Recruitment KPIs to Enhance Your Hiring Strategy
Recruitment KPIs help you determine how effective your hiring process and recruiting teams are. These play a crucial part in any organizations growth.
Organizations are rapidly expanding, and the need to hire the best has increased significantly. With businesses investing heavily in recruitment to streamline the process and attract talent, it is imperative that recruitment generates value and a return on investment. Before we put a number to value for money in recruitment, the first step would be to define top-notch recruitment processes and outline recruitment strategies that can be used to achieve and measure it.
If recruitment is all about driving the best and most suitable talent to organizations, what sets ‘good’ recruitment apart?
The job market today is a treasure trove of all the talent we need, and organizations try their best to ensure that the talent attracted is also performing to the best of their abilities within their organization. Here’s where recruitment KPIs come into the picture.
What are Recruitment KPIs?
You have all your recruitment functions in place - a pool of talent sourcers and recruiters, tools to track and manage applicants, a well-defined shortlisting and interview process, and the best onboarding process an organization can have.
Now, how do you assess the effectiveness of these functions?
Key performance indicators or KPIs in recruitment are metrics that help evaluate the efficiency of the recruiting process. They refine recruitment efforts by using data to understand hiring needs and setting hiring-based goals specific to the organization’s goals and objectives. For your recruitment strategy to prove successful, it is essential to measure and monitor your recruiting efforts, as well as identify and correct problems on a regular basis. These KPIs can serve as performance metrics for recruiters.
8 Recruitment KPIs to ensure Top Quality Recruitment
Recruitment KPIs are specific to an organization’s objectives. You might want to have a pipeline of suitable candidates for specific job demands, or just want to focus on improving diversity and inclusion in hiring. KPIs can be set and measured depending on your needs and objectives. While there isn’t an ideal number of KPIs an organization sets, let us look at some metrics we can have, in no particular order .
1.Quality of Hire
Hiring the ‘best’ candidate off a pool of applicants may not always equate to hiring the ‘right’ candidate. Quality of hire measures how well you were able to fill your open position with the right hire. Quality could be subjective, and based entirely on your organization’s needs and demands.
One of the best ways to assess the quality of hire is often with the help of pre-hire and post-hire metrics of the hires. During hiring, metrics such as assessment scores, time taken to accept an offer and join might give you a good idea about the quality of hire. Metrics like how long it takes for a hire to reach peak productivity after joining, how well they fit into the company culture, and even the immediate supervisor’s satisfaction with the new hire can be looked at to assess post-hire quality of a hire. Good quality hires contribute significantly to an organization’s growth and overall success.
2. Offer Acceptance Rate
After a candidate has passed the screening and selection process, they are given a job offer by the company - that a candidate can accept or reject. Candidates may have multiple reasons to reject an offer, including counter offers from competitors, a bad interview experience, or because the compensation offered was way below their expectations.
You need to ensure that the entire process of hiring a candidate - from screening to offering a job - is smooth, and your packages are at par with market standards. Offer Acceptance Rate helps you gauge the number of offers being accepted by the candidates from the total number of offers being made. A stark difference between the two might require you to make changes to your process and metrics and ensure candidates are accepting the offer and joining your organization.
3. Ratio of qualified candidates per opening
Any external job opening invites a number of applicants who see themselves as qualified for that specific position. However, just because a job posting attracted a large number of applicants does not imply that it is advantageous for the company.
Having a pool of ‘qualified’ applicants can be determined by the specifics of the job description, and a detailed eligibility criteria. A good ratio of qualified applicants per job opening as one of your KPIs can also be used as an indicator of your organization’s talent pipeline health.
4. Source Quality
There are numerous recruiting methods to draw candidates for open positions. - job posting sites, career sites of companies, internal job postings, and social media advertisements. Not all of them, however, are of good quality. Job advertisements on social media, let’s say, might give us close to 2500 applications with just 12 candidates who make it to the next round, while the number of applicants on the career site for the same job post may gather 150 applicants, with 85 of them eligible for the next round of screening.
The number of applicants a channel gathers is never a true metric or indicator of a ‘good’ sourcing channel. It is the number of impressions created on the job position through various sourcing by calculating the channels that determines if a source is of good quality. You can also improve your sources by considering cost-efficiency of various channels, and calculating the efficiency of the sourcing channels you are investing in. Recruiters need to constantly evaluate recruitment sources to ensure they remain competitive and target the right applicant pool.
5. Time to Hire
In a 2018 survey by Spark Hire, it was found that ‘for 49% of the survey respondents, 7 to 14 days from receipt of an application to offer letter was the norm; and 24% of companies reported that it takes them 15 to 30 days to make a hire’. However, SHRM reports an average time to hire of 36 days. But we've all experienced drawn-out hiring procedures and waited weeks or months for job offers that we weren't even sure would arrive.
In an interaction with 'ETHRWorld', Pavitra Singh, CHRO, PepsiCo India, stated that “In a candidate-driven market, top talent will be absorbed by a competitor firm if the company takes too long to make a decision.”
Shifting to more technologically prominent ways of hiring, such as using applicant tracking systems and automated screening, scheduling and interaction has improved the recruitment process significantly, making it quicker and more efficient. However, delaying candidates due to mass hiring, which can be seen today, most frequently results in the loss of a majority of good hires. Using time-to-hire as a key KPI helps ensure a speedy and effective recruitment process.
6. Cost Per Hire
Cost-per-hire, according to the Talent Acquisition benchmarks set by SHRM, represents the expenses associated with a new hire. These costs are calculated by dividing the total of third-party agency fees, advertising agency fees, job fairs, online job board fees, employee referrals, applicant and staff travel costs, relocation costs, recruiter pay and benefits, and talent acquisition system costs by the number of hires.
Cost-per-hire as a KPI makes it possible for you to invest in your recruitment efforts more strategically. It also helps determine the recruitment budget you will need to hire in the coming period, and gives a concise overview of how recruitment affects the business's bottom line. Cost per hire is calculated by dividing direct and indirect costs with the number of candidates recruited.
7. Diversity and Inclusion Ratio
Diversity, Equity and Inclusion (DE&I) practices are in place to ensure equal employment opportunities for everyone - particularly groups that lack adequate representation and need to be empowered. Diversity in recruitment fosters a competitive workforce. To ensure diversity and inclusion in the workplace, you need a hiring process that is free of bias. Job descriptions are often unintentionally biased and are sound restrictive towards certain age groups and genders. In interviews as well, recruiters might unintentionally filter out good candidates due to their unconscious biases towards candidates.
Including D&I ratio in your recruitment KPIs would not only create a diverse workforce, but also help with employer branding and productivity. As McKinsey’s 2020 report on Diversity & Inclusion states, companies which ranked higher for gender diversity on executive teams were 25% more likely to have above-average profitability than companies which ranked below.
Candidate satisfaction is one of the key KPIs for recruitment, and is directly associated with other metrics of time to hire, quality of hire, and offer acceptance rate. Even with an excellent recruitment strategy, execution of these particularly when recruiters have to directly face a candidate-driven job market.
The time taken to hire might affect a candidate’s overall experience with the recruitment process. No one likes being kept waiting, and even more so when they have a good chance of getting a counter offer. A candidate may successfully complete all stages of the selection process, but still have a bad impression of the company because, let's say, they thought their recruiter was "rude."
Having candidate satisfaction as your recruitment KPI might give you the answers to why a candidate did not accept your offer, or if you ever wondered about all your negative Glassdoor reviews. You can use these metrics to improve your talent acquisition functions and make them more candidate-friendly.
Along with the ones we just saw, you can also look at other recruitment KPIs such as Interview-to-offer ratio, Net Promoter Score, First Year Turnover Rate, and Referrals among many others, and consider what aligns best with your recruitment strategy.
Using KPI Dashboards to Meet Recruitment Objectives
Creating and maintaining an actionable dashboard for your recruitment KPIs can help create a sustainable recruitment strategy. They help systematize and organize the recruitment process, making it easier for you to monitor and track these metrics.
Having a recruitment dashboard would give you a visual, data-driven view of all your recruitment metrics that you can use to analyze the organization’s current performance across all hiring functions, and ways to improve and enhance your recruitment strategy.
Now that we know exactly how recruitment KPIs can help us meet our recruitment goals, what are some indicators your company uses to measure the effectiveness of your recruitment teams? Would you say you have a strong and effective process of recruitment?
Involving Perspect AI in your hiring process helps you enhance your recruitment KPIs. We make it easier for organizations to choose the right fit.
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