurate job description or company mismanagement of job seekers’ expectations.
One approach to raising scores on employee job satisfaction is to produce video job previews for candidates before they’re hired, presenting both the positive and negative aspects to give them a realistic idea of what the job is like.
This metric measures the popularity of an opening with job seekers. While a high score can reflect many suitable applicants, it might instead suggest an overly broad job description.
If the job description isn’t specific enough, your company might be wasting time and money during the hiring process, especially at the screening stage. When the ratio of applicants per opening is quite high, you might improve the job description by narrowing it down and adding new “must have” requirements.
A company wants a high score on this metric because it indicates that most candidates are completing the company’s application form. If the score is low instead, you could be inadvertently missing out on applications from top talent.
Some large organizations with elaborate hiring systems demand that job seekers upload their whole CVs before applying. Dropping out at this stage could indicate problems in this procedure, such as a non-user-friendly interface or incompatibility of the application system with certain operating systems or web browsers. Other companies unwittingly sabotage the application process by insisting that candidates submit resumes – already carefully crafted to fit into one or two typed pages – as unformatted text documents.
Some applicants will give up on the process of applying for a job out of frustration with the technical aspects. To improve your ranking on application completion rate, think about surveying candidates as to why they abandoned the process. Many ATS include simple and straightforward tools for applying online.
Track these metrics with robust analytics that help you make sense of your recruiting program with iCIMS’ Applicant Tracking System.