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

Not logged in. [log in or register]

Recruiting By the Numbers — Analyze This! (Part 1 of 2)

by May 30, 2012, 5:38 am ET

Many great recruiting departments and organizations pride themselves on being “metrics-focused” or “metrics-driven” — And for good reason. There’s plenty of research that confirms the value of having clear strategic and operational targets.

Generic recruiting pipeline

In addition, employees appreciate having expectations (think: metrics) that are “SMART” (specific, measurable, actionable, realistic, and time bound). In the recruiting world, some common metrics include time to find, time to hire, survey scores (from hiring managers and candidates), as well as various quality of hire metrics.

How confident are you that you can “hit your numbers”? Are you able to consistently and quickly deliver qualified candidates to your hiring managers? If you are highly confident in your ability to meet or exceed the expectations of your hiring managers, that’s great! Chances are, then, you “know your numbers” very, very well.

This article focuses on one specific aspect of managing opportunities — knowing some key metrics. The next article in this two-part series will focus on some specific techniques for moving individuals through your funnel, or pipeline.

What Have You Done for Me Lately?

In the world of sales, metrics are hugely important. Quota is probably the most famous sales metric of all. I remember vividly receiving my first quota as a new salesperson. I was excited to think that achieving quota meant big commissions. Over time, however, I often dreaded the all-too-frequent “quota conversations” with my sales manager, Stan. Stan could be intimidating. He always wore crisply-starched shirts, preferred suspenders to belts, and loved to smoke cigars — while reminding me that he started his sales career the year I was born. I remember many meetings with Stan where — although his lips were moving — all I heard was Janet Jackson’s voice singing, “What have you done for me lately?”

All joking aside, there are some very good metrics in the sales world that can be useful to recruiters who are looking to increase their ability to meet (or exceed!) expectations. One such set of metrics revolves around activities within the sales funnel, or recruiting “pipeline” itself. Great salespeople know their numbers — and not just their “quota number.” They are excellent at analyzing their ability to achieve “bottom-line results,” based on where opportunities sit in at each stage in their funnel.

Recruiting by the Numbers: Conversion Rates and Time

So the question for you: “How well do you know your numbers?” Great salespeople — and great recruiters — know their conversion rates. At minimum, they know:

  • % of suspects they are able to convert to become prospects;
  • % of prospects they are able to convert to become candidates;
  • % of candidates they are able to convert to being sent to hiring managers;
  • % of candidates sent to hiring managers receive offers; and,
  • % of candidates who receive offers accept and become employees

Once you know your numbers, you are in a much better position to analyze (and more accurately predict!) your ability to “meet quota.” Knowing your conversion rates helps you build specific, actionable plans that translate to hitting your “hiring quota.” You know how many suspects you need at any given time to produce enough prospects who will, in turn, convert to candidates for your hiring managers.

In addition, recruiters should also have a good idea of the time it takes to convert at each level. So not only should you know your “conversion rates,” but know the speed at which individuals move to each stage in the funnel. This measure is sometimes called “velocity.” Each stage can have both a conversion rate and a time component or metric. The figure at the very top of this post provides a graphic representation of this process.

Forecasting Ability to “Meet Quota”: Making it Real

Using conversion rates to develop “dialing plans”

If you know your conversion rates at key points during the recruiting process, you can use a simple Excel spreadsheet to generate your “dialing plan.” In the table you see here, the person has tracked a conversion rate of 30% for call backs on cold calls — and a conversion rate of 33% for converting those “call backs” into qualified candidates.

Using the example from the table, if you needed to find 10 qualified candidates –and if your only source of suspects to put in your pipeline was through cold calling — you would need to make 100 calls. Of course, the higher the conversion ratio, the more people you are able to “deliver.”

The Change Challenge: Mission Impossible?

Your “mission, if you decide to accept it … ” is to ask a person who is currently employed — and presumably satisfied with their current position — if they would like to make a change. Why would they? Why should they? As you know, this “mission” presents many challenges. So what’s the best approach to use to help a person decide that change is not only OK, but might even be a good thing!?

In general, moving passive candidates through a pipeline takes some understanding of “change management.” That is to say, if you want to kick up your conversion ratios — as well as your velocity — you not only need to know how many people are at various stages in your pipeline, but you also need to know what decisions they need to make in order to make a change.

Change can be challenging for many people. Change can invoke feelings of fear or loss of control. What can you do to help move them along? What should you not do? How much can you really affect conversion ratios or velocity?

Looking Ahead

In Part 2, we’ll look more closely at the three major decisions that people make as they consider whether or not to advance in each stage of the pipeline. And, more importantly, we’ll also look at the best strategy recruiters should use — at each step along the way — to ensure high conversion rates and optimum velocity throughout the entire recruiting process.

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.

  • http://www.organizationview.com Andrew Marritt

    Nancy,

    Great article. On a few recent client projects (developing recruitment analytics & reporting) we’re using the same principles but extending them to predict accurately the current likelihood of hitting hiring targets (or hitting revised targets). We explained how here: http://www.organizationview.com/predicting-hiring-success

    Recruiters, especially good recruiters will naturally over-predict the chances of success (it’s human nature).

    Andrew

  • http://www.hrpartnersplus.com Nancy Parks

    Thanks Andrew,

    You’re so right about “over-predicting … success”. I’m embarrassed to say I did some of that myself. But, as you know, it’s not about the “number of deals” sitting in the funnel. It’s about knowing how to successfully move them — and setting goals — based on knowledge of those conversion rates.

  • Pingback: Recruiting By the Numbers — Analyze This! (Part 2 of 2) - ERE.net

  • Pingback: Staffing News | Welcome to American Staffing, Inc.

  • http://www.zartis.com John Dennehy

    Nancy,

    As the owner of a SasS business I’m somewhat obsessed with conversion funnel metrics. It’s what we live or die by.

    In terms of online recruitment I’ve found very little hard data available on conversion funnels. I can share some data we have access to.

    From job boards we’ve worked with the average job description page view to completed application is about 50 to 1. For company’s career sites the ratio thankfully improves to about 20:1. This is specifically for tech roles. Perhaps other sectors might report better ratios. I’m not factoring drop off from job description to application page. I know there’s another important metric in there.

    I read somewhere that the average number of applicants to hire ratio is about 20:1. I’m sure this varies hugely by industry and candidate source. For example, referrals applicant to hire ratio is probably closer to 7:1.

    Using the job board view/applicant ratio of 50:1 and applicant/hire ratio of 20:1 we’d need 1,000 job page views to generate one hire. Almost all online advertising is now based on Pay Per Click except job board ads. (Maybe somebody can explain why that is to a newbie like me). If we used a PPC model for job boards we’d have a pretty neat model. Cost per click at $1.50 and if our model is correct it costs $1,500 in ad spend per hire.

    I haven’t been able to find any meaningful industry report on these metrics. If anybody has any metrics they could share in terms of industry norms it would be great.

    Thanks,
    John