Receive daily articles & headlines each day in your inbox with your free ERE Daily Subscription.

Not logged in. [log in or register]

6 Good Metrics

by Jul 7, 2008, 3:35 pm ET

Recruiting metrics require a number of characteristics to be considered effective and reliable:

• Metrics must be predictive and actionable. Statistics need to provide information that can be acted upon by providing data to indicate trends.
• Metrics must be tracked over time in order to generate internal benchmarks and analyze internal performance.
• Recruitment metrics should include both quantitative and qualitative aspects. Time and cost obviously comprise the quantitative aspects of recruitment metrics, while productivity, retention, efficiency, and candidate performance comprise the qualitative aspects.

Metrics of the Past

Ten years ago recruiting was often seen as a steppingstone to an HR generalist role. Recruiters were trained to “screen out” applicants, thus making their positions transactionally focused. This led to the two most commonly used metrics: cost-per-hire and time-to-fill.

Cost-per-hire, the most common measurement applied to recruiting, only looks at the initial cost — and not the long-term cost — associated with hiring the wrong candidate. Focusing purely on initial cost will drive recruiters to place a ‘butt in a seat’ without regard to the quality of hire or the long-term production the candidate will or will not deliver.

Time-to-fill measurements are often popular due to the cost associated with positions remaining unfilled. Although this cost can be significant, this metric does not take into consideration the long-term cost associated with greater turnover percentages and additional recruitment costs for hiring the wrong candidates. Recruiters will focus on candidates considered the ‘lowest hanging fruit’ in order to fill positions faster.

Metrics of Today

As I speak with staffing and talent acquisition executives from around the country, they all express frustration in creating a measurable that drives one main objective — getting the right candidate for the job. In order to achieve this objective, we must first look at how the recruiter of today differs from the traditional recruiter of the past. Once we have the right recruiter, we can then focus on defining metrics that drive the right behaviors.

The recruiter of today has to move from being transactionally driven to relationship-driven. Recruiters are now sales professionals responsible for prospecting, building relationships, and advancing the sale. This function change requires the metrics associated with success of today’s recruiter to change as well.

Although the following is not an all-inclusive list, the following six metrics are examples of metrics that drive the right results and create the necessary behaviors needed to achieve these results.

• Performance/Quality of Hire: Data is driven by performance appraisal ratings and/or production 6 to 12 months into the new employee’s job as compared to their peers. Quality should be the first and most important recruiting metric. Since there is no formula for determining quality, recruiters and the hiring managers should define the standards for quality before recruiting. Quality of hire can be assessed through a simple survey that lists each criterion separately and asks the manager how the employee meets each standard on a scale of 1 to 5. New hire quality can also be tracked through formal performance evaluations, production reports, etc. A survey reported in Staffing.org’s Recruitment Metrics and Performance Benchmark Report found that the more regularly recruiting professionals measure new hire quality in an organization, the more satisfied hiring managers are with new hire quality.

• Manager Satisfaction: Data is driven by the percentage of managers who are satisfied with the hiring process and the candidates. This metric provides important, easily tracked data to determine a hiring manager’s preferences before recruiting begins, and then to evaluate staffing performance post-hire. Effective recruiting organizations rely on customer feedback to be successful. However, customer satisfaction should never be viewed as a stand-alone metric because it can be misleading.

• Source of Hire: Data is driven by the percentage of new hires from each defined candidate source. Data is also driven by the percentage of hires per source, with highest on-the-job performance and tenure rates. Tracking source of data information allows management to better understand the quality of their sourcing Strategy. This metric also helps recruiting managers see sourcing channels in terms of outcomes, not just sheer numbers.

• Referral Rates: Data is driven by the percentage of hires from referrals generated by the recruiter. Referral programs are most commonly focused on generating referrals from the greater employee population. Referrals generated by recruiters directly soliciting them from prospective candidates and new employees will have a measurable and positive impact on the quality of hire (studies show referrals make better performing hires), cost-per-hire (little to no cost for these referrals), and time-to-fill ratios.

• Candidate Satisfaction: Data is driven by the percentage of new hires who are satisfied with the hiring process as judged by a candidate survey. Candidate satisfaction surveys drive recruiting organizations to have a greater focus on the quality of service provided to each candidate, which has a positive impact on the brand positioning/employment branding of the company. Additional candidate metrics may also be valuable from candidates who were not selected, and candidates who declined offers. These last two groups are often overlooked, but they can provide valuable information about your recruiting operations.

• Pipeline Development: Data is driven by the number of potential candidates the recruiter has developed relationships with for key strategic positions. Data is managed through an effective CRM system. Similiar to tracking pipeline development of sales professionals, measuring recruiter-developed candidate pipelines can have a dramatic improvement on time-to-fill (candidates are already in process for commonly needed positions), cost-per-hire (pipeline candidates have no additional cost associated with placing them), and quality of hire.

Companies can decrease their time to fill and decrease their cost per hire, but if they can increase their quality of hire and quality of service, the entire game changes. Better employees translate into higher performance, more revenue, and higher profits. By using the right metrics you will encourage recruiters to focus their behaviors on the causes and not the symptoms of recruitment success. The combination of having the right recruiter with the right measurements will lead each recruiter to focus on finding the right candidate

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  • Rob Levin

    The one problem I have with the metric of performance/quality of hire is that once the person is hired the recruiter has absolutely no control over the new hire’s ‘employment experience’. For instance, if the new hire is working for a poor manager (all companies have them), is not given any direction, is not given any development opportunities, does not see a clear career path, is put into a situation that is either volatile or does not value the employee, etc. that will affect performance. What part of that is the recruiter’s fault?

  • Mark Edwards

    You’re correct that they have limited control over that new hire’s experience, that all (well, most) companies have poor managers and this is (often) not the recruiter’s fault *.

    However, unless you have (a) a small throughput of new hires and/or (b) a confined mapping of recruiters to hiring managers, then the effects of those experiences should have a negligible impact on the metric(s) over sufficient time and volume.

    Further, a good analyst ought to be ensuring that such caveats are made clear when results are being interpreted by the reader in order that correct allowance is made for such variances. Everyone knows (or should know) the danger of small smaple sizes – this is just one argument that ought to be included within that category.

    * – of course, if a recruiter is at fault for badly matching applicants to roles then this would be their fault and over the course of enough hires this ought to be evident within the data.

  • Stephen Shearman

    Stephen,
    Thank you for your valuable, helpful and informative article on metrics.
    Since crossing over from military recruiting (16 yrs) to now – corporate recruiting, I have found little in way of real and effective tools to measure Recruiting activities and the use of analysis of these activities to create daily, weekly, monthly recruiter/team proactive objectives. The usual measurements: time to fill, cost per hire, quality of hire, etc, in my opinion are ineffective on a daily, weekly basis because they don’t measure activities – they only measure distant results (and even then they have limited individual recruiter relevance).

    To me, real proactive recruiting success comes when a Recruiting Leader can measure standardized key recruiter/team daily, weekly, monthly, yearly activity results that measures recruiter/team activities. Then, after 3 months of historical data, analyze this historical data to create individual and team activity and results objectives and standards of effectiveness (ratios). Recruiting data examples could include:
    1) Searching: qty search strings, resumes downloaded, resumes screened, leads generated.
    2) Prospecting: telephone calls (inbound/outbound), emails (inbound/outbound), area canvassing contacts, prospects screened, prospects meeting qualifications.
    3) Processing: leads turned to Prospects, Prospects given to recruiter, prospects (now candidates) screened by Hiring Manager, Interviews, offers presented, and hires.

    With three months of this type of activity/results data collection, we can perform analysis and compute a number of proactive ratio tools to include:
    1) Standards of Effectiveness: (SOE) of any prospecting activity.
    2) Business Percentage (BP):
    3) Closing Ratio (CR); qualified applicants to sold candidates
    4) Sales Ratio (SR): composite of qualified applicants to hires
    5) Processing Ratio (PR): sold candidate to hire

    This historical data can then used by the Recruiting Leader to create individual/ team daily, weekly, monthly objectives of the various activities. These objectives are based on each individual Standard of Effectiveness so they are more relevant.

    This type of systematic recruiting is the basis of the larger recruiting management elements: organization, standardization, management, training, integration and action.

    It is my experience that a very large reason for a recruiter/team not reaching its goal(s) is not because of training, skills, tools, market or desire but inadequate levels of consistent prospecting activities. A possible solution is a Systematic Recruiting System where the Recruiting Leader manages consistent daily, weekly, monthly activities.

  • Pingback: Podcast: Miller’s Metrics : ERE.net

  • Kelly Magowan

    As Stephen highlights “The recruiter of today has to move from being transactionally driven to relationship-driven,” this is starting to happen due to technology and market forces though is still a long way off.

    The biggest challenge around the metrics is that there are a number of people and businesses areas involved from the businesses advertising spend to the quality of the internal Recruiters, HR and hiring managers all playing a role in how successful a company is at attracting and retaining the best. Therefore coming up with metrics that fairly measure all these variables is often difficult.

    So many companies engage in little meaningful research around measuring success in attracting and retaining talent. Your six good metrics is a very good point to start and no doubt the businesses can refine this to suit their needs as though go.

  • Pingback: Hot trends, and the importance of ROI in campus recruitment - an interview with Jeremy O’Krafka | TalentEgg's Employer Hatch

  • http://www.newtonsoftware.com Joel Passen

    Just came across this older post and agree with much of the information presented. There are also some great comments here- good points.

    Human resource and recruiting professionals are always looking for answers to fundamental questions that arise in corporate recruiting, questions like:
    Are we getting applicants to interview for our open positions?
    Are we acting on applicants?
    What are our best sources of applicants?
    How long does it take us to hire?
    Are there places that we can make improvements?

    and more… way more.

    I also like that Stephen is interested in measuring the “experience” ie. the quality of hire. This is a next-gen idea.

  • http://www.bluegreencorp.com Dalia Burack

    I was wondering if you (or anyone you know) might have access to any 2008-2009 recruiting/talent acquisition benchmarks? I am looking for a National average for things like:

    Average Cost per Hire
    – Non-exempt Cost per Hire
    – Exempt Cost per Hire
    Average Time to Acceptance
    – Non-exempt Time to Acceptance
    – Exempt Time to Acceptance
    Average Time to Start
    – Non-exempt Time to Start
    – Exempt Time to Start

    Any help or thoughts you can lend would be greatly appreciated.

  • David Earle

    Dalia, check out Staffing.org’s 2007 and 2009 Benchmark Reports in their store (www.staffing.org). They include what you list here and much more. Call them (me) if you have additional questions. Contact information is on the site.

    David Earle

  • Pingback: Do you have the Traits of a Big-Biller?

  • Pingback: 5 Recruitment Metrics Every HR Professional Should Report (Part 1) | Convention Center Quindio

  • Pingback: 5 Recruitment Metrics Every HR Professional Should Report (Part 2) | Convention Center Quindio

  • Pingback: How Recruiting Is Like Dating |