Recruiters and talent acquisition teams know they're good at what they do. But how can they prove it — and find areas where they could improve?
Enter recruiting metrics and key performance indicators (KPIs). By measuring the effectiveness of their hiring processes, recruiting teams can demonstrate their value to an organization and tighten up their recruiting efforts to attract and land better candidates than the competition — and do so faster.
The challenge is deciding what metrics to prioritize — and when to prioritize certain ones. The key word in KPI is, well, "key." If your analytics overemphasize quantity over quality or aren't tuned in to current market conditions, it's probably time to reassess them.
To illustrate this, imagine a hiring team that prides itself on crushing its time-to-hire KPI. When the COVID-19 pandemic hit, they pivoted to a remote worker-focused strategy and maintained its hiring speed. High fives all around — until hiring managers started reporting back that many of these new recruits quit after a few months.
Something’s not right in that scenario. By adding metrics like quality of hire and the effectiveness of their candidate assessments, the hiring team can find out what’s going wrong and refine its approach.
To help you choose the metrics that matter, here's a rundown of some of the most popular recruiting KPIs of 2021.
Time to hire
How long is your average recruitment time, from the moment a candidate applies to the moment they accept your offer? This duration is your time to hire.
It’s an evergreen metric, and for good reason. Candidates are turned off by a drawn-out hiring process, with 57% claiming it causes them to lose interest in the job. That’s true all the time. And it’s even more crucial in candidate-driven job markets. In those times, top talent often juggle multiple offers — giving them few incentives to wait around for your call.
However, faster isn’t always better, and slow shouldn’t be confused with thoughtful. Time to hire is a tool for eliminating snarl-ups from your recruiting process, not as a number to be lowered just for the sake of expedience. There’s a balance to be struck, and hiring managers should try to ensure that the balance aligns with the current job market.
Be faster when you need to be, and take a little more time when you can. But always do all you can to make a good hire in the allotted time, and never lengthen the recruitment process when you can avoid it.
Quality of hire
Traditionally, hiring teams have measured cost per hire, which is the average spend on each candidate. However, this metric can be misleading because it only tells you how much you’re spending, not whether you’re spending it well.
Instead, you can look at quality of hire. This can be hard to define, as you must consider multiple inputs, some of which can be subjective. They can include:
- Retention — Are your hires staying at least one year?
- Engagement — Do your hires align with the organizational culture and build strong relationships with peers and managers?
- Productivity — Are your hires as productive as colleagues who have been doing similar jobs? And how long did it take them to reach that level?
Once you develop a consistent framework, you can benchmark new hires against their tenured colleagues and determine whether they’re as good as they need to be.
Quality of hire measures the caliber of the people you recruited. Once you have this data, you can use it for metrics like assessment effectiveness, which tells you how good your evaluation methods are at predicting actual job performance.
Let’s say you hired 50 software developers in 2021. Ten of them underperform. Why? All 50 aced their skills-based test. Digging into the data, you find that the 10 underachievers did worse than their peers on the psychometric assessments, suggesting you should give more weight to this evaluation method in the future.
Sourcing channel effectiveness
Some firms still measure applicants per role, but this is a bit outdated in an age of one-click applications. Instead, it’s a good idea to look at each of your sourcing channels and see how effective they are. You might have multiple channels, including:
- Social media, such as LinkedIn or Facebook
- Advertising on job boards
- Talent solutions services
- Internal referral programs
To calculate each channel’s sourcing channel effectiveness (SCE), divide the number of applications by the number of candidates interviewed. For example, say you received 500 applications from a job board posting, and five people progressed to interviews. That would give you an SCE of 5/500, or 1%. But if you got 20 employee referrals and interviewed two of them (10%), it indicates that you might prioritize referrals over job boards.
A consistent metric like this makes it easy to compare high-volume channels like social media against low-volume channels such as referrals. It will help you focus your resources where they tend to be most effective.
Interview to offer ratio
Even in the age of remote recruiting, interviews consume time and resources for hiring managers and candidates. An unsatisfactory interview-to-offer ratio can negatively impact several recruiting KPIs, including cost per hire, time to hire and candidate experience. Most hiring teams regard 3:1 as a good interview to offer ratio. Anything much above that suggests you need to review your evaluation methods and sourcing channels.
None of these alone will give you a clear picture of your hiring process, but combined they can help you identify aspects that could be shored up. And if your time to hire is lagging or your sourcing channels are letting you down, we can help. Robert Half’s recruiting experts have the experience, connections and analytics to help you find skilled professionals quickly.