A mistake in hiring leads to one of the two – losing out on the right talent, or hiring someone unfit for the role. Thus, one mistake in hiring can lead to loss of money, time, and productivity.
One key goal of every HRM is to hire high-performing talent. A simple way to streamline and handle recruitment is by taking a look at metrics and recruitment KPIs, which can play the role of a game changer.
Understanding Recruitment KPIs
One question that arises is, “What does KPI mean in recruitment?” Recruitment KPIs act as an indicator for HRMs to show what is working and what is falling short.
As a norm, any KPI set should meet the following:
- Specific
- Measurable
- Achievable
- Relevant
- Timely
At its core, recruitment KPIs track the time taken and the costs required to hire, alongside the number of offers accepted against ones made. However, they are not the same as recruitment metrics. While recruitment metrics shed light on the specifics of the hiring process, KPIs reflect the effectiveness.
Why Tracking Recruitment KPIs Matters
On the whole, recruitment KPIs paint a picture of what your company is doing to find and hire the best workers. Thus, these help shed light on the effectiveness and efficiency of the recruitment and hiring process.
If you are the one who handles recruitment, tracking KPI in recruitment can be useful for you in the following ways:
- Quantify all parameters related to the recruitment process.
- Improve the candidate experience of all applicants to attract the top talent in the relevant field.
- Align business goals with the type of recruitment taking place.
- Streamlining the hiring process for quick, easy, and successful recruitments.
- Improve hiring performance and recruitment budget management.
Key Recruitment KPIs to Monitor
According to a SHRM study, 77% of HRMs have indicated that they have a tough time hiring the right candidates for any job role.
To devise effective hiring and recruiting strategies, KPIs play an important role. The factors that act as KPI in recruiting are:
1. Time to Fill
The total number of days from when a job opening was posted to the day when a candidate accepts the job offer is measured as the time to fill or hire for a position. Essentially, this will let you know if your process is efficient and also identify any underlying issues. This stresses upon the importance of KPI for the recruitment process.
2. Cost Per Hire
This parameter is a check on your recruiting budget and helps devise a plan on how to hire for a vacant position. Cost per hire equals the total amount that a company spends on hiring, which is divided by the total number of people the company has hired. When using a recruitment agency in the UK, the cost per hire can be as high as £3,000.
3. Source of Hire Efficiency
The platforms where you advertise a vacancy to find a suitable candidate serve as your source of hire. This may be a recruitment agency in the UK or even LinkedIn. The efficiency of a source of hire is the difference between the number of suitable candidates from that source and the average number of applicants from all other sources.
4. Submit to Interview Ratio
In 2024, surveys show that 180 candidates applied per job listing. However, this is an average, and in some industries, such as automotive, this number was as high as 234. The applicant (submit) to interview ratio is calculated as the number of people who filled in the application for the job divided by the number of people hired. Thus, this is a measure of whether or not the job boards are helping attract the right candidates and if the job post is receiving any engagement.
5. Offer Acceptance Rate
Not every person you interview will accept the offer made. The offer acceptance rate is the number of offers accepted divided by the number of offers made, and multiplied by 100. However, this indicator works better when you weigh it against compensation negotiations with qualified candidates.
6. Candidate Experience
When a candidate has a favourable experience during the recruitment process, they are more likely to consider accepting the role if an offer is made. Further, a good candidate experience also helps build a good impression of the company. In turn, this converts to good feedback on job portals, which can further drive up engagement with job listings.
7. Quality of Hire
When you hire a candidate, their performance may change depending on how long they have been in the role. By evaluating if a candidate is suitable in the long run, their pre-hire metrics, and productivity, HRMs can calculate the quality of the recruitment made.
Mathematically, Quality of Hire equals an average of the Job Performance, Ramp-up Time, Engagement, and Cultural Fit.
To drive up the quality of hire, clear job descriptions, applicant tracking software, and analysing past recruitment metrics can help.
8. Application Completion Rate
Not every person who gets started on a job application completes it. This usually happens if the candidate, while applying, finds out that they are not suitable for the job. It may also happen if the application is too tedious and the compensation not worth the hassle.
According to Recruiter.com, only 10.6% complete their application if it has less than 25 questions, a number that is cut in half (5.7%) if there are 50 questions or more. Thus, with a complicated application, you may be losing good candidates.
9. Diversity Metrics
Recruiting is not all in today’s workplace. For a healthy and balanced workplace, diversity and inclusion are essential in a workplace. Further, 57% of UK workplaces believe equality, diversity, and inclusion (EDI) to be key recruitment goals. Thus, during recruitment, HRMs need to keep this in mind and hire accordingly.
10. Employee Retention Rate
When a newly hired employee leaves an organisation, the company not only has to bear the costs of recruitment but also the cost of training a new worker. Thus, once an HRM hires a new employee, it is important to retain them. This makes employee retention rate an important KPI and a key goal for all HRMs.
11. Time to Productivity
According to Gallup, it can take up to 12 months for an employee to be fully productive. However, this depends on how complex the job role is and if the employee has adequate qualifications. The goal of HRMs is always to reduce the time taken to achieve productivity. Thus, it is important to hire people best suited to a job role.
Best Practices for Tracking Recruitment KPIs
Using KPIs in recruiting strategies is only useful when they are well-defined and not acting as a standalone tool. Some of the best practices regarding recruitment KPIs are:
- Make the KPIs clear and measurable.
- Set benchmarks that reflect the company’s usual performance.
- Use Applicant Tracking Systems and other analytical tools to gather the data for KPIs.
- Focus on key areas (as mentioned above) and how they link to one another.
- Monitor all key indicators regularly to adjust and update KPIs as necessary.
Challenges in Measuring Recruitment KPIs
While you can track the recruitment KPIs using data from the past hiring, you may also come face-to-face with certain challenges. These include:
- Lack of clarity regarding the quality of hire.
- Fluctuations in the labour market dynamics.
- Benchmarks used to define KPIs might not be apt.
- Lack of standardisation during recruitments.
- Little to no accounting for the challenges that a recruiter can face.
Leveraging Recruitment KPIs for Continuous Improvement
For recruitment KPIs to be effective, it is important that they align with the business goals. Thus, it is essential to consider the industry, size of the company, and the position that is open.
Keeping these in mind, HRMs need to build a proper recruitment pipeline through appropriate sources of hire. This will help reduce the “time to hire” for any given position. The categories listed above work as excellent KPIs to track and understand whether or not the recruitment process is up to par.
Further, once an employee is hired for a position, it is important to build their skills. This will not only help workers keep their skills sharp but also progress to better roles.
Also, HRMs can identify areas where they can improve, such as attracting better talent, reducing the time taken to fill a position, and increasing the number of offers being accepted. This will help them make better decisions regarding future hires, refine the data they use for benchmarking, and improve their image as a recruiter.
Conclusion
To improve the recruitment process, it is important to gain insights on the different aspects. Well-balanced recruitment KPIs combine recruitment metrics along with the actions associated with the hiring process.
Align the KPIs for recruitment to business goals, set actionable goals, and establish a system to automate the tracking process. Together, these will ensure that your recruitment KPIs achieve the desired results.
