Core Staffing Performance Metrics
Recruiters, like all HR professionals, are under increased pressure to demonstrate their value to their organizations and customers. It is wise to be proactive in meeting this demand: by the time senior management actually asks for a demonstration of value, it is usually too late to act - they have already made up their minds.
Recruiters can take advantage of four core staffing performance metrics: (1.)Actual Time vs. Contracted Time to Start, (2.) Staffing Efficiency, (3.) Hiring Manager Satisfaction, and (4.) New Hire Quality. These metrics involve only a modest level of data collection and will not only provide a measure of the value that recruiting brings to its customers, but just the simple of act of measuring will help improve operations. Here's a breakdown of each metric, the data needed to calculate it, and what information they provide.
New Hire Quality
This is the rating of the new hire by the hiring manager. It is recommended that this evaluation be conducted three to six months after hire. It takes at least three months before a new hire performance can be accurately assessed and after 6 months, work place influences become a dominant factor in new employee performance. To fairly judge the quality of a new hire, it's important to define expectations prior to recruiting and then compare these expectations to actual performance. The following list provides a starting point for developing the criteria for new hire:
Actual Time vs. Contracted Time to Start
In lieu of the traditional "Time to Fill," metric, which can be easily manipulated and distorted, consider using the ratio of the actual start date to the targeted start date that gets negotiated with the hiring manager. This ratio indicates how closely you met the expectations of the hiring manager. In addition, negotiating a start date with the hiring manager helps set realistic expectations about when someone will be in their seat working, which is what the hiring manager really cares about. In addition, using this metric will help reduce the likelihood of the "fill all open positions ASAP" fire drill that many recruiters must contend with.
Hiring Manager Satisfaction
This is the hiring manager satisfaction rating with the hiring process.
Hiring manager satisfaction is often based on a general post hire questionnaire but there is an inherent problem with this approach -- the hiring manager has no pre-established guidelines by which to judge the recruiter. A fairer and more useful questioner is one which is completed BEFORE and after the recruitment process for a new position. This type of questionnaire ensures that both the hiring manager and recruiter are clear about what they expect from the hiring process.
While the traditional Cost-per-Hire metric is widely used and provides some meaningful indication of effectiveness, it does not account for variations in factors such as the level of the position being filled, labor market conditions, and availability of workers by region. Consider using the Staffing Efficiency ratio. It is easily calculated as follows:
Determine your Total Costs the sum of your Internal Costs (salaries, office space, supplies, general overhead) and your External Costs (all external expenses which are incurred to specifically identify candidates - advertising, contingency and retainer fees, research costs, annual fees for posting jobs on the Internet).
Divide your Total Costs by Total Compensation Recruited (TCR) - the sum of the base STARTING salaries for each external hire during their first year. External compensation recruited is the best measure of recruiting production, and the Staffing Efficiency metric will illustrate how efficiently you are bringing in this compensation.
Staffing Efficiency = Total Costs/TCR. Staffing Efficiencies in the range of 5% - 9% are considered excellent, and those above 16% indicate some needed attention. However, these ranges can vary by industry, organizational size, and region, and it is best to compare your own results to benchmark data.
The hiring manager and recruiter should meet prior to recruiting to review all these areas and determine expectations for each. By proactively taking accountability for their contributions and backing up their assertions with credible metrics, recruiters will actively demonstrate their value to their organization and customers. By using the four core staffing performance metrics to assess their effectiveness, recruiters will be put themselves at the leading edge of the human resources profession that is under increasing pressure to demonstrate its value. It is always far better to lead with metrics than to be asked to produce them.
-Lawrence J. Quartana, Ph.D.