We all talk about wanting to improve hiring efficiency because efficiency is the key to success, right? Well, the key to evaluating the effectiveness of your hiring process is by examining your recruitment metrics. After all, it’s impossible to know whether the processes in place are effective if they are not continuously measured.
Recruitment metrics are different measurements that are commonly used by organizations to both track and reassess hiring success, as well as continuously give insights into how to optimize the recruitment process as a whole.
On top of that, using recruitment metrics allows you to identify and fix any pitfalls that might be causing inefficiencies within your hiring process. Thus, allowing you to determine which parts of the hiring funnel need more attention.
Here are 9 recruitment metrics that you should know about & continuously track (if you want to get a full picture of your hiring process efficiency)!
What metrics can be used to assess recruitment efficiency?
6 of recruitment metric for the top of your hiring funnel
Qualified candidates per opening
We all want candidates. The more the better. Right? Well, not in all cases. If there is a large number of applicants, but very few of them are qualified for the position, then you’ve gotten yourself in trouble.
There are a few reasons why there might be a lack of qualified candidates per open job position:
- You are not sourcing candidates from the right place.
- Your job description is not clear enough, for example, it’s too generic so everyone feels like they have what it takes to become the next unicorn within your company.
- Or perhaps your expectations of the ideal candidate are unrealistically high, for example, you only perceive them as qualified enough if they meet every single requirement you’ve set up.
Think of it this way – a qualified candidate is similar to a qualified lead (if we’re talking about it in Sales terminology). The more qualified candidates you receive, the more healthy & efficient your sourcing and selection strategies are. In contrast, if there is a lack of qualified candidates per open job position – it might be time to reevaluate your recruitment process.
Interview to hire ratio
Without a doubt, interviewing candidates can be one of the most time-consuming tasks throughout the hiring process. While simultaneously being one of the most important aspects because after all, you want to make sure you’re interviewing the right people instead of wasting your time on unqualified candidates.
By being aware of your interview to hire ratio, you will be able to better estimate how many interviews you need to conduct in order to make that one offer to a candidate. Having a strong interview to hire ratio helps to ensure the overall quality and efficiency of your hiring processes.
Read more about how to effectively shortlist the best candidates for an interview here!
Time to hire
In most cases, a hiring manager (or anyone whose primary responsibility is to make new hires) is evaluated based on the time it takes to fill an open position. In other words, time to hire.
Now, the time to hire is a pretty common recruitment metric and measures the time (in days) between the first day when the open job position is shared and when a candidate accepts the job offer. That includes the process of reviewing applicants, shortlisting them for interviews, actually interviewing them and eventually making a final hiring decision. It kind of sounds similar to time to fill, right? The devil is in the details and more about the difference between the two later, so keep on reading!
Ideally, most companies try to aim for a lower time to hire ratio as that allows them to fill open positions, yes, you guessed it – sooner.
However, if the time to hire is high, that might be an indication of inefficiencies in your recruitment process, such as:
- You are not posting your jobs within the right job boards or on the right platforms.
- There is a large number of applicants to sort through manually and/or too many open roles to be filled.
- Lack of availability in the agendas of hiring managers for reviewing applications or conducting interviews is limited (because let’s be honest, they have better things to do than this).
- The overall hiring process is too complex or simply has too many different stages within (phone call, first interview, first assessment, panel interview, perhaps another assessment etc.). You’d be surprised how many companies still tend to unnecessarily overcomplicate their hiring processes in hopes that will also lead to more efficiency…
Time to hire ticks all the boxes when it comes to our desires when assessing recruitment efficiency – it’s very easy to define, it’s even easier to measure, and you can measure it right after you made a hire.
However, the reality is that time to hire is the worst hiring KPI.
By focusing on primarily ensuring an open job position is filled as quickly as possible, your focus will shift away from quality to speed. Who cares about time to hire when the new hire ends up walking away after 3 months and you’re stuck just where you first began – with an empty job role and tons of sunk costs. You probably shouldn’t, after all – quality is most definitely more important than speed in this case.
Time to fill
Now, let’s clarify the difference between time to fill and time to hire. As I mentioned previously, time to hire focuses on measuring the amount of time between sharing the job opening and actually making a hire. While time to fill begins after there is a new job opening and all the requirements relevant are submitted to whoever is responsible for hiring.
Fun fact (or maybe not so fun, depending on what your definition of fun is), research by SHRM has shown that the average time to fill is 42 days with an average cost of $4,129. That’s quite a lot of time and quite a lot of money involved in making just one hire (which also, P.S. often can end up being a mishire if you’re not entirely sure who you are choosing to hire).
There are three main reasons why tracking your time to fill is important:
- It allows you to better estimate how long it will take you to fill an open position.
- Time to fill is a good key performance indicator for assessing the efficiency of your recruitment process.
- Being aware of your time to fill means you are better equipped at developing talent strategies that allow you to hire the best out of the best.
Candidate drop out rate
Okay, we’ve discussed plenty of recruitment metrics by now but aren’t we forgetting something important? Drum roll…we’ve got a winner – candidate dropout rates!
Candidate dropout rates are something most of us tend to look at with absolute horror in our eyes. Cause let’s be honest, we all want to have at least some choice when hiring a new team member, right?
Without a doubt, it hurts, and spending a lot of time on candidates if they end up dropping out of your recruitment process can set you back when looking for that one hire to fill a role. After all, you put in all this hard work and effort into finding a candidate, and then they suddenly drop out? Ouch.
And yes, in most cases, a high candidate dropout rate can be an indication that there is something inherently wrong with your hiring process. This can happen for a few reasons:
- The market is candidate-driven and many companies are fighting for the same talent, so if your company does not stand out from the crowd – candidates will choose your competitor over you. Most importantly – it’s not only about who you are as a company but also about the candidate experience you create for each applicant.
- Perhaps your application process is too long, complicated and induces feelings of stress?
- Or maybe you simply don’t collect enough candidate feedback about the hiring process and thus you fail to understand what is and what isn’t working well.
However, if you flip the coin to the other side – perhaps candidate dropout is not so bad. Because IF the candidates who actually do not drop out prove to be the most qualified ones. Then you know for a fact that these are the people that were truly passionate about the job and deserve it right?
And that’s exactly why sometimes, you should even be happy with candidate dropout. For a recruitment process to be effective, the value should be placed upon the quality of the candidates rather than the quantity.
But overall, in the unfortunate case that your candidate dropout rates are increasingly high as time goes on – I strongly urge you to keep continuously tracking at which stages of the hiring process these rates are the highest. Is it during technical skill testing? During the first interview round? Or perhaps even during the initial job application process itself?
Being aware of whether (and how) the dropout rate fluctuates throughout will allow you to iterate upon specific stages of the hiring process to ensure that you don’t lose great applicants throughout.
Offer acceptance rate
Perhaps one of the most self-descriptive recruitment metrics is the offer acceptance rate (OAR). Obviously, when making a job offer to a candidate, you expect them to accept it, right?
Sadly, as a result of a primarily candidate-driven market – you cannot expect any more that every offer will be accepted. After all – candidates know what they are worth and they will likely not settle for less.
That’s why the offer acceptance rate most definitely should be a recruitment metric that you are continuously tracking. If most offers you make are rejected – it would be very naive of you to assume that there are no red flags waving.
Long story short – your offer acceptance rate is an indicator of how attractive your company and job offers are to potential employees:
- A negative/low OAR. *Cough cough*…might be time to reassess both your recruitment efforts and the offers you’re giving.
- A positive/high OAR. This is an indication that your recruitment is effective, meaning that there is a solid pool of candidates, the selection and interview processes are efficient. And on top of that – candidate experience is good, as well as your offers are attractive enough for candidates to not second guess whether they want the job or not.
What I’d also like to mention is that OAR tends to vary across different teams. So for example, you can have a 100% OAR for commercial teams (so Sales and Marketing), while for product/development teams it’s around 65%.
The reason for this is that the demand for tech talent (so, developers and so on) is back at an all-time high, so candidates have plenty of job opportunities to choose from. And reasonably so – they will end up choosing the offers that are the most attractive. In today’s fast-changing world, your next tech hire is crucial for the future of your company – here’s what to keep in mind if you want to boost your OAR for specifically product/development teams!
The 3 recruitment metrics to track after hiring a candidate
Let’s take a look at three recruitment metrics that you should track after you’ve made a hire!
Cost per hire
After you’ve made a hire, it’s time to take a look back at the financial expenses associated with hiring a new employee – the cost per hire (CPH). The average cost per hire is $4,425.
To calculate the cost of hire, you should add together both the internal and external costs of making a new hire. External costs being costs such as sourcing, pre-screening expenses, marketing costs and so on. And internal costs being those related to administration, interviews, recruiter salaries and such.
There are a few best practices that you should keep in mind when it comes to CPH:
- It should be observed & measured regularly.
- The cost of hire can be calculated for each department and position you’re hiring for.
- Like with most things – the cost of hire should be looked at in relation also to other recruitment metrics.
If you know your cost per hire, it will be easier for you to determine which parts of the recruitment process might need to be optimized: maybe there is a need for the implementation of an Applicant Tracking System to streamline the process? Here are 5 signs that indicate it might be time to use an ATS! Or perhaps you need an extra pair of hands when it comes to shortlisting candidates?
Quality of hire (QoH)
I know for 99,9% sure that this metric is on top of everyone’s priority list. Yes, time to hire is important. And yes, cost per hire is important. But the quality of hire is what will ultimately result in the success of your business.
I don’t think I need to give you a definition of QoH. But while everyone knows the definition of QoH, the calculation of it still seems to be a black box for many companies. After all, even though the quality is of utmost importance when making a new hire, it can only really be assessed many months after the hire has been made. And on top of that – quality is often a subjective and vague term, and heavily varies per company and the personal & professional development goals set up when the new hire first begins working.
The first consequence of having a candidate-focused market is a rise in the number of people leaving your company. Your best employees probably get sourced by recruiters on a daily basis, and there’s a fair chance that they will eventually leave you to join a company that better reflects their personal goals or beliefs.
Your people are the reason for the success of your company. For this success to be sustainable in the long run – ensuring that your employees are engaged, happy and committed to their roles, as well as to your company is without a doubt important.
In order to understand whether you’re being successful at this, you should begin (if you already haven’t) measuring employee retention rate. Long story short – to calculate the employee retention rate:
- Determine what time period you will use to measure employee retention (will it be done on a quarterly basis or perhaps only a yearly basis?).
- After you’ve decided upon that, you can calculate the retention rate by dividing the number of employees that stayed with you throughout the entire time period by the number of people you started with initially (so, on day one).
- The last step – multiply the said number by 100 and you’ve got an employee retention rate.
Now, this can be done for the company as a whole, per department, and also per position. It’s up to you to decide how detailed you want your insights to be!