Let the Numbers Help You: Meaningful Metrics for Today

Now is the crunch time for many recruiters. This is when someone in management asks, “What have you guys contributed to our company?” or “Why does it cost so much to find just a few engineers?” And, of course, you try and show how many people you have hired and how hard you have all worked over the past year. You may haul out cost-per-hire numbers and time-to-start figures and all sorts of other stats. But others of you will not have any of this data and sheepishly have to keep quiet because you just don’t really know what you’ve contributed. Recruiters, like so many others on the support side of business, generally don’t have good statistics about what they do, nor do they have a plan to communicate to management just what they have contributed. It doesn’t have to be that way. Nick Burkholder, a long time recruiter and observer of the staffing world, along with many of the familiar names in great recruiting like Gerry Crispin, Gary Cluff, John Sullivan, and Wendell Williams tackled the issue of measuring recruiting several months ago. Their goal was to develop a set of metrics that could accurately assess the efficiency and the effectiveness of any organizations’ recruiting. To do this, they created a non-profit organization, Staffing.org, to communicate the formulas and explanations and to collect data so that we can all compare our successes to others. I urge you to check them out at the website above. I am also on their advisory board, and have presented these concepts to numerous clients around the world. Most immediately understand how powerful they are and how simple they are to gather. The average recruiting department can probably put together a decent set of these measures in a fiscal quarter and can begin almost at once to change the way they think about tracking progress. Metrics need to meet several criteria:

They need to be simple enough that anyone can understand them and believe them on face value. If they are hard to explain, they will not be useful.

They have to lead to improvements or suggest changes that will make what you do more effective. If they cause you to be less effective, as cost-per-hire often does, then they are not the kinds of numbers you should be focused on.
The data needs to be easily gathered and reported. If you need an accountant or statistician to gather and interpret the numbers, then they are too complex.

The first thing you will notice about the statistics Staffing.org proposes is that they do not include things like cost per hire or time to start as we normally report it, or even the overall number recruited. There are only four major metrics that are proposed ? yet these will give you and management a sound view of how well you are performing. The first metric proposed is called the staffing cost ratio and it is easily calculated. Simply divide the total expenses of your recruiting efforts (overhead, salaries, advertising, bonuses, job board costs, the costs of visa processing, background checks and etc.) by the total compensation of everyone you recruited over the same period. This way you can see how efficiently you have used money to bring in people in general. And, of course, you can break this down by profession, position type, recruiter and so forth to get a more detailed picture of efficiency. This is far more effective than just reporting cost per hire. When cost per hire gets mentioned, there are always lively discussions about its merits. On the one hand, it does show us how much we spend to get someone in the door. But that’s about all it tells us. It doesn’t really tell us if spending that amount was good or bad. After all, what is good or bad in terms of the cost to hire someone? Maybe it costs a lot to hire a Michael Jordan, but we would probably all agree that he is worth that cost. When we talk about cost per hire, we have to ask what value that figure has to our organization. I know of companies that are so fixated on cost per hire that they sacrifice quality and speed just to keep costs down. Another way to look at cost per hire is to ask yourself how much business is lost if a position isn’t filled quickly. Then compare that to the cost to hire someone and, in most cases, you will see how small the cost is compared to the cost of lost business. For example, if a salesperson in your firm averages $100,000 of sales revenue per month, every month that position is not filled means your firm LOSES a potential $100,000! What is a $5,000 or even a $10,000 cost per hire compared to that? If I were the sales manager or CEO, I’d say spend whatever it takes but get that position filled ASAP! Cost per hire may be a useful metric for you to use internally among your recruiting team, but it is not a wise metric to report to senior management. It doesn’t help you in any way, and may actually make your job a lot more difficult than it should be. The second metric staffing.org proposes is time-to-fill (not start) measured against whatever time you contracted to fill the position. This means you negotiate a time-to-fill agreement with the hiring manager and you measure yourself against how well you perform to that agreement. Reporting time-to-fill without an agreed to target goal is, once again, not meaningful. Management has no idea what a good or bad time-to-fill might be. But, by negotiating that up front you give yourself a goal and make the figure very meaningful to everyone. The third metric is customer satisfaction ? again compared to whatever was agreed upon about your performance up front. Rather than send out a generic survey, this customer satisfaction survey requires a process at the beginning of the hiring cycle to indicate what things are important to the hiring manager. Once those are established, it is a simple matter to do a post-hire survey to see whether or not you did what you agreed to do and how well you did it. This puts the manager in the center of the process and gives you, as a recruiter, something tangible to work toward rather than vague ideas of what makes a manager happy. And the final metrics is a measure of new hire quality. Again, this requires you to discuss with the hiring manager the standards that a new hire should meet during her first 90-180 days on the job. These standards are decided before the hiring process starts and are the basis for selection. After the person starts, they are assessed against these standards and you will get useful feedback on how well both your assessment was of the candidate as well as how good the hiring manager’s was. Taken together these four metrics are a powerful way to show management you are business focused and are a strategic partner ? not just a flunky who takes orders and gets beat up for not meeting unclear standards. Check out the web site and let all of us know what you think of these metrics. Even better, start using them! <*SPONSORMESSAGE*>