It is critically important that recruiters and subsequently the business understand how to measure recruitment effectiveness, and find out what works and what doesn’t.
To do that they need to generate simple, accurate reports that allow them to measure performance and establish those areas for improvement.
I was told very early in my management career that ‘what doesn’t get measured, doesn’t improve’ and this is so very true. But measuring the right components is equally important and so a structured approach is required.
A good recruitment management system will provide you with detailed reports and set you on a course for improvement across all areas of your recruitment activities and should be at the centre of this strategy. It will also provide an audit trail that can be reviewed and assessed to back up recruitment teams who are adopting the correct procedures or not, as the case may be.
Setting KPI’s at each stage of the process will drive improved results that will improve hiring quality, reduce costs and help to avoid hiring mistakes that can be the most costly bi-product of an ineffective recruiting strategy.
A simple review of the stats can highlight problems, bottlenecks in the process and the guilty parties where human intervention is at fault. By identifying positive trends the company can capitalise and by identifying problems it can avoid making mistakes that cost the company.
So what should you measure?
The key elements to measure in recruitment are around time, cost, effort, and outcomes. Here are a few suggestions for areas that the company can look at reporting against:
1. The approval process
Many companies tell me that certain individuals can become bottlenecks, delaying the start of a recruitment campaign by weeks. A system where approvals can be made with 48 hours of a hiring request being made should be aspired to. When you start measuring and reporting on this, guilty individuals are highlighted and more easily challenged to improve.
2. The view: apply metric
Over 90% of people looking for jobs online are currently in employment, so getting your advertising copy right to convert views into applications is an important statistic to measure. A minimum target for all companies to maintain is at least 10 views to every 1 application. Anything less than this and you need to start looking at your advertising copy.
3. Average number of applications by source and CPA
Ensuring that the advertising channels that you are using are effective is critical in measuring your CPA (Cost per application). The best performing job boards average around 15 applications per job, so that is between £5 and £10 per application if you are paying £100-£150 in advertising costs. These costs can be driven down by purchasing advertising credits through a fixed price provider where you can buy bundled packages for a single cost.
In addition to the paid-for channels, you need to measure the results of the free channels and task yourself with maximising these. Aggregation sites such as Indeed, your career page and referral programs are three areas that you should also measure.
4. Fulfilment rates
More important though, is to assess the quality of applications, so measuring applications to shortlist/interview/offer metric will give you an idea of what the quality is like and the true value of that channel.
5. Agency fulfilment rates
Quarterly assessments of how agency suppliers are performing, is really important because if you are going to use 3rd party providers, you have to ensure that they are adding value to each campaign. Establishing minimum KPI’s for agency suppliers to maintain is important and if they are not adding value, remove them and replace with new ones.
6. Time to offer
Measuring the time between posting the job and making the offer is a great metric to help improve recruiting outcomes. Getting this to below 30 days should be a company target to strive for. The longer the campaign goes on for beyond 30 days, the more inefficient the process is and the chances of things going wrong increases. The candidate experience is also affected negatively by lengthening the process beyond 30 days. There is no evidence whatsoever to suggest that there are any advantages to taking longer than this to complete a campaign and yet there is plenty of evidence to support keeping it shorter and more efficient.
7. Staff retention
By far the most effective way of keeping recruitment costs to a minimum is to improve staff retention. In particular, staff that leaves in the first 12 months of employment incur the highest costs to the company and have the biggest negative impact on staff morale. A member of staff that leaves within the first 12 months of employment usually costs the company a lot of money. Even if you just calculate the recruitment cost, the salary, and NI and add 25% for bedding in and training related costs, you quite quickly start to see the true cost of making a bad hire. So retention starts by hiring the right people in the first place. By measuring this and potentially by rewarding the recruiter for making good hires that stay, you are encouraging the recruitment teams to take more interest in the quality of hire, rather than focusing on the efficiency around getting the job filled.
8. Average direct recruitment spend per hire
To calculate the annual direct recruitment spend, take the total annual advertising spend then add annual agency fees and finally add the total recruitment/HR staffing salary costs (Based on the average number of days HR are required to work on each campaign, or if you have full-time recruiters, then just add their total annual salary plus NI) and divide by the number of hires made that year.
9. Average cost per hire
In order to calculate this figure accurately you need to apply the following calculation:
Total annual direct recruitment spend (as outlined above) then add the total salary and NI costs of all people that left within the first 12 month period of employment. Finally, divide that total figure by the number of new hires made during that 12 month period and you have the true average company cost per hire. This is still relatively conservative, as it does not take into consideration training costs, lost business or the toxic effect that people who have left, may have had on other people around them.
10. New tools and services
I highly recommend trialling new tools and services in order to find improvements. However, it is really important to measure their performance, so that you can determine whether they are having a positive effect.
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