What are recruitment KPIs?
It’s possible that your company has the greatest recruiting approach, surpassing all of your rivals. But if you don’t track and measure your hiring efforts and make sure to detect and address issues on a regular basis, your plan will become ineffective. Throughout the hiring process and beyond, the appropriate recruitment KPIs are a priceless instrument that will continuously simplify and improve your strategy. So how can you determine which KPIs your company should be monitoring?
We’ll go over what recruitment KPIs are, which ones should be measured, and how to choose the best KPIs for your company in this guide.
Key performance indicators, or KPIs, are strategic measurements that are linked to the short- and long-term objectives of a business. They support managers, staff members, and company executives in understanding where they are now, what needs to be improved, and the precise actions to take to get there.
Employers use recruitment key performance indicators (KPIs) to track particular actions and outcomes during the hiring process. To make them simple to grasp in Human Resources and throughout the company, they are frequently presented as single numbers, percentages, or ratios. KPIs related to recruiting, such as first-year turnover rate, offer acceptance rate, and cost per hiring, can provide important insights.
What distinguishes metrics from KPIs in recruitment?
KPIs include metrics as well, but they are the most important ones for your business and need to be directly linked to your goals and objectives. Not all metrics are KPIs, even if all KPIs are metrics as well. One example of a recruiting metric would be the quantity of applicants for a job at your company. Comparatively, the number of eligible applicants who pass the first screening would be a key performance indicator.
Recruitment KPIs like this one make sure the hiring process benefits the company and the hiring team gets a good return on investment.
Typical KPIs for recruitment
Let’s examine a few of the most widely used recruiting KPIs. There is no set order in which they are listed.
- The cost of each hire
The overall cost to fill a position within an organization is known as the cost per hire. This ought to cover all expenses, including recruiting costs, the amount of time the team works on it, the expense of new equipment and employee training, posting the position on employment sites, and referral fees.
This KPI helps you better understand your overall recruitment budget, which makes it useful. Additionally, it lets you focus on staff retention programs when necessary and cut expenses when possible. This number, as well as every other KPI on this list, can be compared to the industry average or your rivals. You’ll be able to assess your performance more accurately and identify areas for growth with this method.
- Source quality
Does your company source candidates from Linkedin, employment sites, and recruitment agencies? If yes, which source is producing the most promising prospects for you? Do you regularly receive low-quality prospects from any sources?
Assessing source quality, sometimes referred to as sourcing channel efficiency, can assist you in determining how much money you’re spending and the caliber of applicants you find through various channels. This allows you to concentrate more on what is working for you and stop wasting money on sources that aren’t. From here, you may construct a dependable pipeline that strengthens your hiring procedure as a whole.
- The number of eligible applicants
Establishing what a competent applicant for a certain position looks like is the first step in using this KPI. To find out if the applicants that make it through the screening procedure are qualified, you may ask hiring managers to respond to a survey.
As an alternative, you may consider how many candidates hiring managers wished to interview after they passed the first screening. Additional measures, such the interview-to-hire ratio, will help you determine the level of qualification of candidates for particular roles.
This KPI gives you important information about how well your sourcing initiatives are drawing in and advancing eligible applicants through your hiring process. A shortage of suitable applicants may indicate inadequate quality of sources, inaccurate or deceptive job postings, or a subpar screening procedure.
- Hire quality
The goal of the recruitment process is to identify the best (and highest performing) applicant for the position. Assessing the quality of hires reveals how well your team fills positions with qualified applicants. “Quality” is typically unique to your company and the objectives that you are trying to achieve. That’s why it’s critical to understand what this entails for new staff.
A number of characteristics, such as how soon the individual achieves full productivity and fulfilling job performance and how well they integrate into the organization’s culture, could be evaluated in order to measure this KPI. A hiring manager satisfaction survey can also be used to assess the level of satisfaction that line managers have with their recent hires.
All of these are hard to foresee before an applicant starts work. But over time, you’ll be able to spot trends between high- and low-quality hires. These insights help you determine whether a potential employee will fit in well with your business or not.
- Time to hire
The time to hire is the number of days from when an applicant enters the recruitment funnel until they sign an offer to work with the company in question.
It is recommended to measure this KPI independently for every department or category of position. It is crucial for gauging the effectiveness of your present hiring procedure. By using the time to recruit metric, you may expedite the process and find any bottlenecks. This is important since the top applicants are frequently hired in a matter of weeks. You must therefore take all reasonable steps to ensure that you do not pass up such candidates. In the long run, this will help you lower your total recruitment expenditures and improve the quality of hires you make.
Monitoring this KPI will be helpful if you need to plan ahead or adhere to a deadline. Knowing how long it typically takes your company to hire new employees may help you plan ahead when adding more people to the team or starting a new project.
- Rate of Offer Acceptance
After you have recruited, screened, and interviewed competent applicants and offered them a job, you want them to take it. Rejecting an offer can happen for a number of reasons, such as a competitor offering more money or benefits, something went wrong during the interview process, or there might be a reputational problem with your business.
To determine whether your wages are competitive and to make any adjustments, be sure to monitor the pay discussions you have with prospects. To increase your offer acceptance rate, track other key performance indicators (KPIs) like the time to employ.
The following formula can be used to get the offer acceptance rate: # of accepted offers / total # of offers.
- Net promoter score (NPS) of candidates
The candidate net promoter score (NPS) measures a candidate’s satisfaction with your hiring process and the likelihood that they will suggest your business to others. This shows how happy candidates are with the way you hire.
You can use a survey to gauge this KPI by asking all applicants—hired or not—how likely, on a scale of 1 to 10, they are to recommend your company. Anyone who scores 1-6 on this scale is considered a detractor. Reactions of 7 and 8 should be disregarded; anyone scoring a 9 or 10 is a promoter. Your Net Promoter Score (NPS) can be calculated by subtracting the percentage of critics from the promoters. A score of more than 50% is regarded as exceptional.
By gradually improving your organization’s reputation and candidate experience, a high NPS will provide you an advantage over your rivals and solidify your position as the best place to work in your sector.
- The rate of first-year turnover
Your business will spend more on recruitment the higher your turnover rate is. It’s crucial that the money you spend on the hiring process doesn’t go to waste. Furthermore, a high turnover rate suggests that workers may not be content in their current positions, may not fit in with the company’s culture, or may have moved on to a more suitable job elsewhere.
Finding out how many employees left your company before they had a full year there is a smart way to estimate your first-year turnover rate. It is imperative that you assess your company culture and the entire onboarding and hiring process if this number is high.
You’ll need to make adjustments and get input from both current and previous workers. This will lessen your recruitment expenses, increase employee satisfaction and productivity, and decrease turnover while increasing retention rate.
- Adverse impact
Measuring adverse impact is the last KPI we would like to discuss. You can use this measure to determine if your hiring procedure discriminates against members of a protected class. A bias is evident if less than 80% of candidates belong to the protected class in question.
Separate the application success rate into two groups in order to calculate this KPI. Your protected class is Group A, and your non-protected class is Group B. To get your adverse impact score, divide the Group A value by the Group B figure. This figure will enable you to determine whether your hiring procedure needs to be more inclusive. If so, you can proceed with taking the required actions to make this happen.
How to choose your KPIs for recruiting
Here are a few simple things you can do right now to help your organization create and monitor the appropriate recruitment KPIs.
1. Think about your company’s objectives
To make sure they are in line with internal business objectives, various businesses will need to select different KPIs. For instance, keeping an eye on cost per hire and making adjustments would be essential if one of the company’s goals is to cut expenses over the course of the ensuing year. Choose KPIs that, if at all feasible, show how the HR department works to improve the bottom line by bringing in top people, reducing costs, and producing a strong return on investment.
Remember that KPIs will change based on your market position, size, and industry. It’s also critical to remember that when your company expands and changes, these KPIs may also shift.
2. Choose SMART KPIs
A successful KPI is specific, measurable, attainable, relevant, and time-bound (SMART). Let’s take an example where you use the first-year turnover rate as your KPI. Clearly stating your goals is the first stage in the process. Maybe you’re attempting to lower the organization’s total turnover rate, The next step is to decide how you’ll know when your goal has been accomplished. One such goal could be to lower the first-year turnover rate by 15%.
After you’ve established your goal, it’s necessary to determine its likelihood of success and if it is attainable. If not, choose a new target that has a higher chance of success and is more reasonable.
Set a deadline for when you want to accomplish your goal after you’re satisfied with it and know it can be accomplished. For instance, “Within the next 12 months, we want to lower our first-year turnover rate by 15%.” This key performance indicator is SMART.
3. Keep an eye on your KPIs and act
The final step is to set up systems and procedures to efficiently measure and report your SMART KPIs and take appropriate action based on the results.
Let’s say you decide to include source quality in your KPIs. You find that hiring companies are delivering you low-quality applicants on a regular basis. If so, you could think about cutting back on or stopping your advertising work with these companies. However, if you find that social networking platforms like Linkedin consistently attract excellent applicants for you, it might be time to step up your efforts there.
Recruitment KPIs allow you to measure success
Choosing the appropriate recruitment KPIs for your company, keeping an eye on them, and adjusting as necessary are essential steps in making sure you continuously assess and improve your recruitment efforts. Make informed decisions and showcase your team’s business acumen by demonstrating how your plans and initiatives directly support the organization’s overall goals.
