Understanding and Applying HR - Recruiting Metrics

While you do not have to implement all of these metrics at once, choose one or two that will help your recruiting system immediately and work from there. Over time, you can add more metrics until an entire measuring system has been created.

The Big Five

The five recruitment metrics used by recruiters are:

• Recruiting Cost ratio (this includes staffing costs and new employee salaries over the year)
• Recruiting efficiency

• New hire performance
• Hiring manager satisfaction
• Employee starts (difference between date of offer and actual start date)

Metrics like these can be approached in different ways. Understanding how your company operates and the individuals within departments will help you conduct your research.

Even if you don’t incorporate all five metrics into your recruiting analysis, it is in your best interest to choose metrics that will be valuable. Improving the recruitment process will not only save money, it will also build your company’s reputation which will attract more qualified candidates, diversity, and innovative employees.

Recruiting Cost Ratio

The recruiting cost ratio is simply a number used to describe how much money HR spends on recruiting new employees. This is a simple calculation:

RCR = (Total Staffing Costs / Total Compensation Recruited) x 100*

Total staffing costs include recruiter travel, events, cost for job fairs, paperwork, supplies, recruiter salaries, bonus’ offered to new hires, and any other expenses your department needs in order to function properly.

Total compensation recruited refers to new hire employee salaries or hourly wages for that year.

If you add these numbers and end up with a low percentage, then you are on the right track to becoming a more efficient department. If the percentage is higher than if should be, then you should look at where the department is spending money and the types of positions that were filled in order to justify costs or in order to find ways to cut costs in the future.

Recruiting Efficiency

This is another metric used to determine how efficient HR is about recruiting new hires and balancing expenses. After figuring out the recruiting cost ratio, you should subtract 1 from the percentage to figure out how efficient the department is.

Recruiting efficiency numbers should be high in order to be considered efficient.

Becoming more efficient may require hiring more employees during the year to justify costs, cutting costs by traveling less, or not participating in those job fairs that cost too much and yield little in respect to new hires. Tracking how people find your company is an excellent way to judge venues that are successful and those that are not.

These metrics may be good starting points if you haven’t been using metrics to measure the recruiting process so far. Understanding how much is being spent on recruiting and the success rates will give you a good idea on where improvements should be made.

New Hire Performance

When gauging new hire performance, it is important to be consistent and maintain a record of all new hires in each department. In order to do this, you will need assistance from the hiring manager.

Before implementing this metric, discuss grading systems with hiring managers and decide on a universal system. This can be a grading system or a point system. Make sure all managers understand the system and are willing to use it.

The best time to evaluate new hires is between 90 and 180 days after they started working for the company. By compiling new hire performance data, you will be able to see how well new hires adjust, if additional training is required, or if more information needs to be passed on to the new hire during the recruitment or orientation stages.

If you notice, for example, that large a number of new hires leave the company before their evaluation period is up, then you need to find out why they are leaving as this will effect the company’s reputation over time. There are many reasons when new employees leave:

·         Incorrect information given during recruitment stage

·         Inadequate training

·         New hires not given the position they were originally hired for

·         Policy changes implemented after new hire started

·         Shift changes after new hire started

·         Family/personal issues

These are all possibilities that will have to be investigated.

Tracking new hire performance will also give you perspective into the types of personalities that stay with the company and those that don’t. This may help when recruiting others.

Hiring Manager Satisfaction

Understanding what hiring managers expect from HR recruiting is important because it is up to recruiters and managers to help new hires adjust to their new positions. Grading recruiters on their efforts is a way to judge the recruitment process overall.

If a hiring manager is not familiar with the grading system used to determine overall satisfaction, you should inform all hiring managers the criteria used in rating satisfaction so each manager will be able to give accurate feedback.

You can help hiring managers in a variety of ways with feedback:

• Create a questionnaire before implementing a manger feedback policy. Ask managers what they are looking for and what they expect. Use this information to discuss a grading system or other system that will provide accurate feedback.

Make sure all managers are on board before implementing this system.

• Ask for new hire feedback by sending periodic questionnaires that include criteria chosen by you and the mangers. This will make giving feedback easier because managers already know what to expect on the questionnaire.

• Use a simple grading system and spend a few minutes with hiring managers periodically interviewing them on the pros and cons of the current recruiting process.

While it is difficult to make all managers happy, you will be able to compare responses and see similarities which can be used to make changes to the current recruiting system.

Employee Starts

This refers to the time between signing a contract to the actual start date for new employees. The time between should be as short as possible, otherwise the cost of holding a position becomes very expensive. This time can be calculated very easily:

 Time = (Actual Time to Start / Contracted Time to Start) x 100*

If the percentage ends up being over 100, then too much time is lapsing between contract signing and the first day of work. Monitoring this time can help make the recruiting process more efficient. By having a more accurate idea of start dates, recruiters will be able to manage their time and be able to interview more or less candidates, fill other positions while waiting for the ideal candidates, or be able to pursue other hiring venues.

Metrics in a Nutshell

Recruiting metrics can help make HR departments more efficient. It is important to not only gather data using metrics, it is also important to devise a plan using the data to create a better recruitment system. This may mean monitoring recruitment spending, time between hiring and actual start dates, and implementing changes based on hiring managers evaluations.

All in all, recruitment metrics were developed to help make the recruitment process as efficient as possible and enable companies to hire qualified candidates that could make a difference within a company. 

*All calculations found on www.staffing.org