*A special guest post by Angela Cripps from Connemara UK
To make your rec cycle more effective, data-driven decisions will lead the way. We’ve put together a list of the most significant recruitment KPIs and how to track them to improve your business’ bottom line.
By keeping an eye on these metrics, you can easily gauge your agency's recruitment performance, find areas for improvement, and make informed decisions that will drive operations forward.
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What are recruitment KPIs?
Recruitment KPIs are key metrics that help recruiters track progress and identify areas for improvement. KPIs can be used to measure the performance of individuals and teams.
With an overview of the recruitment process’ effectiveness, agencies can adapt with better strategies.
The 5 key recruitment KPIs
Choosing the right metrics to measure is critical. We’ve put together the 5 top KPIs needed for a recruitment agency:
1. Quality of hire
Quality of hire, also known as QoH, is a metric used to measure a candidate’s value to a client. It’s calculated in a number of ways. Examples might be how many tasks an individual completes on a daily/monthly basis, or how much their work performance improves over time.
2. Cost per hire
Cost per hire (CPH) is the total amount spent to place a candidate. As obvious as it might seem, CPH can take some time to measure when considering a large number of new hires.
CPH is usually calculated based on both internal and external costs. “Internal” is a sum of the candidate’s salary and learning & development costs. “External” are expenses necessary for the recruitment process. These might be payments for job board posting, aptitude testing, or other services.
3. Recruiting yield ratio
Recruiting yield ratio measures the percentage of candidates that moved through each step of your pipeline. By looking where candidates moved forward and where they dropped off, rec agencies can uncover gaps and opportunities in their staffing process.
4. Time to hire
Time to hire refers to the number of days it took for a role to be filled. In order to keep this KPI as low as possible, recruiters might invest in job postings, actively assist candidates, or find ways to reduce paperwork.
5. Offer acceptance rate
This will be one of your most critical recruitment metrics. This KPI tracks the percentage of candidates that go through with accepting a job offer. It’s the closest thing to absolute proof of your recruiting process’ success.
Recruitment KPIs for managers
All managers need to understand which metrics are important to help out their team, and which ones to include in reports to the CEO.
Recruiting is expensive in time and resources. It’s important to have a list of metrics that point to a positive return on investment (ROI).
Managers use KPIs for two reasons: encouraging team performance, and understanding the recruitment market as a whole. Once you understand which metrics lead to better business, you can plan out solid strategies for teams and communicate with leaders.
All KPIs are valuable in tracking and evaluating recruitment performance. But some are more important to managers, as they provide valuable insight into the efficiency and effectiveness of recruitment activities.
Top metrics from a manager's perspective include:
- Percentage of open positions filled
- Time to hire
- Cost per hire
- Quality of hire
Recruitment KPIs aren’t just good for teams or leaders, but also clients and even a business’ board members.
When you have easily provable performance metrics, communication and alignment on goals gets that much easier.
Being selective with your KPIs
On one hand, KPIs are great as indicators of an agency’s effectiveness in reaching goals. On the other, just counting numbers isn’t going to get your business where it needs to go. Making 50 calls per day is not a KPI. It’s just a measure of activity levels. But as the name suggests, a KPI is about key performance. The question is: are you working effectively?
Is getting more client meetings an important objective? A good KPI would be the average number of calls it takes to confirm a meeting. For example, 50 calls leading to 5 meetings booked is a ratio of 10:1 (just divide the first number by the second).
The idea is that when tracking over a period of time, this ratio gets smaller and therefore consultants are getting more effective at booking meetings. But it doesn’t stop there. A follow-up KPI could be the ratio of meetings booked to meetings attended. This makes sure that your clients are actually getting the benefit of these meetings.
And after that, you can track client meetings to business gained. This will answer the ultimate question of any meeting: did you actually get business out of it? A good target is that after 6 months, 80% of the meetings provided an opportunity with that client. As a ratio, that would be 1.25:1. The greatest benefit of recruitment KPIs is comparison.
As an example, an interview to job ratio of 3:1 is an industry standard for contingency recruitment. A ratio of 1.5:1 would be considered great. If your interview to placement ratio is 3:1, then this indicates that you’re filling 50% of your jobs, which is also not a bad target to aim for if you haven’t got exclusivity with your clients.
But what if the interview to placement ratio is 7.5:1? Here, it takes 7.5 interviews to get a placement and each job has 1.5 interviews allocated to it. Therefore, 7.5 divided by 1.5 = 5. You’re only filling 1 in 5 jobs (20% fill rate).
In this case, look at how many interviews the client is conducting for each job. 1.5 might mean not enough choice, and that the client is potentially shopping around for other candidates.
How to implement recruitment KPIs effectively
1. Set specific goals
There should be measurable goals for both your teams and each consultant. Goal setting is vital for implementing recruitment KPIs. Without clear targets, your team will go nowhere. Goals also help set realistic expectations and make it easier to define success.
2. Choose the right metrics to track
All KPIs are valuable, but choosing the right ones for your agencies or teams isn’t a simple task. Based on your goals, set out 3-5 metrics that are most relevant. Don’t set more than 10 KPIs, or you run the risk of confusing your team.
3. Regularly monitor your KPIs
Change happens. As a manager or director, your job is to constantly keep track of KPIs to suit business needs and meet clients’ expectations. Set out weekly or monthly meetings with your team to make adjustments together.
With the correct KPIs in place, your business will be well on its way to measurable success.
More about Angela
Company: Connemara UK Ltd
Email: Angela@connemarauk.com
Phone:+44 (0)7789 966209
Skype: angelacripps