In the world of recruiting, it’s essential to have a clear understanding of the key metrics that can help measure the success and efficiency of your recruitment process. This knowledge will enable you to make better-informed decisions, optimize your recruiting strategies, and ultimately attract and retain the best talent. In this blog post, we’ll discuss the top-5 metrics that every recruiter should know, measure, and track to achieve recruiting success.
Time-to-hire measures the average time it takes to fill a position, from the moment the job is posted until an offer is accepted. This metric is crucial for assessing your recruitment process’s efficiency and helps you identify areas where you can streamline and improve. Here’s a step-by-step guide to help you measure time-to-hire:
- Define the start and end points: The first step is to establish the exact starting and ending points for calculating time-to-hire. The start point could be when the job is posted, or when a job requisition is approved. The end point is typically when the candidate accepts the job offer.
- Track the hiring process: Document each stage of your hiring process, from job posting to screening, interviewing, and finally, the job offer. This will help you identify bottlenecks and areas that need improvement. Be sure to maintain consistency in your records to ensure accurate results.
- Calculate time-to-hire: To calculate time-to-hire, subtract the date the job was posted (or the job requisition was approved) from the date the candidate accepted the job offer. This will give you the total number of days it took to fill the position.
Remember that time-to-hire can vary depending on factors such as the role, industry, and labor market conditions. It’s essential to continually monitor and analyze this metric to ensure that your recruitment process remains efficient and effective in meeting your organization’s talent needs.
2. Cost per Hire
Cost per hire is the total amount spent on recruiting divided by the number of hires made. This metric provides valuable insight into your recruitment budget’s effectiveness and can help you identify areas where you can optimize costs without sacrificing quality.
According to the Society for Human Resource Management (SHRM), the average cost per hire is nearly $4,700, but employers often estimate the total cost to hire a new employee to be three to four times the position’s salary. These costs comprise 30-40% hard costs and 60% soft costs, which include the time departmental leaders and managers spend on the hiring process. Losing a team member disrupts workflow, and the departure of employees who facilitate information flow across teams can be particularly impactful.
Measuring cost per hire helps organizations assess the efficiency of their recruitment process by determining whether they are spending too much or too little to acquire new talent. This information allows companies to make data-driven decisions on how to improve their hiring strategies and allocate resources more effectively.
3. Offer Acceptance Rate
The offer acceptance rate is the percentage of job offers that are accepted by candidates. This metric indicates how well your recruitment process aligns with candidates’ expectations and helps identify potential issues with your job offers, such as uncompetitive compensation packages or unfavorable working conditions. Here’s how to measure offer acceptance rate:
- Count the number of job offers made: Determine the total number of job offers extended to candidates within a specific time frame, such as a month, a quarter, or a year.
- Count the number of accepted job offers: Determine the total number of job offers that were accepted by candidates within the same time frame.
- Calculate offer acceptance rate: Divide the number of accepted job offers by the total number of job offers made, and multiply the result by 100 to get the offer acceptance rate as a percentage.
For example, if your organization made 50 job offers and 40 of those offers were accepted, your offer acceptance rate would be:
Offer Acceptance Rate = (40 / 50) x 100 = 80%
Analyzing your offer acceptance rate can provide valuable insights into the effectiveness of your recruitment process and the competitiveness of your job offers. A low offer acceptance rate may indicate that candidates are not finding your offers attractive, possibly due to factors such as compensation, benefits, or company culture. In this case, you may need to reevaluate and adjust your offers to improve their attractiveness and increase the likelihood of candidates accepting them.
4. Retention Rate
Retention Rate measures the percentage of new hires that remain with the company after a set period (usually one year). A high retention rate indicates that your recruitment process is effective at selecting candidates who are a good fit for your organization, leading to lower turnover and recruitment costs. Here’s how to calculate the retention rate:
- Determine the number of employees at the beginning of the period: Count the total number of employees within your organization at the start of the time frame you’re analyzing (e.g., the beginning of the year).
- Determine the number of employees at the end of the period: Count the total number of employees within your organization at the end of the time frame (e.g., the end of the year).
- Count the number of new hires during the period: Determine the total number of new employees hired during the time frame.
- Calculate the retention rate: Divide the number of employees retained by the total number of employees at the beginning of the period, and multiply the result by 100 to get the retention rate as a percentage.
For example, if your organization had 100 employees at the beginning of the year, 110 employees at the end of the year, and 20 new hires during the year, your retention rate would be:
Number of Employees Retained = 110 – 20 = 90
Retention Rate = (90 / 100) x 100 = 90%
A strong retention rate suggests that the organization is effectively managing and developing its talent, leading to higher productivity, improved performance, and better organizational outcomes. By measuring retention rate, organizations can better understand the effectiveness of their talent management strategies and make necessary adjustments to retain top performers.
5. Candidate Experience
Candidate experience is a qualitative measure of how candidates perceive your recruitment process. Tracking feedback from applicants and new hires can help you identify areas for improvement and ensure that your recruitment process leaves a positive impression on candidates, which can, in turn, affect your employer brand and ability to attract top talent.
There are several ways to measure candidate experience, including:
- Candidate surveys: The most direct method of measuring candidate experience is to gather feedback from candidates themselves through surveys. These surveys can be sent to candidates at various stages of the hiring process, such as after application submission, phone screenings, interviews, or even after a job offer has been extended or declined. The survey can include questions about communication, the application process, interview experience, and overall perception of the organization.
- Net Promoter Score (NPS): NPS is a metric commonly used to gauge customer satisfaction, and it can be adapted to measure candidate experience. In the context of candidate experience, NPS measures the likelihood of a candidate recommending your organization to a friend or colleague based on their experience during the hiring process. NPS can be calculated by subtracting the percentage of detractors (candidates who rate their likelihood to recommend between 0-6) from the percentage of promoters (candidates who rate their likelihood to recommend between 9-10).
In the competitive landscape of talent acquisition, keeping a close eye on these top-5 recruitment metrics is crucial for any recruiter who wants to stay ahead. By measuring and tracking these metrics, you can gain valuable insights into the effectiveness of your recruitment process, identify areas for improvement, and make data-driven decisions that will lead to better hiring outcomes. Ultimately, understanding and acting upon these metrics will help you create a more streamlined, efficient recruitment process that consistently attracts top talent and contributes to your organization’s long-term success. So, start monitoring these metrics today, and take the first step towards a smarter, more effective recruitment strategy.