The Most Important Metrics in Recruiting
Very few companies appreciate the power of statistics. According to a study, less than 10% of HR departments in Germany use Key Performance Indicators (KPIs) to measure the success of their recruiting strategies. Yet, Talent Acquisition specialists can gain many important insights from recruiting data. Companies that check the numbers and address KPIs correctly gain qualified professionals and secure a competitive advantage in recruitment in the long term.
What Are the Most Important KPIs in Recruiting?
HR expert Robindro Ullah found that many HR departments rule and control the recruiting process without implementing KPIs. “Decent controlling measures save on budget and provide insights to outline sensible recruiting strategies,” the expert continues. KPIs play an essential role in a successful recruiting process.
The rejection rate is the percentage of candidates who do not meet the job requirements and therefore don’t enter the recruiting pipeline. This metric provides information on how well the job advertisement hit the target group. If the rejection rate is very high, companies should consider enhancing their job descriptions by making the job requirements more accurate and clear, or relying on different recruiting channels for promotion. A best-practice example is the Google billboard, which said “only those who solve this puzzle can apply”. With this creative solution, unqualified applications are cut out from the start.
This metric gauges the satisfaction of applicants throughout the entire application process. Companies often refer to this as the candidate experience. This definition includes the whole applicants’ experience of the recruiting process: from applying for a job to the onboarding stage. Unfortunately, about every second candidate does not receive feedback on their application. This is the result of a labour market study carried out by Jobcloud in Switzerland, and the situation is similar in Germany and other major markets around the world. The lack of feedback can negatively reflect on the company’s brand image.
Additionally, feedback that is sent out too late often leads to talented candidates already being hired by a competitor. The best way to gauge candidate experience is to send out a questionnaire to candidates after making the hiring decision. Also, consulting your company’s reviews on rating platforms such as Glassdoor or kununu can give you an idea of the quality of your candidate experience.
This key figure measures how effective your recruiting channels are. To help you assess the recruiting process, software that keeps track of how often candidates click on an advertisement is useful. It also provides information on how often potential candidates click on the “Apply” button. If there is a big gap in the number of clicks, the job ad may not be worded appealingly or aimed at the correct target group.
Cost of Vacancy
COV refers to the hiring costs necessary to fulfil a vacant position. Based on a gross salary of 1,650 euros, a company incurs around 19,000 euros to fill this vacancy. This is the finding of a study carried out by CISS. In this number, CISS finds the costs to fulfil a vacant position to be 3,850 euros. The rest results from paying for extra working hours to the staff covering major workload and eventual double staffing. Training costs are also included in the calculation. There is another formula that calculates the COV based on how much money employees would have earned daily for the duration of the application process.
The KPI cost-per-hire measures the costs of filling a new position. The calculation includes both recruitment costs and onboarding costs. In the CISS study, the total costs resulted in just under €19,000.
Early Turnover Rate
This metric tracks hires who resigned in the period that goes from onboarding to the first six months of employment. A high turnover rate at this stage indicates some internal problems in the company. Often the onboarding phase is not well structured and unimportant, and there is no contact person or precise work instructions. This can lead to dissatisfaction and early dismissal. Another reason for employees jumping ship could be when their job tasks differ from those described in the job ad. Companies who promise things that they cannot deliver lose employees at the very beginning.
Hiring Manager Satisfaction
This metric gauges how much Talent Acquisition specialists are satisfied with the application process. Being the experts in the topic, they best know whether a referral process functions well or not. They are also the right people to ask for suggestions on its improvement.
Offer Acceptance Rate
This rate refers to the percentage of candidates who accept a job offer. A low acceptance rate indicates that the candidate journey hasn’t been well taken care of. As a consequence, candidates may leave with a negative opinion of the company. In these cases, it is worthwhile to survey the candidates after the application process to find out which stages of the candidate journey must be improved.
This metric regards the percentage of job offers in relation to suitable candidates. The higher the number of applications that the company receives, the better. An increased offer rate speaks for itself in terms of solid employer attractiveness.
The quality of new employees is measured by how well they fit the advertised position. For example, you could measure the correlation between the quality of hires and the recruiting channels they came from. This will help you to determine which channel brings the best talent into the company. Employee referral programs have proven to be particularly efficient when it comes to bringing in highly talented professionals. With these programs, company’s current employees refer their friends and acquaintances for vacancies that they deem to be suitable. Studies have proven that referred candidates are a good cultural fit, they share the company’s mission and values and stay longer with the company. This channel proves itself to be above average in terms of quality of hire.
Would you like to implement a digital employee referral program? We would be happy to introduce to you the Firstbird platform’s functions in a free product demo. Book an appointment now.
This KPI refers to the period between the first job posting and the final hiring decision. If the hiring process is longer than desired, companies can undertake some measures to streamline it. The shorter the application process, the lower the hiring costs: but it is not the only advantage. A more efficient hiring process results in a quicker feedback response, leading to a more pleasant candidate journey. In turn, candidates who didn’t make it to the final stage would be happy to stay in your talent pool and apply again when the next vacancies arise.
Time to interview measures the time elapsing between the first job advertisement and the first interview. The shorter, the better. Especially in this era of home working that Corona brought up, companies have been forced to rethink remote recruiting. Recruiting interviews taking place online has indeed saved time and money on long journeys. Another tip to speed up the interview process would be to include well-specified job requirements in the job description to attract more suitable candidates.
Here Is How To Establish Your Most Important KPIs
Implementing recruiting measures is not worth it if companies don’t check whether they are working. That is why key performance indicators are so crucial in recruiting. A lack of know-how and technology are usually the most important reasons companies have not yet introduced reporting on data in recruiting, as a survey conducted by Personalwirtschaft shows. Around 83% of respondents stated that a lack of know-how is mainly why companies struggle to identify their KPIs. 85% of those surveyed saw technology as the reason. So, what is the best way for companies to introduce KPIs? What might sound complicated is easily doable: companies can gain an overview of their recruitment data in just a few clicks with the right software.
The industry specialist Firstbird provides companies with referral software that tracks, monitors and analyses referral data. Big international enterprises like Generali, Deloitte and McDonald’s have implemented Firstbird’s software successfully. Deloitte Belgium, for example, has increased its hires up to 18% through referrals with Firstbird.
“I am convinced that nothing we do is more important than hiring and developing people. At the end of the day, you bet on people, not on strategies,” said Lawrence Bossidy, retired CEO of now Honeywell company. With software like Firstbird, it is easy for companies to analyse their recruiting metrics and thereby identify the best measures to attract and retain qualified talent.