We’re living in the age of big data. Technology makes it easier than ever before to gather information not only on prospective candidates but on the hiring process in general. Most will agree that more data is good; knowing what to do with recruiting metrics and then putting it into practice becomes the challenge.
In this article, we’ll explain how to take a data-driven approach to staffing and recruiting, which, in turn, will help you streamline your operations, shorten your hiring timelines, and land the best possible talent the first time around.
Why Track Recruiting Metrics?
Imagine a captain steering a ship. To maneuver the vessel without sinking, he needs, at a minimum, some navigational charts and a compass. Add a radar system, and his efforts become more precise. Throw in a GPS, and it becomes virtually impossible to veer off course. All of these navigational tools serve as data points that give the captain useful information to plot the best course. The more data points he has, the more swiftly he can navigate and avoid errors.
Your organization’s hiring process is no different. With more data, your efforts to attract the best job candidates become faster and more accurate while costing less. According to a report from LinkedIn, talent acquisition teams with robust analytics are twice as likely to improve their recruiting efforts and three times as likely to experience cost reductions and efficiency gains.
Data-driven recruiting helps you allocate your budget more effectively, as you know exactly how much it costs to hire a candidate via each of your various recruitment channels. It also helps you to forecast more effectively, planning your operations and growth around the right hiring benchmarks. Finally, being armed with data helps you make smarter hiring decisions that give you the best chance of placing the right candidate in every open role.
How to Collect Recruiting Metrics Efficiently
Now that we’ve nailed down the benefits of recruitment data, our next challenge is collecting it. For data to be effective and not a burden, an organization must have a systematic, efficient way of collecting data continuously. It must be an integral part of the hiring process, not an afterthought.
If you use an applicant tracking system (ATS), you’re in luck because most have many useful data tracking and reporting features built right in. If you don’t use an ATS, it may be worthwhile to invest in one. In a survey of recruitment professionals, 78% of participants said using an ATS has helped increase the quality of candidates they hire.
Your website can be another powerful source of recruiting metrics. For example, allow candidates to apply through your website. You can use an analytics application like Google Analytics to track how many people viewed the job post, how many applications were submitted, and how many interviews resulted. You can then use these numbers to calculate important metrics like your pass-through rate (more on this below).
Finally, if you’re not already conducting candidate experience surveys, consider this a strong suggestion to start. Conducted after the interview process, candidate surveys help you collect key data on your recruitment experience and company perception, both of which contribute to your employer branding. Companies with a strong employer brand attract more qualified applicants and have a lower turnover in addition to hiring candidates faster.
The Most Important Recruiting Metrics
Your next big question is probably, ‘What recruiting metrics should I measure?’ The truth is, there are hundreds of recruitment data points you can collect. This may be feasible for enterprise-level organizations, but for smaller companies, collecting that much data may not be practical.
The good news is that even a handful of key data points can go a long way in strengthening your recruiting process. Here are the metrics we believe are the most important contributors to a robust data-driven recruiting program and how to interpret them meaningfully.
1. Application completion rate
This is the portion of candidates who complete the application process after starting it. To find your number, divide the total number of submitted applications by the number of started applications (this data should be available in the platform you use to manage digital applications). This will give you a percentage.
If you have a low application completion rate, it’s an indicator that there are technical hurdles or unnecessary hoops to jump through in your application process. Ultimately, you want to reduce drop-offs as much as possible since every lost candidate equals wasted recruiting resources.
2. Cost per hire
The Society for Human Resource Management (SHRM) defines cost per hire as the sum of all internal and external recruiting costs divided by the total number of hires in a given time frame. According to SHRM’s Human Capital Benchmarking Report, the average cost per hire is $4,129.
Some external costs to consider when calculating your own cost per hire are advertising and marketing of open positions, travel expenses, job fairs/event fees, background checks, and other screenings. Some internal costs to factor in include the cost of recruiting staff, recruitment-related office expenses, and recruitment learning/professional development.
By weighing your cost per hire against the number of vacant positions, you can accurately allocate a budget to meet your staffing needs—and make adjustments if the numbers don’t align.
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3. Time to hire
On the surface, this one’s simple: how long it takes from when a candidate enters your pipeline to the day they accept your offer. SHRM says the nationwide average here is 36 days.
However, to make this metric truly useful, you’ll need to break it down by hiring stage. For example, you might segment your overall time to hire into the following phases: application submission, initial screening, phone interview, onsite interview, offer, and acceptance. If you’re struggling with a lengthy time to hire, this segmentation is necessary to pinpoint where the lag is happening so you can take steps to correct it.
By the way, it’s important to distinguish between time to hire and time to fill. In contrast, time to hire tracks an individual candidate’s progression through your hiring funnel, and time to fill measures the overall position from the date the position is published until the hire is made. If you have a satisfactory time to hire but a problematic time to fill, it could point to a problem with your advertising strategy for open positions.
4. Pass-through rate
We just discussed segmenting your hiring process into phases regarding the length of time. The Pass-through rate looks at your hiring process regarding succession from one phase to the next.
The Pass-through rate is calculated by dividing the number of candidates who moved on from a given stage by the total number of candidates who entered that stage. For example, if 5 candidates made it to a phone interview out of the 25 you screened, your pass-through rate for the screening phase would be 20%.
By monitoring recruiting metrics like pass-through rate consistently, you’ll be able to identify when there are deviations from the norm. Deviations in your pass-through rate can be a flag for when there are external factors at play that you might not otherwise be able to identify; for example, if your pass-through rate from offer to acceptance (also known as acceptance rate) suddenly takes a dip, it could mean a competitor has made their offers more lucrative.
The pass-through rate also helps you set a benchmark for the total volume of candidates and the time that will be required to make a successful hire. For example, if only 10% of candidates who receive a phone interview make it to the offer stage, you know you’ll need to conduct a minimum of 10 phone interviews, all of which might take 30 minutes each, to get to your final winner. Metrics like these help management get a realistic handle on the true resources required to make the right hire.
5. Source of hire
Last but not least, you’ll want to carefully track the source of applicants and the frequency with which those sources convert to a hire. Source of hire speaks not only to the quantity of candidates but also the quality of any given source.
For example, let’s say you receive 50% of your total applications from job boards. It’s highly unlikely, however, that that translates into 50% of your new hires coming from job boards. Instead, maybe you’ll find that 1 out of every 10 job board applicants are hired, while 4 out of every 10 referred applicants are hired. This might indicate you can scale back the resources allocated to job board listings and divert more time and funding to your employee referral program.
Tracking the source of hire will shed new light on your recruitment channels and how they stack up in your overall hiring program.
One final word about data-driven recruiting: try not to get overwhelmed. It’s easy to get bogged down in granular data that doesn’t tell you much. To start using recruitment data, focus instead on big-picture numbers that will help you identify weak spots in your hiring funnel so you can correct them to save time, reduce costs, and hire better.
6. Time-to- fill
Time to fill is the number of days from when a job is posted until a candidate accepts an offer. Some companies use an alternate starting point, calculating time to fill from the day a hiring manager submits a job requisition for approval.
As we discussed earlier, time to fill differs from time to hire, as it measures the entire hiring timeline versus only the part that involves a candidate.
Time to fill is a great metric for succession planning since it gives you an accurate idea of how long it will realistically take to fill a position if the person in it leaves. It can also shed light on the effectiveness of your recruitment marketing. If there’s a big discrepancy between time to fill and time to hire, you know it’s taking excessive time to attract candidates and get them to begin the application process.
7. Offer acceptance rate
The offer acceptance rate is the portion of offers that results in a successful hire. You can find this number by dividing the number of accepted offers by the total number of offers made. An acceptance rate above 90% is a good benchmark to strive for.
Your offer acceptance rate is closely linked with the quality of your offers, including your compensation and overall benefits package. It can also give you information on the quality of your candidate experience. If you’re having no trouble finding great candidates to interview but have a weak acceptance rate, it’s a signal that you need to focus on better engaging candidates and stepping up your pay and benefits.
In addition to understanding how many candidates are turning down offers, it’s essential to understand why. Candidate surveys can help you gather actionable information on what ultimately caused a candidate to decide your job wasn’t the right fit.
8. Quality of hire
Quality of hire measures a new team member’s value to a company. This complex recruiting metric combines aspects of employee performance with retention and hiring manager satisfaction to gauge the new hire’s overall quality. It’s calculated several months after a hire has been made.
Since performance ratings can be subjective, it’s important to zero in on measurable outcomes like sales quotas or projects completed when calculating quality of hire. It’s also important to take retention numbers with a grain of salt since myriad factors can contribute to a new hire’s quick departure, not limited to their fit for the position.
9. Percent of open positions
This recruiting metric measures how many of your organization’s total positions are available at any given time. It’s calculated by dividing the number of job openings by the total number of positions in your company.
The percentage of open positions can tell you a lot about your company, like if you’re growing quickly or are experiencing skills gaps. It can also shed light on the market as a whole, indicating that there’s a talent shortage or that it’s a particularly difficult time to source candidates.
10. First-year attrition
Also known as new hire turnover, first year attrition tells you how many of your new hires leave within 12 months of joining the company. To calculate it, divide the number of employee departures that happened within the worker’s first year by the total number of departures in one year. First-year attrition numbers can indicate your hiring quality, onboarding effectiveness, company culture, and employee engagement.
Unfortunately, new hire attrition is fairly common; around 20% of employees leave within their first 45 days on the job. So, if you can keep first year attrition below 20%, you’re in a good place.
Need a Hand With Your Hiring or Help Improving Your Recruiting Metrics?
4 Corner Resources has the recruitment process down to a science. Our team of expert headhunters can help you supplement your hiring process to source and screen the best talent in your industry, uncovering untapped channels for hiring success.
When you work with 4 Corner Resources, we’ll leverage our massive internal database and a vast network of professional relationships to find the perfect candidate for your permanent, temporary, or long-term contract position. We serve companies of all sizes with solutions that work within their budget. Contact us today to learn how our professional staffing solutions can serve you.
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