Somewhere in your company, someone knows how much the recruiting department costs, and chances are the number crunchers would like to cut those expenses to the bare bones. If you aren’t measuring your success and you can’t show your value, you might soon find yourself on the other side of the application process.
These four metrics offer an objective look at what you are doing right, and they give you clear, actionable information on making significant improvements in return on investment. Next time you are questioned on your request for an expanded budget, have these numbers ready to show your department is worth every penny.
1. Measure Applicants Per Position
While it might seem prudent to attract as many applicants as possible, a number far outside the standard range of applicants per position could reveal problems with your recruitment process. It might be that your methods are casting too wide a net and would benefit from a more focused approach to ensure that recruiters have time to carefully review all qualified applicants and make successful selections. Alternatively, your application might not be attracting enough candidates, because the posting is too specific or your application is so long and complex that most potential applicants lack the patience to wade through it. The number of applicants per position is directly related to the time required to fill each position, which is the primary concern of hiring managers.
Use industry benchmarks to understand how your applicants per position ratio compares to others, then refine job postings accordingly. Too many applicants can be resolved with a more complete list of the job’s qualifications and responsibilities, which your team can develop with input from those in the position already. Too few applicants can be resolved with a less specific list of required qualifications and a simplified application process. Fine-tuning the activities that drive this metric will bring the time it takes to fill each open position and the time it takes for new hires to begin contributing to the company (time to performance) in-line with industry standards.
2. Refine Your Hiring Platform
Finding out where your applicants learned about the position will help you better understand which sourcing channels are most effective and which could use fine-tuning. When measuring sourcing channels, consider the following:
- number of candidates from each source
- cost to maintain each source per applicant
- ratio of qualified candidates from each source
- rate of hire by source
Collecting and retaining detailed sourcing information allows an objective picture of the effectiveness of each source over time, as the data can later be compared to other metrics such as employee retention. Effort can be diverted appropriately to improve the performance of weaker sources or rely more heavily on the most successful sources based on which sources statistically lead to strong hires that turn into long-term contributors. Efficient use of sourcing reduces cost per hire and increases retention rates, leading to a bigger bottom line.
3. Understand The Cost Per Hire
The metric that often receives the most attention is the cost per hire ratio. This metric provides critical data on the effectiveness of your recruitment process, as it shows the amount invested in each position filled. When cost per hire is too low, you can expect high turnover, as positions are being filled with little investment in finding the best candidate for the job. When cost per hire is too high, it is a clear sign that your department is operating inefficiently. Benchmarking your cost per hire ratio with others in the industry will give you a range of standard costs specific to the positions you are filling – and it is a nice reminder of how critical your work is to the company’s bottom line.
4. Look at Employee Retention, Then Recruit
Your organization’s rate of retention provides the clearest measurement of the effectiveness of your recruitment process. Considering that it costs up to three times base pay to replace a mid-level manager, you can bet that short-term turnover is closely watched, and high numbers of resignations under one year of service are traced directly back to you.
When your new hires make the company their long-term home, you know that you have been successful at matching applicants with just-right positions. Gather data on when and why employees leave the company, then analyze the information to find any common themes. For example, frequent resignations over pay and benefits can mean a failure to appropriately screen candidates.