No matter what team you’re on, you’ve probably been asked to create and share the key performance indicators that measure your efficacy. There are lots of metrics that can be labeled KPIs and provide insight into parts of your process, but great KPIs will:
Last year I worked with Greenhouse’s VP of people to develop the KPIs that would tell the story about the Greenhouse recruiting team — our process, our wins, and our opportunities to improve. We boiled our work down to a list of five KPIs that, when taken together, provide an insightful picture of how optimized the recruiting team is (or isn’t!). Another advantage of this set of KPIs is that I can easily report on them quarter over quarter to give the executive team a critical picture of my team’s impact.
Read on to learn about the process we used to decide on our KPIs as well as some lessons we learned along the way.
The first — and sometimes most difficult — step is to ask yourself about the impact you want these KPIs to have, and which audience they’re addressing.
For example, when we were defining our KPIs, we wanted to make sure that they would both provide transparency into our process (both for recruiters and other folks throughout the organization), and would help us improve that process.
Being mindful of both of those goals actually shaped our outcome quite a bit. For example, a report that Finance might want to see is the variance between the compensation projected when a role is first opened and the offer a candidate ultimately signs. This report would fail our goals test because although we act as thoughtful partners when deciding on a compensation offer with our hiring managers, Greenhouse VPs ultimately control their department’s budget and how much is available to spend on any given hire. So that metric wouldn’t provide the recruiting team with much actionable data about our own process. It’s a report I run for Finance periodically, but not a team KPI.
Let’s start with a definition of what KPIs are:
Key: focus on the most important metrics
Performance-related: illustrate results, not activity
Indicators: look for signals and headlines (they don’t need to tell the whole story!)
So how does this framework impact the KPIs you select? Each piece acts as a guiding force to ensure that you don’t just settle on any old number or report you could pull. Applying each of these as the benchmark of a successful KPI will help you land on the most strategic metrics.
I’ll define the term “Key” in a bit more detail later, but as you think about each report or piece of data you could use, make sure you are always asking yourself, “Is this measuring an output of our process rather than the inputs or activity? If not, how can we follow this activity to its end result and measure that instead?”
For example, some of our customers will ask for a report of all recent applications. While that’s interesting information, what they are really trying to understand is how full their top of funnel is and whether they have enough candidates to start moving through the pipeline. However, applications are noisy. More isn’t always better, since application quality can vary quite a bit.
What you’re really trying to understand is “How qualified and full is my pipeline for this job?” That question is better answered by asking yourself when in the interview process you typically know a candidate is qualified, and counting how many of those you have in each of your pipelines. At Greenhouse, we measure how many candidates make it out of application review and to the second milestone of an application process: a phone screen with the recruiter. We call these qualified candidates, and it is our top of funnel KPI.
Now, rather than diving into a list of reports you’ve pulled before, or numbers you’ve been asked to produce, let’s take a step back.
The best way I’ve found to make sure you land on the right KPIs is to start with the questions that, when answered, help you understand your process. Maybe they are questions you get from stakeholders around the business, or maybe they are the questions that tend to pop into your mind on the commute home. The train of thought would go something like this: “When my CEO asks me for a report that shows candidate start dates and the dates that jobs were opened, what is he trying to figure out? Oh! He wants to know how fast the team is moving.”
For us, the right way to communicate how quickly we were moving was hiring speed, or Days to Offer — this measures how many days pass between when the candidate we ultimately hired, applied, and when they signed their offer. This KPI accomplishes a few things:1) it lets execs and hiring managers get a feeling for how quickly we’re moving, 2) it can be compared over time to see trends, and 3) it’s actionable because it only focuses on the core part of the recruiting process, so it’s data that we have full control over improving.
After cycling through steps 1–3 a few times, I had a list of 9 or 10 metrics that I thought were at least performance-related indicators. They gave us actionable insight into the performance of the recruiting team. However, my VP pushed me pretty hard to make sure I had fully embraced the Key part of the equation (the “K” portion of “KPI”). She insightfully helped me understand that there is a marketing component to KPIs — they need to be sticky and brief enough to be able to recall easily. Anyone on the recruiting team should be able to name the five KPIs that govern their team’s success.
Similarly, we wanted the exec team to be able to name our KPIs (after seeing them presented a handful of times). Marketing and sales both have metrics that are omnipresent like that, and she thought it was strategically important that ours were similarly memorable.
So, I edited. I took out a KPI or two. And then I did it again. In the end, I had five KPIs that still fully encompassed our process, and were truly just the key numbers to report on. And I’m really glad I did — it makes it much easier for me to do my monthly analysis, and it makes the quarterly exec report much more readable (and, thereby, impactful!).
Defining your KPIs will take some effort. But, don’t let that deter you. You’ll end with a set of goals that your team can align around and use to understand their own efforts, some clear points you can report to management and executives, and perhaps most importantly, the ability to fully see the impact of your team’s work.
Following the steps I’ve outlined will also help you stay on track. Your team will be more likely to embrace each KPI because improving them is fully within the team’s scope of influence. This will help everyone feel empowered to address areas of improvement — and celebrate your wins!