Mark twain a very famous American writer, humourist, entrepreneur, publisher, and lecturer once stated that “ Data is like Garbage , you better know what you are going to do with it when you collect it.” During this Data Driven economy data plays a major role in business and at the same time Hiring Great Talent to any organisation is a challenging task for the HR team.
For an analogy let us say that: If a person wants to scuba dive or swim in the ocean, he needs to analyse the depths of the water & the person should also understand the risks and consequences in doing this. One single wrong move could have severe consequences and could leave to fatality. Now imagine the same person is equipped with good data & has enough knowledge of the dangers, risks & safety measures, & precautions to be taken. There are better chances that a lot of risk and uncertainty is avoided for the scuba diver and they could be at an upper hand compared to person without that knowledge.
Similarly, in Recruitment, the team must evaluate their Recruitment Metrics to strength their hiring process and avoid major risks and be able to take necessary precautions. A single bad hire can quickly cause significant problems to the organisation and cause reduced productivity and cultural degradation. All in all, a big risk to the organisation’s development and growth.
Let’s get to know more about how a few metrics that can be set in place for your organisation to hire the best candidates. These metrics would help monitor, assess, and improve the hiring methods.
1) Source of Candidate: Source of Candidate is a part of the hiring process which demonstrates where your potential candidates are coming from (Job Portals, Social Media Channels, Company Career Site, Employee Referral, Recruitment Consultancy, etc.) As a company you may have invested a lot of time and money on top job portals. Amongst them a few job boards have given good profiles & Few job boards would have shared very few or zero profiles. Getting to know the Source will make you gain insights on identify the best of sources that help in receiving more applications. This helps you in many ways such as budget allocation to sources, and optimum utilisation of Resources.
• Do a cost benefit analysis of cost per CV compared to the subscription charges paid to the job site.
• Do a Sourcing to Joining comparison of Jobsites to understand which jobs sites work better for your industry and for the nature of the job.
2) Time to Hire: Time to hire is a duration of total number of days that have been take from sourcing of a candidate to joining the company. As per our experience in Multi Recruit we have found that it takes an average of 42 days to full fill an open position. So, how do you to calculate the Time to Hire?
The formula for this is:
(Time for JD Creation+ Time taken to validate the profiles from the source + HR interview round + Technical Round + CEO Round or Hiring Manager Round + CTC negotiable + Candidate offer acceptance time + Candidate Notice period completion , till joining date.)
You can reduce this time duration from 42 days to a quicker turnaround time by following a few best practices such as offering best CTC in the market, Recommending Candidate Highlights to the hiring manager, and informing the candidate about the benefit and advantages of going your organisation.
3) Profiles per Hire: The quality of Sourcing depends on the Number of profiles shortlisted for each job opportunity. Profile per hire measurement is crucial if you are not sourcing and shortlisting enough profiles. Basically, if you want to fill 2 Java positions you may have received 400+ profiles in your inbox. However, all those 400+ profiles are not your potential except 2 applicants as relevant an seem as a fit for the interviews. Have you thought ever how to reduce irrelevant profiles receiving to your inbox?
Yes! You can reduce the irrelevant profiles to your inbox by Providing specific key function, Roles of the candidates, and providing the precise skill set in the job description (JD), also presenting accurate keywords while job postings. Adding a form fill with Multiple choice questions or a Filter to sort irrelevant candidates eases this job.
4) Cost Per Hire: Analysing the Cost Per Hire is one of the most important metrics to HR department. Companies would not like to spend money unnecessarily, especially Start-up, would have to have accurate metrics in terms of Budgets for Talent Acquisition. Tracking cost per hire formula is essential to understand how much time & money is spent on Hiring a candidate.
How to calculate cost per hire:
(Internal Recruiting Cost + External Recruiting Cost) divided by Total Number of Hire. Internal Recruiting cost such as Recruiter Salary, incentives for employee referral, office rent, mobile phone, internet, tables, chairs, etc. External Recruiting cost such as Recruitment agency, advertisement on job portals & social media channels, background check, drug test, etc.)
Following a few simple guidelines to minimize your recruitment budget effectively can help in your hiring efforts a long way.
• Increasing employee referrals.
• Outsource your requirement to a recruitment agency.
5) Employee Retention: Retaining their employees is one of the main goals of HR and TA team. No organisation would wish to see their valuable employee walking out the door. As per Times of India report, 43% of employees quit their current job due to a lack in their career growth. 36% criticize work-life balance is not met, 33% blames less salary & few blame work culture is poor. Well talking about millennials, they shift their jobs nearly 3-4 times within 10 years, *source “Gallup”. Calculate the employee Retention rate to get a clearer understanding of this metric.
The formula for this is:
Create a Set Time period – Example: Time Period = January 1, 2019 to January 1, 2020
[(Total Existing Employees on last day of set period) / (Total Existing Employees on first day of set period)] x 100 = EE retention rate
Employer X ended 2019 having retained 115 of the 125 employees they started with on January 1, 2019, which translates to a 92% employee retention rate for 2019.
115 / 125 = 0.92
0.92 x 100 = 92%
Companies can overcome this by:
• Having a good Interview & Onboarding Process
• Aligning the new hire with the company’s Vision, Mission & Goals.
• Offering healthy work-life balance & career growth Path
• Employee recognition & appreciation
• Provide necessary Training & Development
• Provide effective tools and improve efficiency
• Offering good benefits such as Health insurance, ESI, PF etc.
6) Offer Acceptance Rate %: Not all candidates who are offered will join your organisation. There could be various reasons for them not joining such as
• Counteroffer from competition
• Offer shopping by candidates
• Unhappy with the interview process
• Delay in offer
• Delay in onboarding
This would create a lot of delay in hiring and cause serious damage in terms of time spent and efforts put in hiring.
The formula for Offer Acceptance Rate %:
No. of offers proposed / No. of applicants accepted.
For example, you may have rolled out 10 offer letters to the candidates, but only 5 candidates have accepted your offers for the role of Business Development Manager, which shows 2:1 ratio.
Best Practise to increase offer acceptance Rate:
• Create an attractive CTC package with benefits
• Create a well-defined Job role
• Be open to Counteroffer candidates with evidence
• Have a well-defined POFU (Post offer Follow Up Process)
7) Quality of hire: Quality of hire is an essential metric to the organisation.
Reporting Managers and Senior management team always track the performance of their employees. No one likes a non-performer in their team. Also, this metric will give you to assess the performance of the in-house Talent acquisition team as well.
A few factors that determine the quality of hire is as follows:
• Evaluating the output of individual
• Finding the average performance of the employee
• Measuring the ability to adapt to the work environment
• The Ability to smash their targets / Overachieve targets
• Measure the Consistency and quality of work being done
Best Practises: –
In the interview phase, the HR team should evaluate candidate on:
• The various Projects & domains they have worked on
• Technology they have used in their previous organisation
• Assess Their Key result areas (KRA).
These types of strategies will be helpful to hire the best candidate for the company.
8) Diversity Hiring: Hiring based on merit with special care taken to ensure hiring procedures are free from biases related to a candidate’s age, race, gender, religion, sexual orientation, and other personal characteristics that are unrelated to their job performance. Diversity discriminations creates a negative impact in the corporate environment. If the company ignores diversity hiring, they may lose a good and professionally qualified talent. So, providing an opportunity to the real talent on diversity hiring is an essential measurement to be considered by higher-level management & HR teams.
A few metrics that you could set in terms of diversity would be:
• Diversity Retention levels across women & minorities
• A track of uniform ration across different departments
• Funnel conversion rates in diversity hiring
9) Attractive Passive candidates: Passive candidates are applicants who are currently employed in an organisation, It doesn’t mean they are not interested in a new job. Passive candidates are convinced if they found any attractive job which will add value to their career. A LinkedIn study found that 85 per cent are passive candidates around the globe. Passive candidates are highly skilled & well equipped in ongoing market technology, they are the top performer in their present company who produces significant results. As per our 2019 employer survey, Companies across industries are spending 25% of Learning & Development L&D budget on training the team. Onboarding such passive candidates does not require any training programme which will save significant training cost and reduce the Deployment time for the employee.
Your Active Vs Passive Jobseekers recruitment funnel should have a few metrics such as:
• Ratio of CV Source
• Interview to short list
• Interview to Offer
• Offer to join
• Source to join.
10) Employer Branding: 83% of millennials are actively engaged when they believe an organisation has an attractive culture. Employer branding would be highly valued when you have a career site and a website that shows and tells who you are, what you do, where are you and how they can get in touch. Evaluating your employer branding metric measurement will help in the recruiting phase. Building a company brand will attract more Job seekers to apply the jobs which will reduce the company recruitment cost & recruiter time (Job Boards, Social Media Channels, etc).
A few Metrics for the Employer Branding of the Job sites or your recruitment career Site would be:
• Registration Source / Candidate Traffic Source
• Landing page to Candidate application Ratio
• Time spent by Candidate on an ATS or a Jobsite
• Source of Candidate from social media to ATS / Career site
In this age of Technology, Creativity & Innovation in your business is very important. Not all metrics that we have stated is suitable to every business. You need to adapt and follow that model which suits your business and industry the most. Thus to conclude , Oren Etzioni an American entrepreneur, professor of computer science, and CEO of the Allen Institute for Artificial Intelligence said that “When there are hiring decisions and promotion decisions to be made, people are hungry for data.”