Recruitment metrics – the data behind your hiring lessons – outline which hiring methods are working for you and which aren’t.
Without assessing the value of your recruitment tactics as well as the performance of your new hire, you could be destined to repeat past mistakes – and that’s a price you pay from your bottom line.
The actual costs of hiring an employee vary depending on the industry and the employee level, but, on average, companies pay about $2,000 per new hire. And that’s just the onboarding process–interviewing and hiring costs add even more.
The point here is simple: the wrong hire can cost your business a lot of time and cash.
Which Recruitment Metrics Should Earn Your Attention?
Countless recruitment metrics are available to recruiters. You could get dizzy just trying to narrow them down from a Google search. However, leveraging these metrics can help ensure you make the best decision during the hiring process so that you don’t have to go through the process again. We’ve gathered a list of the most important metrics to consider and some information on how to measure each.
1. Quality of Your Hires
If you want to know the future, look to the past. Your business has a treasure trove of past data when it comes to hiring – your current and previous employees.
With a Quality of Hires metric, you’re not aiming at determining the general ability of your hire to do their job; instead, you’ll learn how effective your recruiting practices are at finding candidates who accept your job offer and are loyal to your company.
There are many ways to calculate Quality of Hire data. As an example, when using HireScore, we will send an email survey to the hiring manager or appropriate supervisor one year after an employee was hired. In about two minutes, we will collect ratings on the person’s overall performance, technical performance, team orientation and safety.
We summarize our survey with a simple question asking whether you would hire the person again. If yes, then we code the person as a successful hire. If no, then something went wrong and we use the data to learn from past mistakes.
2. Source of Your Hires
Most companies recruit in multiple arenas and use a number of search methods to find candidates. With today’s recruitment sources running the gamut from physical job boards and newspapers to social media and current employee referrals, it is more important than ever to know which sources are providing you with quality hires who are loyal to your company.
Whether tracking in HireScore or simply using a spreadsheet, you should be recording the sources of each hire as well as which candidates were rejected or shortlisted.
Analysis of each will tell you which resources are delivering and which are underperforming. This information can help you make better decisions regarding where to invest your time and money the next time you’re recruiting.
3. Time to Fill the Position
Time to fill is, simply, the amount of time elapsed between the listing of the position and the date of hire. While this metric is fairly straightforward, it can reveal a great deal about the efficacy of your recruitment resources as well as your productivity and efficiency.
Which sources tend to quickly produce good candidates? Which factors produce a bottleneck effect on your process? Time to fill can help you answer these questions and more.
For some positions, the key metric to determine the success of your selection process is simply whether new hires stay in the job for a given period of time. If you are hiring summer help at an amusement park, you want to know if the person is going to last the full summer.
In some cases, you might even prefer to hire a person who may not perform the job as well but who is more likely to stay in the job.
To calculate turnover, take the percentage of employees who leave (for any reason) in a specified period of time and divide it by the total number of employees that you had in that role during the same period of time.
While turnover is a valuable metric, it is important to understand the context as well. If you lose 5% of your employees, but they are the bottom 5%, then turnover is actually a good thing.
In jobs with a high burnout rate, such as pro football coaching, some turnover is inevitable and is not necessarily a sign of failure. If, on the other hand, you are hiring sandwich makers at a fast food franchise and less than half of them stay for a month, then turnover should be your primary focus.
5. Cost Per Hire
While hiring better tends to have an extreme ROI, often in the hundreds or even thousands of percent, it is still useful to track up front investments. Determining which recruitment tactics are successful and which aren’t from a cost perspective is a key performance indicator.
At a minimum, any assessment or interview should have a significant positive ROI or it’s not worth doing. Tracking cost per hire allows you to determine where your recruiting budget is best spent and justifies your hiring related investments over time.
Calculate cost per hire by adding your total external and internal costs – including advertising, SaaS subscription fees, and cost to sustain recruitment staff – then divide by the number of hires the process produced.
Hire Better With These Metrics
While these five recruitment metrics are certainly not the only metrics you should be tracking to assess your performance, they are among the most important. Whether you’re most recent hiring decisions have proven successful, mediocre, or ill-fated, deeper insight into the many factors that led to each hire should be a key component in your next recruitment endeavor.