By: Don Kim
My statistics professor once told me that what can not be measured can not be improved. My philosophy professor once told me that if you don’t know where you came from, you can’t know where you are going. Combining these two statements, I conclude that the best way to reach your end-goal is to reflect upon past performance and look for areas of improvement. For the enterprising recruiter who wants to double his success rate, this means using metrics.
A metric is any statistic that is designed to improve recruiter performance by increasing candidate quality and client satisfaction. A good metric combines both quantitative and qualitative data to tell a story of trends over time. Good metrics allow us to see how a particular recruiting initiative influenced the quality of a particular hire, and how we can tweak that particular initiative to improve hire quality. Metrics also give you insight into the per-dollar impact of your funds, which helps to create sourcing budgets.
To help you with your recruiting goals and initiatives, we at HRMDirect have compiled a guide to the basics of recruiting metrics. To start, you will want to choose exactly what you want to measure.
1. Cost per Hire (CPH)
Cost per hire is the ratio of the costs of hiring candidates and the number of candidates hired in a specific period of time. When calculating CPH, it is important to keep in mind just how many costs are actually associated with the recruiting of a specific candidate. Besides the typical costs of advertising, staff salaries, and assessments, remember factors such as travel expenses, sign-on bonuses, and office space/rent costs for a dedicated recruiting department.
Take the time to create a comprehensive list of all the costs associated with the final hire of a candidate. This will give you the most accurate metric to allow you to make an educated decision.
2. Recruiting Cost Ratio (RCR)
RCR is simply the ratio of the costs of hiring candidates and the combined first year compensation of all candidates hired during a specific period of time. Similar to CPH, the RCR gives recruiters a better idea of how their time and money actually translates into a candidate’s perceived value to the organization. In this case, first-year compensation is the sum total of a candidate’s accepted salary, benefits, perks and bonuses for the first 12 months of employment.
3. Time to Fill
Time to fill is the number of days that pass from when a job requisition is first opened to when the position is actually filled. This is easiest metric to track. All it requires is that you keep accurate time records. The data you receive from this metric allows you to advise your clients on how much work they should allocate to other employees depending on the average time it takes to fill a particular position.
4. Quality of Hire
While CPH, RCR and Time to Fill look at the time and money efficiency of your recruiting efforts, quality of hire evaluates how well a candidate actually fits into the company. We recommend surveying hiring managers and supervisors on a candidate’s time to productivity and overall satisfaction with the candidate. Whichever method you decide on, make sure that it allows the client company to give both subjective and objective feedback on a client’s performance. Numbers are one thing, but your ultimate goal is client satisfaction.
Using the above four metrics should allow you to make better decisions on how you formulate your recruiting strategy and where you allocate your resources. However, if your data collection methods aren’t on par, then your metrics will be meaningless. SHRM‘s report on recruiting metrics recommends that your data collection methods include:
1. A representative data set
The data you collect should actually correlate to the recruiting efforts that you want to measure. This means recording accurate costs and timelines.
2. Transparent source of data
Anyone who looks at your metrics data should know exactly where it came from and be able to access it easily.
3. Minimization of data errors
Avoid simple errors such as recording a negative cost where credit didn’t happen or omitting key costs will skew your numbers.
The simplest and most cost efficient way of practicing good data collection methods would be to subscribe to an online Applicant Tracking System (ATS). A competent ATS provider stores your information in a secure database that already sorts data by time and different cost categories. This is not to say that you couldn’t create your own tracking system using an online spreadsheet system. However, wouldn’t your time and effort be better served to reaching your recruiting goals than tinkering around on Google Spreadsheets?
If you are serious about your recruiting and HR, then you will listen to us and start investing in creating some quality metrics. Good luck!