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Top Metrics to Measure Hiring Success Rate
The current talent market is highly competitive giving rise to an uncompromising requirement to stay ahead in the hiring race. Along with dynamic and ambitious hiring goals there is a need to carefully invest in the right set of tools and technology and human resources in order to arrive at a competent recruitment strategy. Here just like any other business, every investment in talent acquisition is also expected to have a return on investment.
According to PwC, 28% of the company's average operating expenses are spent on HR functionalities. With such a considerable sum of money being spent, recruitment metrics have become inevitable. Also, 70% of top hiring managers believe that recruiting teams must become more data-driven for a long-standing recruitment workflow and to boost productivity that reflects the growth of the business.
What are recruitment metrics?
Recruitment metrics are defined and used to measure the success rate of the talent acquisition process. Such metrics include Key Performance Indicators that help measure the progress and performance of each hiring process step.
Recruitment metrics have two important outcomes. The first one is that it helps quantify the effort of recruiters and hiring heads. The second one is by being a direct indicator that suggests where you can save hiring time, resources, and cost. In fact, hiring experts will recommend employers to invest more in those ‘recruitment resources’ that yield promising outcomes and cut down the expenditures on the less promising ones.
Having said this, here are the top 10 recruitment Key Performance Indicators every HR team should monitor.
Key Metrics to Measure Hiring Success Rate
1. Time to Hire
Time to hire is the time taken from when a candidate applies for a given job position until the candidate accepts the job offer. This includes the time taken for candidate CV screening, skill assessments, interview rounds, candidate selection, sending the offer letter, and offer acceptance. Thus, time to hire is a reliable measure of how well the hiring strategy, screening process, and HR team performs for a job vacancy.
2. Time to Fill
Time to fill is the number of calendar days required to find, filter, interview, and acquire a new candidate for a given job vacancy which spans from the time a given job request is approved till a candidate accepts the job offer. Though time to fill relies upon several factors, such as the effectiveness of the hiring team and the hiring strategy, supply and demand ratios for specific roles, and so on; candidate offer rejections plays a key role. This gives organizations and recruiters a compelling reason to concentrate on retaining talents during the hiring process.
3. Source of Hire
Monitoring the sources that fetch candidates to your organization is one of the most critical recruitment performance indicators. This measurement helps in keeping track of the effectiveness of various hiring channels as well as assists recruiters take a call on the amount and resource to be invested in various sourcing channels. The various sources include job boards, the company's career page, job referral campaigns, candidate sourcing platforms and professionals, and so on.
4. Offer acceptance ratio
The offer acceptance rate refers to the Number of applicants who accepted their job offer among the Number of applicants who were given job offers. Fewer candidates accepting job offers from your organization might be due to several factors, such as issues with remuneration and employee benefits, poor employer branding, bad reviews about the work culture, extended time to hire, delayed responses to candidates, and offers from competitors.
Offer acceptance ratio= Number of job offers accepted/Number of job offers made
Here the ratio ranges between 0 to 1 and a value tending towards 1 indicates a better offer acceptance rate.
5. Quality of Hire
A A candidate's success and growth within the organization indicate the quality of hire, which is usually determined by the candidate's overall performance. Candidates with high first-year performance ratings signify quality hiring, whereas candidates with low ratings indicate poor hiring decisions. First-year performance is given weightage for quality of hire because organizations will have to bear the loss of ~Rs.25,500 for a single bad hire, which is the average cost per hire as per several leading enterprises.
6. Employee Attrition ratio
The employee attrition rate is an increasing concern that burdens the recruiters and the overall hiring cost. Attrition refers to the number of people leaving the organization during a given period. The most concerning factor is employees leaving during their early phase in the organization, such as the probation period. Here both voluntary resignation and termination reflect a bad hire or a mismatch. This can be improved by evolving talent retention strategies by taking regular surveys and feedback regarding candidate experience, onboarding experience, training and evaluation, scopes for skill development, work-life balance, support from teammates and managers, exit surveys, and so on, acting on the issues accordingly.
Hiring attrition rate= Number of candidates hired/Number of employees who left the organization
7. Employee job satisfaction
Job satisfaction among candidates is an excellent indicator of how closely the hiring and candidate expectations match in reality once the job vacancy has been filled. Low applicant job satisfaction points to inadequate or mismanaged expectations in job descriptions and requirements. A realistic job preview might help recruiters manage this by outlining the work culture, nature of the job, expectations, advantages, and disadvantages.
Employee and employer expectation success ratio= Number of the hired candidates considering the job satisfactory/Total number of candidates hired
8. Hiring team and manager satisfaction
According to LinkedIn, the top three methods for evaluating the quality of hire are talent retention, time to fill, and hiring manager satisfaction. Hiring team satisfaction can be measured by conducting a periodical survey and feedback exclusively for the recruiters and their team heads. Here they can rate and comment on the overall hiring process, targets and deadlines, challenges, work life balance, display their efforts that did not have a quantifiable outcome and so on that needs to be addressed. This is a very important metric as only a well-motivated and fairly-treated recruiting team is going to deliver quality hiring outcomes for the long run.
9. Applicants per opening
This indicator is suitable for assessing the reach and attractiveness of a given job opening among the potential candidates and those who can help you reach the desired talent pool. A high number of applicants per opening indicates that your job campaign has reached a wide range of people, a good employer branding, and a good number of people interested in the job role, whereas low number of applicants may be due to confusing job title or job description and inefficient talent sourcing and talent attraction strategies which can be countered by utilizing candidate sourcing experts.
10. Hiring cost
The hiring cost for any organization is crucial as it occupies a significant component of the organization’s expenditure. Hiring costs include salaries, incentives, training, and benefits provided to recruiters, administrative costs, hiring software subscription cost, one-time tech investment such as cost of automating a hiring step and purchasing cloud storage space, hiring related marketing cost, and recruitment outsourcing cost. Here it is important to note that hiring cost is predominantly calculated annually, therefore the cost incurred for one-time and periodical subscriptions needs to be taken into account accordingly.
Recruitment cost= Internal cost + External cost
11. Cost per hire
The cost per hire, in simple words, can be defined as the sum of all the hiring related expenditures divided by the number of hires in a given period.
Cost per hire= Total recruitment cost/Total number of hires
The average cost per hire for an organization is estimated to be Rs.25,500 and organizations strive to keep CPH as low as possible while keeping the quality benchmarks intact. As a solution, employers also rely on outsourcing the talent acquisition steps and hiring automation to cut the cost per hire.
The main objective of monitoring hiring metrics is to increase the hiring quality while lowering hiring costs and time. This can be achieved by monitoring the required set of recruiting metrics that has the potential to provide valuable insights into the effectiveness of your recruiting process and the return on investment.
Though experienced recruiters and industry experts can intuitively identify the pitfalls in the hiring process it is always appreciable to have data that can exactly quantify the issues. Especially in the case of smaller enterprises and startups where there is not enough data to arrive at a conclusion related to hiring, it is still recommended to keep track of the numbers to start with.
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