Recruiting KPIs analyze how efficient an HR team is in achieving its HR strategy.
HR KPIs can help businesses leverage existing data, extract valuable insights, and create a plan. In this article, we are going to be talking about the ten key indicators that HR managers should take advantage of.
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What are recruiting KPIs?
Recruiting KPIs are metrics that help measure the effectiveness of the recruitment process. The KPIs leverage data to measure how far you are from reaching your hiring goals while guiding you to make strategic decisions that serve your business goals and objectives.
For instance, KPIs can guide you to channels that consistently offer high-quality candidates.
KPIs offer useful insights into the recruitment process. You can get insights on how you can connect with the target audience, how candidates respond to interviews and assessments, how quickly you can fill up a specific role and more.
You can also look at the recruiting benchmarks and compare them to the previous year/month to gauge recruitment success.
Characteristics of good recruiting KPIs
In a 2009 paper, Eckerson describes a number of characteristics of “good” KPIs.
- Sparse: Focus on the essential ones and leave the rest out. The general rule remains: the fewer, the better.
- Drillable: You should be able to drill into detail. Why aren’t we meeting our recruitment cost target? What groups are the costliest to recruit? By drilling down you can more easily predict your future success and see where progress is lacking.
- Simple: Users need to understand the KPI. If it’s not simple, it’s hard to communicate and focus on.
- Actionable: The reason why HR only focuses on KPIs related to HR outcomes is that they can influence these. HR is not responsible for revenue or sales success. Only focus on the KPIs which outcomes you can affect.
- Owned: In line with the previous points, KPIs need to have an owner. This owner will be rewarded in case of success and will be held responsible if they fail to hit the target. The owner of an HR KPI is likely to be a senior member of the management team – such as a department leader, or manager.
- Correlated: The KPI should be related to the desired outcome. When we speak about business targets, the HR KPIs need to be related to these business outcomes. You will not directly achieve cost savings by hiring better performers.
Hiring good performers is vital, but this shouldn’t be your main focus when the company needs to cut costs to survive. Maybe you can reduce recruitment cost by 30% without really reducing the quality of hire. This is more important as it helps fulfill the company’s strategy.
Griffin (2004) stated that there should be a direct link from KPI to goals, from goals to objectives, and from objectives to strategy. - Aligned: Alignment of HR KPIs is something we briefly touched on before. KPIs shouldn’t undermine each other.
10 most important recruiting KPIs to track
There are quite a few recruiting metrics to track depending on your business goals and objectives. Let us discuss them in detail one after the other.
1. Qualified candidates per open position
A ratio of qualified candidates per open position is self-explanatory. It indicates the exact number of people who qualify for a position. A good indicator of someone being qualified is moving them to the next hiring stage.
Tracking this KPI helps you know if you are reaching the right audience. If you find the ratio of qualified candidates is low, you might want to redo the job postings and improve your efforts to reach the right prospects.
2. Application completion rate
If the number of applicants abandoning the application midway is high, you may miss top talent. There are two possible reasons for this. It is either too cumbersome to fill out or it is confusing.
If you want to connect with high-quality hires that qualify for the position, a low application rate is not desirable.
To calculate the application completion rate, divide the number of submitted applications by the total number of candidates who started filling one out.
3. Source quality
Measuring source quality helps you build a reliable talent pool. It also ensures you are investing in the best sources.
To calculate source quality, take stock of the number of quality hires coming from a particular source or how far they move through the hiring stages.
It is important to look for patterns and trends to identify the best source of applicants.
4. Time to hire
Time to hire is the amount of time taken to shortlist, interview and hire prospects from when they fill out your application form.
Knowing how much time it takes to hire a person can help you plan recruitment campaigns.
You can also unearth bottlenecks in your hiring process, discover strategies to eliminate them and reduce hiring time.
5. Cost per hire
How much does it cost to fill a position?
This KPI considers all costs associated with recruitment – how much you invest in posting job ads to the relevant boards, employee referral bonuses, job fairs and so on. Businesses should also consider the time spent interviewing applicants.
6. Interviews to hire
This metric conveys how many people you need to interview to make a hiring decision. In other words, how many qualified applicants do you need to interview before you extend an offer.
7. Offer acceptance rate
The offer acceptance rate (OAR) defines the percentage of accepted offers.
A good OAR indicates the team has succeeded in filling up a pipeline with candidates, created an efficient recruitment process, delivered a seamless hiring experience and helped the team find the right hire with the right skillsets.
To boost the offer acceptance rate, make sure the offers you are extending are competitively on par with industry standards. Facilitate open communication and make sure to be clear and consistent about job responsibilities.
8. First-Year turnover rate
High turnover is not economical for organizations.
To calculate the first year’s turnover rate, divide the number of employees who left within a year with the total number of employees who left. It gives a precise estimate of the number of people leaving the company within a year.
If this number is high, it is a matter of concern.
Businesses should revamp their recruitment and onboarding process or company culture to boost retention rates.
9. Candidate job satisfaction
Candidate job satisfaction is a robust metric to track. A low candidate-job satisfaction highlights the misalignment of expectations or partial job descriptions.
It is best to provide a realistic job preview to highlight the pros and cons of the job to the prospects, thus mitigating the risk of lower candidate job satisfaction.
10. Hiring manager satisfaction
It is important to measure candidate satisfaction levels as well as how happy and satisfied hiring managers are with employee performance.
When hiring managers are not happy with new hires, it can indicate potholes in the recruitment process or the selection criteria may be irrelevant.
You can find out about hiring manager satisfaction with short surveys or interviews.
Generating KPIs
Let’s discuss certain methods to generate robust recruitment KPIs.
1. AI-screening solution
Businesses can leverage AI screening solutions powered by machine learning to screen qualified candidates based on different parameters. This can help calculate qualified hires per open position with a few clicks.
2. Predictive hiring assessments
Software solutions powered by predictive models can process huge datasets from HRMS and performance management systems. Data analysis offers robust hiring assessments that can boost KPIs such as turnover rate, hire quality and cost per hire.
3. Chatbots
Digital assistants engage with candidates, screen them to assess their potential and provide a seamless experience. Chatbots also help users navigate through the application process and replace phone interviews with automated questionnaires to determine the right fit.
4. Digitized reviews
Online platforms like Glassdoor give an insider view of the organization and have altered the way prospects engage with brands based on reviews. Reviews on these platforms include information about the employer brand, workplace culture, compensation and benefits, work-life balance and more. Employers can monitor KPIs such as candidate-job satisfaction level based on the conversations on these sites.
5. Monitor KPIs with an HR dashboard
How do you measure recruitment success?
Whatever your goals are, defining them and tracking recruitment efforts with dashboards is a crucial step.
A recruitment dashboard is a reporting tool to visualize recruiting KPIs and evaluate performance.
They display real-time information to facilitate decision-making and alignment of recruitment activities with ultimate business objectives.
It is a collection of key metrics and captures data related to applicants, hires, recruitment budget, campaigns and more to provide a bird’s eye view of the end-to-end recruitment cycle.
These metrics help organizations reduce costs, source candidates from the best channels and enhance talent acquisition strategies to boost the overall hiring process.
Why is it necessary to have a recruitment dashboard?
- The visual nature of the dashboard empowers users to identify trends, patterns, potential issues and insights.
- It helps users analyze the hiring funnel to see how many candidates traverse from one hiring stage to the next. If you have a low conversion rate, it means you are attracting a high number of unqualified candidates in the first place.
- Users can refine and refurbish their recruitment strategies to reduce costs and hire the best candidates who are likely to remain in the organization for longer. If the current source you are hiring from does not provide qualified candidates, you may choose to advertise vacancies on different job portals.
- Spot issues and resolve them immediately to mitigate the snowball effect.
Moving forward with recruiting KPIs
Once you’ve successfully aligned your human resources KPIs with the organization’s goals, don’t forget to make these steps.
- Conduct regular meetings to review HR KPI progress at both the department and organization level.
- Review with the leadership team to ensure progress is aligning with the company’s strategic plan.
- Evaluate metrics periodically to ensure they are still valid.
- Share your HR metrics and progress with the entire organization to demonstrate the department’s contribution to the strategic goals. It doesn’t have to be complex or take a gargantuan effort to create—it could be something as straightforward as an HR KPI dashboard.
Your next step is to choose the KPIs that will bring the most value to your organization and create your scorecard.
