Executives Should Be Driving Recruiting Metrics
It is no secret that a company’s success is driven by its the ability to hire the best people who can drive organizational goals and carry out the company’s mission. It is those employees who interact with clients, drive innovation and shape the company culture. Getting the right people requires a strong recruiting operation and a steady pipeline of excellent candidates.
No matter how great a recruiting team is, without clear direction from leadership about the importance of recruiting, it will be difficult to design and execute an effective talent acquisition strategy. It is time for executives to take a more informed and proactive role in recruitment. This doesn’t necessarily mean being in every interview or writing job ads; executives can impact recruitment most effectively by consistently reviewing recruiting metrics, much the same as they do sales, marketing and customer satisfaction metrics. So, given the importance of the recruiting process and a company’s ability to attract, hire and retain top talent, why aren’t more leaders involved?
In my experience as VP of People and Strategy at Greenhouse, I speak with dozens of recruiting and HR leaders regularly. In my work, I have observed that no good baseline consensus exists across companies as to which recruiting metrics to track, as well as how and why those measures should be tracked. Moreover, few organizations have a coherent and useful set of recruiting metrics in place. This lack of good metrics is one of the main impediments preventing executives from taking a more strategic role in managing recruiting. This article lays out a clear set of five metrics, including the rationale for each of them and key learnings for implementing them.
The Increasing Impact of Recruiting
The need for leadership to focus on and engage in recruiting is pressing. Recent research from ManpowerGroup shows that 38 percent of employers worldwide have difficulty filling jobs, with the hardest-to-fill positions being engineers, sales representatives and skilled trade workers.
Most companies today face a number of challenges while trying to build a successful hiring strategy. For one, decision-making based on gut feel rather than data seems to be the norm rather than the exception. The result is an inconsistent process and poor candidate experience that might lose the best candidates and make it even more challenging to attract qualified talent. With hiring poised to only become more critical (and more challenging) in the future, it is imperative that company leaders take a look at their organization’s recruiting processes and ensure recruiters and hiring managers have the support and structure they need to enhance their talent acquisition strategies.
The Top Five Recruiting KPIs
One of the best ways to drive success is by establishing key performance indicators (KPIs) around the most crucial recruiting metrics. Just focusing on the number of individuals hired in a given period is no longer enough to determine success – instead, organizations must take a closer, 360-degree look at all aspects of the hiring process to determine what’s being done right, what should be done differently and how the entire talent acquisition lifecycle can be continually improved. So what’s the best way forward? To start, consider the following five KPIs and how your recruiting teams can start measuring them:
Number of Qualified Candidates (QC’s)
Total candidates that pass an application review and have a first phone screen
The ultimate goal of any recruiting function is to fill roles with excellent people. However, ‘total hires’ is a lagging indicator; if an organization misses this goal for a quarter, it will likely take at least another two quarters to diagnose the problem and drive effective changes to alter results. The number of Qualified Candidates (QC’s) is an excellent top-of-funnel, leading indicator of how an organization is tracking to hit future hiring goals. By using historical conversion numbers, organizations can look at future hiring goals and back into QC goals per month. And, by tracking progress to QC goals, recruiting organizations can make immediate course-corrections to impact the longer-term hiring goals.
Source-to-Close Speed (S2C)
Days between when an application is received and an offer is made
In today’s candidate-driven market, excellent candidates are typically comparing opportunities with multiple companies. Organizations that are able to deliver a streamlined and efficient process increase their chances of the candidate accepting their offer. Furthermore, hiring managers show greater satisfaction with their recruiting teams when candidates are moved through the process quickly. Source-to-Close Speed (“S2C”) is a measure of how fast an organization can hire someone once that candidate is identified. A well-structured interview processes should produce clear, actionable data, such as how long a candidate spends in each recruiting stage, which recruiters can use to to continually streamline the process. If an S2C speed is too long, or varies wildly from period to period, this may result from a poorly structured interview process, and thus indicate an obvious way to improve results.
Candidate Satisfaction Score (“CSS”)
Post-interview candidate satisfaction survey results (of both offered and rejected candidates)
Organizations are increasingly focusing on their talent brands, which, similar to a consumer brand, have significant impact on its ability to attract and convert top applicants. One of the most impactful tools a company can use to improve its talent brand is the candidate experience. Organizations must ensure that the candidate experience, especially for rejected candidates, is a positive one. Sending a third-party survey after the interview is the best way to track these responses. Improving CSS has positive impact across all stages of the hiring funnel, while falling CSS is surely a sign of a deeper problem and a clear signal to investigate further and take corrective action. One hesitation executives might have is that candidates become ‘disgruntled’ after they don’t receive an offer, but that doesn’t turn out to be true. Across Greenhouse customers, an impressive 75% of surveyed candidates report having had a positive interview experience.
Offer Acceptance Rate (“OAR”)
Percentage of extended offers that are accepted
Offer acceptance rate (“OAR”) signals many aspects of an organization’s overall process. For example, a low acceptance rate could indicate that the team is not doing a good job of “selling” the company, or that compensation bands are low compared to market. Tracking offer acceptance over time helps companies understand their processes and reveal areas for improvement. Key to measuring OAR is to track the details of each extended offer. For example, OAR will vary between departments and locations so tracking these data points with each offer will help focus the reports to clarify issues and trends. Without proper systems and procedures in place, data quality can become an issue here; make sure recruiters don’t just enter offers after the fact, or the OAR number might be artificially too high.
Hires to Goal (“H2G”)
Total hires in a given period as compared to the target hires for that period
Just as sales organizations have quarterly sales targets, recruiting teams should have quarterly hiring targets. It is easy for companies to fall in the trap of “hire as many people as fast as possible.” However, without setting targets, executives have no idea how to measure if the recruiting team is performing well and tracking to support the business’s needs. Furthermore, department heads and managers can’t accurately set objectives for their business without understanding the make-up of their future teams. Organizations must look at historical data and estimated output to determine realistic future hiring goals, then set aggressive yet achievable hiring targets.
The Path Toward Recruitment Success
To ensure an effective strategy, implementing these KPIs isn’t enough; recruiting teams and leaders should meet regularly to review progress and share insights and learnings gained from the process. Doing so will help keep all parties in alignment and working toward the company-wide goal of attracting and hiring quality candidates who can make a positive difference in the organization. You can see the set of reports and KPIs that we use at Greenhouse to track our recruiting progress here.
As hiring continues to become more competitive, it is essential that recruiting teams understand the KPIs that will enable them to transform their talent acquisition processes. By throwing out the old, tired metrics that do little to inform and fine-tune the process, they can focus on the metrics that will enable them to continually improve how they hire. Doing so will help them not only find the best talent today, but continually improve the process to find the best candidates well into the future.****
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By Maia Josebachvili is the VP of Strategy and People at Greenhouse.