Hiring metrics need to be watched, what with recruitment being one of the mainstream cost centers of a company. Yes, it is the people of the organization that help it tide over dips and troughs in market fortunes. But they are also one of the major cost overheads. Hiring is even more so, and the only way to drive the costs of the hiring activity down is by tabulating each step of hiring and taking a data-led approach to analyzing hiring metrics.
The prerequisite to understanding the cost structure of this year-long activity and taking steps to ensure that it is running in the most efficient manner possible is by measuring hiring metrics. A method as old as the hills is measuring the time taken to finish each stage of the recruitment process, and assigning a cost in Rupees to it in terms of the number of resources involved and/or invoices generated. Historical data is good to have, but allowances have to be made for changing trends and relevance.
To even begin measuring the hiring metrics, certain items which govern analysis and decision-making need to be in place:
Hiring volume: This starts with identifying the roles to be filled, replete with unambiguous job descriptions, and then deciding on the number of positions to be filled. It’s a clear whole number.
Hiring budget: Accordingly, a hiring budget is drawn up by a senior HR generalist or specialist to determine the exact cost of the activity and the wage for each band of employee and position. Hiring budgets go through analyses and approvals so that a company knows exactly what it is doing while adding to its staff.
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Giving an expensive ad in the news and media, or participating in a costly job fair – these items give complexion to hiring metrics and expedite many of them. But they drive the hiring budget up. The trend in the last five years of the past decade shows that hiring volume and hiring budget has an increasing gap. Preferred modes of advertisement of open positions now are the free ones – social media and job portal postings which cost little or nothing at all. What’s more, these modes are hugely successful because they are able to attract valuable talent without costing a lot.
Along with those whole numbers that guide recruitment practices, hiring metrics take into account several important trends such as:
Multi-generational workforce: For companies gunning after diversity and inclusion, ageism is passé. They would rather have representatives from every generation of workers. That’s because each worker and each category of professionals brings in their own take on project management, collaboration, and problem-solving. This is a type of diversity that companies are anxious to include, in addition to ethnic diversity, gender parity, social influence for good, and overarching equality in society.
Internal hiring: Lateral movement of professionals between positions and divisions saves recruiters a lot of effort and makes induction into a new set of rules much easier than that in the context of a new hire. This is because the rules and expectations, as well as cultural acclimatization, are already in place in the case of internal movements.
People as a priority: The importance of employee experience and positive engagement with the company is well-established by now. Hiring metrics are a function of this realization, as well. This is why some policies and hiring metrics are framed to check employee engagement, immersion with the company’s ethos, and culture. An example of this is “suggestions per employee” whereby the company looks to delve into each employee’s knowledge contributions to make their workflows better while encouraging them to think in terms of the company’s betterment. Although this isn’t a direct hiring metric in itself, it looks at long-term trainability, maturity planning, and succession while instilling the right engagement expectations. Therefore, these ideas have to be established from the beginning.
With this background of recruitment trends established, the hiring metrics that are key to companies in the current climate are:
1) Time to fill: It is not uncommon for companies to reach out to staffing establishments to get a jump on their ‘time to fill’ or time taken to fill a position. With or without them, time to fill still ranges between 1 to 90 days. This hiring metric has always been under the scanner because it directly affects productivity and projects thrashed out.
2) Quality of hire: This is almost the polar opposite of ‘Time to Fill’. This hiring metric focuses entirely on the outcomes achieved by a new hire in a fixed timeframe – down from the learning modules they finish to the projects they succeed at, in addition to their quality of assimilation into the organizational culture. The urgency to fill a post does not contribute to the best quality of hire and therefore, recruiters are obliged to maintain a healthy balance between these first two hiring metrics on the list.
3) Net promoter score: Just as an employer hopes to reach the pinnacle of employer branding, even a niche employer, an employee is envisioned as a promoter and advocate of the company (by the recruiters and HR leaders). Every effort is made by the employer to turn their new hires into advocates of the company so that they act as brand ambassadors and bring in their friends and referrals into the fold. When this happens, it’s a win for the recruitment team because they would not have spent time and resources overtly in attracting talent. The promoter score, therefore, is rated on several incremental number scales with positively-disposed existing talent being given a high promoter score. A referral bonus is further made available to encourage the promotion of the employer’s brand.
4) Channel effectiveness: Being agnostic to a hiring channel such as social media hiring was gone even before the pandemic. Large corporations and solopreneurs alike let go of the insular notion of leaving a channel unexplored. But today there’s an actual hiring metric measuring the cost-effectiveness of each channel. This is a simple fraction of the advertising expenditure for that channel divided by the number of candidates who make it to the final stage of recruitment (to be defined by the recruiter). This way, an individual cost per hire for each talent pool is arrived at and can be compared with others.
5) Application abandonment: This metric counts the number of candidates who arrive at the application form on the careers page but do not fill it to the end. Much like the sales funnel contact form, this “drop off rate” provides analytics into candidate profiles, experience, as well as which parts of the application need to be curtailed to bring a better completion rate. This is a relatively newer hiring metric that has come to be of relevance due to the digital transformation of the workplace.
6) Selection ratio: This simple ratio of the number of applicants hired over the number who have filled the application shows the effectiveness of the entire recruitment effort. Based on this, the assessment models used, selection criteria, and even the entire recruitment workflow can be tweaked.
7) Attrition rate: This is one of the hiring metrics that has not changed for several decades. Loyalty is not just highly prized, it is a judgment on how desirable a place of work is in the long term. The attrition rate is assessed based on the number of candidates who depart within the first year of hiring.
For the recruitment teams of the HR function, these and many other hiring metrics tell a story in operational effectiveness, viability of the recruitment system, and nuances of employee experience in addition to any captured by an employee survey. These two tools, vastly different in execution and qualitative approach, must be used together to fill out the numerical and non-numerical aspects of the talent acquisition and talent management functions. Thus, they instruct talent strategy and vision to drive positive long-term outcomes.
References:
- 6 Key Hiring Metrics Every Company Should Closely Monitor|Hire Rabbit | June Javelosa, Karen D’angelo | 2017
- 8 Crucial Recruitment Metrics You Should Track in 2020 | Hirevue | Adam Love | August 19th, 2020
- 5 India Recruitment Trends That YOU NEED To Know | Social Talent Blog
- Four trends changing the way you attract and retain talent | Global Talent Trends 2020 report|LinkedIN Talent Solutions
- 4 Trends Changing the Way You Hire and Retain Talent in 2020| LinkedIn Talent Blog | Mark Lobosco | January 22, 2020
- 15 Sourcing & Recruiting Metrics: How to Measure Your Hiring Success in 2021 | Amazing Hiring | By Yulia Kuzmane | February 01, 2021
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