To the uninitiated, the recruiting world looks like a supermarket: When you need something, you simply go to the right part of the store and select from your pre-packaged options.
But for those in the know, recruiting behaves more like the stock-market: it’s fast-paced and varied. You are never sure whether the skills you need will be available at the price you want. Like a stock market trader, the successful recruiter needs a balance of experience and data to land great talent.
Too often, recruitment success is gauged by time-to-fill quotas or cost-of-hire numbers. All these numbers do is tell you how quickly you hired someone at the lowest possible price. These metrics just won’t cut it in a place like Silicon Valley, where skills and expertise (quality) trumps fast and cheap.
William Tincup, one of the leading thinkers in HR, expressed the “recruitment paradox” well with this tweet:
Often we focus on what can be measured. Instead, we need to focus on what should be measured: whether we are efficiently finding the skills and expertise at the right time and for the best price.
Here are five indispensable metrics that will help you determine whether you are finding top quality hires who will move your business forward — In short, whether you are actually recruiting people you want to retain. I will also outline the red flags you should be acting on to refine your recruitment process.
Remember: For all these metrics there is a spectrum in terms of success. The more critical, complex or hard-to-fill the role is, the tighter the target should be:
Must-have recruitment metric #1: Qualified applicants-per-requisition
Why you need it: The qualified applicants-per-requisition metric indicates whether your sourcing practices are delivering what you want: people who can do the job effectively.
How to get it: To calculate this metric, follow these steps:
1.Start at the end of the period you want to analyze
2.Count all of the qualified applicants you have for the requisitions that are still open or were closed during the period
3.Count the number of requisitions that are still open or were closed during the period
4.Finally, divide the number of applicants by the number of requisitions to calculate your metric
You can further refine your numbers by looking independently at the requisitions that are closed and the requisitions that are still open. You can look for flags that indicate whether specific roles or geographies are seeing more or fewer qualified applicants per requisition.
Red flags to act on: If you see that your qualified applicants-per-requisition metric is declining over time, then you need to tweak your sourcing activities. For example, you may need to post job openings in new locations or revamp your referral program.
Must-have recruitment metric #2: Offer acceptance rate
Why you need it: Declined offers are very expensive for tangible and intangible reasons.
How to get it: To track how well your organization is performing, look at:
1.How many offers were accepted
2.How many were declined (if an offer has not closed then do not count it in the calculation)
3.Divide the offers accepted by the sum of offers accepted plus offers declined
By following the above steps, you will be able to see offers accepted as a percentage of all offers closed.
Red flags to act on: Aiming for 100 per cent acceptance is not realistic, however if less than 90 per cent of people are accepting your offers, then you have work to do. This could indicate that there is a mismatch between your expectations, the resources you are putting against this, and the level of player you are trying to “attract” from the market.
You need to remain flexible – just like a stock trader – in terms of the price you will pay. At the offer stage, it may be cheaper to include a signing bonus and land your candidate than to start again. Or it may make sense to introduce some assessment tools or other types of qualifying tests to the interview process so that you fast-fail candidates who will not match your offer.
Must-have recruitment metric #3: Resignations and involuntary turnover for less than 3 months service
Why you need it: If someone leaves your organization within 90 days of starting, then you most likely have no return on the time and money you invested in finding them, onboarding them, and training them to do the work required. The combination of the resignation metric with the involuntary turnover metric tells you whether you are landing the right people or not.
How to get it: To generate this metric, follow these steps:
1.Select the time period you want to analyze
2.Count all the people who have less than 3 months service at the beginning and end of your analysis period (this allows you to calculate average headcount)
3.Count all the people who left, that had less than 3 months service, during the period
4.Categorise and group these exits as resignations or involuntary
5.Divide the number of resignations or involuntary exits by the average headcount of people with less than 3 months service
Red flags to act on: If an increasing number of people are resigning within three months of starting, then this is a bad sign that the role or culture or something else about the organization was a significant mismatch – that should have been caught through the hiring process. It also could be a sign that expectations about work performance were not properly communicated.
If an increasing number of people are being asked to leave within three months of starting, then this is a sign that the hiring team is not picking up on critical red flags about capabilities or fit.
Read Part 2
Author: Ian Cook