Understanding and focusing on the right recruiting metrics and key performance indicators (KPIs) can set you apart in today's competitive hiring market.
If you are looking to refine your hiring strategy, this overview of the most essential recruiting KPIs is a great place to start.
Let's take a few minutes to highlight the essential recruitment metrics worth tracking, including definitions, measurement techniques, and insights into the role each plays in developing a more effective hiring strategy.
1. Time-to-Fill (TTF)
Time-to-fill captures the average duration from posting a job opening to the candidate's acceptance of the offer.
How to Measure: Calculate the total days between job posting and acceptance, then divide by the number of hires.
Why it Matters: Being efficient with your time is crucial. A streamlined TTF helps identify bottlenecks in your hiring process, enabling you to secure talent faster than your competition. It's also essential to track your TTF for different kinds of roles. For example, an executive search is often an exhaustive six-month process, while engineers are generally only on the market for two to three weeks, requiring a speedier process and a shorter ideal TTF.
2. Quality of Hire (QOH)
Quality of hire is as complex a metric as it is important. In the simplest terms, QOH assesses the overall effectiveness of your recruitment process by quantifying the success and impact of your new hires.
How to Measure: To measure QOH, gauge performance metrics like productivity, reviews, and onboarding success for a set period post-hire. There's no one-size-fits-all approach to calculating QOH, but we have plenty of advice for finding the right mix of data points for your organization.
Why it Matters: Beyond filling roles, having QOH as a recruiting KPI ensures that your new hires properly align with your organizational goals. QOH promotes continuously improving your hiring criteria and the entire candidate experience throughout the recruitment funnel. Also, while there is no such thing as a bad time to start calculating your QOH, it can be incredibly impactful during hiring slowdowns and lulls.
3. Source of Hire
Source of hire reveals where your successful hires come from, whether from job boards, referrals, social media, or other channels.
How to Measure: Track your hires' origins through an applicant tracking system, surveys, or in-depth analytics.
Why it Matters: Strategic investment is critical when you are trying to find your next great hire. This is especially true when dealing with shrinking budgets and limited resources. Identifying successful sources allows you to allocate your time and resources in the most impactful places.
4. Candidate Satisfaction
Focusing a KPI around measuring and tracking candidate satisfaction is a perfect way to gauge your candidates' overall feelings about their hiring experience and identify areas where you can improve.
How to Measure: You should use surveys, post-application feedback, and Net Promoter Score (NPS) to gauge your candidates' satisfaction levels.
Why it Matters: Positive candidate experiences strengthen your employer brand. This can help you turn applicants into advocates and attract top-tier talent. Being alerted to poor candidate experiences is similarly crucial in identifying potential breakdowns in your hiring processes and providing the data to support future improvements and adjustments.
5. Offer Acceptance Rate
This one is a bit easier than the others to grasp. Your offer acceptance rate measures the overall percentage of candidates who have accepted your job offers. This can be done at an overall macro level and tracked by role, department, or other business segments.
How to Measure: To measure your offer acceptance rate, divide the number of your accepted offers by the total number of offers you have extended. Next, take this number and multiply it by 100.
Why it Matters: Analyzing acceptance rates can provide valuable insights into how effective your talent brand is and how appealing your job offers are currently in the market. This data can help you refine your value proposition and job offers. It can also help you create more compelling pitches that resonate with your chosen candidates.
6. Cost Per Hire
Cost per hire provides a view into the total expenses associated with your recruitment process by comparing your recruiting-related expenses with your total number of hires.
How to Measure: To measure cost per hire, add up all your recruitment costs (advertising, technology, personnel, etc.) and divide this number by the total number of your hires during the same period.
Why it Matters: Staying budget-conscious is more critical than ever when making hiring decisions. By making cost per hire one of your recruiting KPIs, you can better determine which channels and tactics are cost-effective and optimize your resource allocation more easily.
7. Retention Rate
YYour retention rate measures the percentage of your employees who stay with your organization over a specific period.
How to Measure: Divide the total number of your employees at the end of a period by the number of employees at the start, then multiply this by 100.
Why it Matters: Maintaining a high employee retention rate indicates a healthy work environment. This can save you in the long run by significantly decreasing costs associated with recruiting, onboarding, and training new hires.
Looking for guidance on how to enhance your retention rates? We've got you covered!
8. Applicant Drop-off Rate
Your applicant drop-off rate highlights the percentage of applicants who abandon your application and interview process before completing it.
How to Measure: Divide the number of applicants who abandon the process by the total number of started applications, then multiply by 100.
Why it Matters: Identifying and reducing drop-off points enhances the candidate experience and ensures a robust talent pool. You'll lose fewer candidates in your hiring process and foster a stronger brand reputation.
9. Cost of Vacancy (COV)
Cost of vacancy calculates the financial impact of leaving one of your open positions unfilled over a certain period. This can include lost productivity, revenue, and potential opportunity costs.
How to Measure: Multiply the average daily revenue generated by the position by the number of days the position remains vacant.
Why it Matters: Vacant positions can disrupt workflow, affect team morale, and result in missed business opportunities. Understanding your cost of vacancy emphasizes the urgency of efficient hiring processes. The longer a job is open, the more money, time, and effort are allocated.
We found that the COV of an unfilled software engineer position for 35 days is $20,623.27. That's a lot of incentive to fill the role!
In Closing
By mastering these essential recruiting KPIs, you'll be fully prepared to navigate whatever today's recruitment landscape throws at you. As you assess your metrics and adjust your tactics accordingly, you'll be amazed by the positive impact these metrics can have on your recruitment efforts.
Investing in recruiting data gives greater insight into your department's impact and can help inform progress on important goals, ultimately leading to better outcomes for any organization.
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