Metrics for Recruitment Process
According to ISO 9001 all activities within the QMS of any organization needs to be managed by applying the “Process Approach”. Simply put Process Approach means defining appropriate metrics for measuring the effectiveness of activities and improving it on a continuous basis by analyzing the data thus making it more and more efficient.
The recruitment department of an organisation is tasked with recruiting the primary asset of the company – its workforce. It follows that for the recruitment department to be efficient and effective, it should put in place proper performance metrics. Having a cost- and time-effective recruitment and selection process in place can benefit an organisation in several ways – in terms of employee engagement, sustained job performance, employee retention and low turnover among others.
While few firms would dispute the importance of recruitment metrics, not all companies have well defined metrics or measurement processes actually in place.
First step therefore is to clearly define the metrics for the recruitment process. The metrics determined should not only provide the current operations status, but also help the organisation in making future predictions. This becomes more imperative in human capital intensive businesses where the organisation revenue is dependent upon the fulfillment of the positions.
Further recruiting metrics should be aligned with business needs and objectives. The metrics then are optimized over time to increase efficiency. Metrics enable fact-based decision making by collecting, collating and analysing data.
The common recruitment metrics are:
Position Fulfillment Capability: What this number indicates is the number of open positions for which candidates – both internal and external candidates - were hired against the open positions during a financial year. It includes also those who may have accepted the position in the current financial year, but would be joining in the following year.
This metric helps determine the organisation’s capability to fulfill the open positions.
Cost-per-Hire: How much is being spent to get a new employee on board? Which types of positions cost more to fill? In which specific areas in the recruitment process can you cut costs? This metric can help answer these questions. Cost-per-hire represents the costs associated with recruiting new hires, and these can be categorised under four heads: Sourcing, Screening, Interviewing, and Hiring.
Sourcing: Costs incurred on job advertising, online job posting boards, agency fees (if any outside recruitment agency is hired), and employee referral fee.
Screening: Costs associated with time spent by recruiters to screen through resumes received per job and the number of preliminary phone interviews conducted.
Interview: Time spent in scheduling interviews, the number of interviews conducted, the time spent in the actual interviews, the average cost of the interviewers’ time, etc.
Hiring: Time spent on follow-ups with selected candidates, cost of background checks, signing bonus paid, and so on.
All of these expenses may not be incurred for every new hire. Therefore it’s important to determine which recruitment costs to track and then track them consistently for all hires. One very important point to note while calculating this metric is to include above cost even for reneged candidates. Even though the candidate did not join but all the recruitment effort was made in getting the candidate on board.
However, it would be unfair, even wrong, to evaluate recruiters’ performance from this metric alone because it does not account for quality of hire. And the quality of hire is one metric that matters a lot.
Time-to-Fill: Time-to-fill metric is a fair indicator for hiring efficiency. It represents the number of days from when the job requisition was opened until the offer was accepted by the candidate. It is a popular metric because of the loss of revenue associated with positions that remain unfilled.
Again it would be totally off the mark to use Time-to-fill as the sole metric to evaluate the performance of recruiters. And that is because a variety of factors could come into play to delay the hiring of a new employee: hiring managers may well be taking their own sweet time to interview and make decisions thereby pushing up the time-to-fill metric, the pay and benefits package offered may not be competitive enough to attract candidates as readily as that of firms who offer “juicier” packages, there may be conditions in the employment market that the recruiter has no control over, and so on.
Also, the emphasis in this metric is on ‘speed’ of hiring and not quality of hiring. If time-to-fill is set as the only consideration to evaluate recruiters’ performance, recruiters may focus only on ‘easily gettable’ candidates – the low hanging fruits as it were – in order to fill positions faster without paying any consideration to the quality of hire. So, when it comes to evaluating recruiter performance it is advisable to track new-hire quality along with time-to-hire and cost-per-hire.
Recruitment Ratios: These ratios are the ones that help in determining the quality of hire. Some of the recruitment ratios that are to be tracked are Interview vs Submittals, Cleared vs Interviewed, Offered vs Cleared, and Offered vs Interviewed. Tracking these ratios per recruiter will help determine which recruiter is able to provide the quality hire.
Based on these ratio metrics, we can also build prediction models for fulfillment of future positions such as how many submittals are required per position or how many interviews are to be conducted to clear how many candidates, etc.
The quality of hires can further be evaluated by conducting fixed interval surveys with the hiring manager regarding the performance of the employee hired against the job description based on which the employee was hired.
Annual Turnover Rate: Employee turnover refers to the rate at which employees leave jobs in a company and are replaced by new hires.
Simply put, it is the ratio of the number of employees that leave a company over a period of time compared with the average number of total employees over the same period. Obviously, the more loyal employees are the lower will be turnover rate.
Turnover can be on account of a variety of reasons but what is critical in today’s context is the rate of voluntary separations. One need to track that for sure. In fact many times the cost of hiring and training a new hire could be more than the cost of retaining the separating employee by offering them the salary desired by them.
To restate the point, something which is not measured cannot be controlled. Since quantitative metrics are easier to observe, track, calculate and analyse, companies would do well to make a beginning with them.
Time-to-Fill: Time-to-fill metric is a fair indicator for hiring efficiency. It represents the number of days from when the job requisition was opened until the offer was accepted by the candidate. It is a popular metric because of the loss of revenue associated with positions that remain unfilled.
Again it would be totally off the mark to use Time-to-fill as the sole metric to evaluate the performance of recruiters. And that is because a variety of factors could come into play to delay the hiring of a new employee: hiring managers may well be taking their own sweet time to interview and make decisions thereby pushing up the time-to-fill metric, the pay and benefits package offered may not be competitive enough to attract candidates as readily as that of firms who offer “juicier” packages, there may be conditions in the employment market that the recruiter has no control over, and so on.
Also, the emphasis in this metric is on ‘speed’ of hiring and not quality of hiring. If time-to-fill is set as the only consideration to evaluate recruiters’ performance, recruiters may focus only on ‘easily gettable’ candidates – the low hanging fruits as it were – in order to fill positions faster without paying any consideration to the quality of hire. So, when it comes to evaluating recruiter performance it is advisable to track new-hire quality along with time-to-hire and cost-per-hire.
Recruitment Ratios: These ratios are the ones that help in determining the quality of hire. Some of the recruitment ratios that are to be tracked are Interview vs Submittals, Cleared vs Interviewed, Offered vs Cleared, and Offered vs Interviewed. Tracking these ratios per recruiter will help determine which recruiter is able to provide the quality hire.
Based on these ratio metrics, we can also build prediction models for fulfillment of future positions such as how many submittals are required per position or how many interviews are to be conducted to clear how many candidates, etc.
The quality of hires can further be evaluated by conducting fixed interval surveys with the hiring manager regarding the performance of the employee hired against the job description based on which the employee was hired.
Annual Turnover Rate: Employee turnover refers to the rate at which employees leave jobs in a company and are replaced by new hires.
Simply put, it is the ratio of the number of employees that leave a company over a period of time compared with the average number of total employees over the same period. Obviously, the more loyal employees are the lower will be turnover rate.
Turnover can be on account of a variety of reasons but what is critical in today’s context is the rate of voluntary separations. One need to track that for sure. In fact many times the cost of hiring and training a new hire could be more than the cost of retaining the separating employee by offering them the salary desired by them.
To restate the point, something which is not measured cannot be controlled. Since quantitative metrics are easier to observe, track, calculate and analyse, companies would do well to make a beginning with them.
(Condensed from the article published in DH dated 30.5.2012 by Ruhi Sharma, VP–BPE, Arctern -- A Subsidiary of Volt Information Sciences, Inc)
