“Measure what matters” has become a catchphrase of data analytics (there’s a whole book you can read on the topic), but which are the recruiting metrics that matter?
Your HR team can track many different recruiting metrics, but just because something can be measured doesn’t mean it provides you with meaningful information to guide your recruiting efforts.
Here are some common recruiting metrics that don’t necessarily make the best key performance indicators (KPIs), and alternative metrics that can better guide you in improving your recruiting efforts.
From Reactive to Predictive
We’re in the era of Big Data, where almost anything can be measured, quantified and analyzed. Yet when it comes to talent analytics, most HR teams use only the most basic of metrics.
According to Bersin by Deloitte, 86% of HR teams only use descriptive o.r reactive analytics — basic analytics that explain what has already happened in the past, but do not enable HR teams to predict or plan for what will happen in the future.
Reactive and descriptive analytics:
- Are often used for compliance and to measure efficiency
- Provide information
- Focus on the past
- Are mostly inflexible
Predictive analytics, on the other hand, are much more useful. They help organizations plan strategically by demonstrating what is likely to happen in the future, allowing HR teams to make better decisions about what to do next.
- Allow for predictive models and scenario planning
- Support risk analysis and mitigation
- Provide insights
- Focus on the future
- Are more flexible
It’s recommended that 20% of your recruiting analysis should be data capture, and 80% should be analysis of that data. This makes identifying the right metrics even more important — for your efforts in analysis to bear fruit, you have to be capturing the right data.
Modifying Your Metrics
According to a Jibe survey on recruiting analytics, the top three most commonly measured recruiting metrics are the source of a hire, the time it takes to make a hire, and the number of applicants per job opening.
What do these analytics all have in common? They’re descriptive, not predictive. They don’t provide insights about the quality of the candidates you bring in, how well your new hires live up to their performance goals, whether candidates have positive or negative experiences going through your hiring process, and whether new hires stay at the company or turnover quickly — the kind of insights that a competitive HR team needs to become better at recruiting.
Your company may, for compliance or other reasons, need to track these metrics. That is fine, but it’s important to also track predictive metrics that go a step further to give your HR team real, actionable insights.
Here are three common descriptive metrics your HR team can set aside, and predictive metrics to focus on instead that will give you more meaningful insights.
1. Set Aside: Source of Hire
Measure: Referral Rate
Many HR teams track source of hire to determine which sourcing channels find them the most hires. The truth is, source of hire is an inflexible metric and doesn’t acknowledge the fact that different types of employees will come from different sources. The channels you use to recruit executive team members, for instance, are not likely the same channels you use to recruit entry-level staff — and if you are hiring executive team members far less often, it will appear that those channels aren’t performing as highly as others. Tracking source of hire doesn’t give your HR team actionable insight into how they can improve their recruiting efforts.
A better metric to track is your employee referral rate: the total number of referrals received during a certain time period, or per open job. This metric evens the playing field — everyone from C-suite executives to front-line staff can refer people to your company — and research shows that a company’s own employees deliver the highest-quality candidates. Employee referrals also cut time and cost from your hiring process.
What’s more, employee referrals can give you insight into how happy your employees are at your company. People rarely refer others to companies where they themselves are not happy to work.
2. Set Aside: Number of Applications
Measure: Candidate Quality
As any hiring manager knows, the number of applications received per position doesn’t mean much. For instance, it’s not exactly an achievement to receive hundreds of applications riddled with spelling mistakes from candidates of dubious qualifications.
Your company doesn’t want to choose from hundreds of “okay” candidates. It wants to choose from a handful of very strong candidates. That’s why candidate quality is a much better metric to track than number of applications.
Here are a few ideas for metrics you can use to measure candidate quality:
- A candidate’s interview score
- The number of candidates selected for an interview, out of the total number that applied for the position
- The ratio between number of interviews your company conducts and the number of offers made
- The percentage of candidates that come from referrals
The exact factors for each metric should be developed in conjunction with your hiring managers and those who will manage the successful candidate. What counts as a quality candidate will differ from your finance team to your sales team.
3. Set Aside: Time and Cost Per Hire
Measure: Hiring Quality
At first glance, it seems like a no-brainer to track the time it takes to hire a new employee and the costs that new employee incurs. Your company wants to fill open positions quickly and spend less money doing it, right?
These metrics are helpful to flag a review of any significant outliers — such as a new hire taking 60 days to complete when the average is 40 — but relying too heavily on these metrics risks significantly hurting your recruiting efforts. In an effort to keep the hiring process efficient, recruiters may start cutting corners or entertain less qualified candidates. After all, there’s no better way of reducing time and cost per hire than by hiring the first person that comes in the door.
Rather than introduce incentives for recruiters to hire less-than-ideal candidates, track hiring quality. Your hiring quality metrics should incorporate both candidate quality and hiring process quality.
Here are a few ideas for metrics you can use to measure hiring quality:
- A new hire’s job performance score
- Time-to-productivity: The time it takes a new hire from their start date to reach a performance goal or productivity goal
- A new hire’s engagement score at their 90-day and one year review
- The length of time new hires stay with the company
- Candidate experience score — survey candidates on how satisfied they were with their experience throughout your recruitment process
You may also consider surveying your hiring managers on their experience going through the interview and hiring process.
To maintain a hiring advantage, your company should aspire to be one of the 14% of companies that uses predictive HR analytics. Basic analytics like applications per position just aren’t going to cut it anymore. Arm your HR team with better information by tracking KPIs that give a true picture of your company’s recruitment efforts, and how to improve them.