Companies dedicate hundreds of hours and thousands of dollars on recruiting new talent. Yet it’s still all-too-common for the recruitment process to be informed by little more than gut feeling, rather than hard-and-fast data.
It doesn’t need to be that way. There are dozens of metrics you can use to measure the effectiveness of every part of your recruitment efforts, from the time you first qualify a candidate to the moment you offer them a position.
But with so many KPIs to measure, which ones should you focus on? Which will give you the vital insight you need to recruit better people? Read on to learn about the five key recruitment metrics you simply can’t afford to ignore:
1. Time to fill
Sadly, recruitment is more complex than simply advertising a job, then waiting for the candidates to come running. There are several steps to filling a vacancy - and the longer it takes, the more it costs you in lost productivity.
To make matters more difficult, the best people are in greater demand than ever, fuelling an increase in “ghosting” - when candidates miss interviews, fail to turn up for their first day, or quit their job on the spot with no prior warning.
That’s why it’s so important to measure the time taken to fill vacant positions. To get a clearer picture of the efficiency of your recruitment process, use the following formula:
- Average time to fill = Total number of days of open jobs / Total number of jobs open
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GET YOUR COPY ifp.ClickDetails"2. Retention rate
Given the cost of recruitment, the last thing you want is for your new hires to hand in their notice after six months.
According to the US Bureau of Labor Statistics, the average employee has spent 4.2 years with their current employer. However, there’s a significant disparity between the length of tenure in younger and older employees. For 25 to 34-year-olds, the figure drops to 2.8 years - less than a third as long as 55 to 64-year-olds.
Those are the averages, but how do you compare? Are you hiring people who are a great fit for the company, or do they struggle to fit in, then leave in a hurry? Use the following formula to find out:
- Retention rate = (Number of people employed over a set period / Number of workers employed at the start of that period) x 100
3. Cost of hire
There are countless studies aimed at calculating the cost of hiring new talent. One, from the Society for Human Resource Management, claims the average company spends $4,129 and 42 working days to fill a vacant position.
The aim here isn’t to slash all recruitment costs. From advertising and fees to lost productivity, there will always be some cost attached. But breaking down cost per hire using the following formula is a great way to identify unnecessary expenditures and spend money more efficiently:
- Cost per hire ($) = (Total external costs + Total internal costs) / Total number of hires
4. Offer acceptance rate
Unfortunately, not every candidate you offer a job to will end up accepting the role. They may receive a counter-offer from their current employer, or have chosen a different job.
While hitting a 100% acceptance rate is unlikely, reviewing and tracking the proportion of candidates who accept your offers can help improve your recruitment strategy.
If the rate is on a downward trend, you may need to review your employee benefits or remuneration - perhaps they no longer compare favorably with those of your competitors. Use the following formula:
- Offer acceptance rate = ( Number of acceptances / Number of offers ) x 100
5. Source of hire
Chances are you don’t find all your new recruits from the same source. Some candidates will have responded to ads on Facebook or LinkedIn, or filled out a form on your website, whereas others will have been identified by recruiters or your own HR team.
Tracking your source of hire is critical to understanding what works best for you. There’s no formula to calculate it; you simply need to record how each successful candidate was recruited.
The results can be used in tandem with each of the other metrics in this list. For instance, you can use it to establish which source is best for finding long-serving employees, or which is the most cost-effective.
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