August 16, 2023
Recruitment is not a smooth sailing journey. When it comes to setting up objectives, most employers focus on the speed and quality of hiring, and the cost of recruitment is another unavoidable KPI. Regardless of the scale of your organization and the roles that you’re hiring for, you need to measure the recruiting efficiency that your team is able to achieve. As the recruitment space is constantly evolving towards candidate-centric nature, the hiring process and candidate experience define your talent acquisition outcomes.
On average, it takes a company around 42 days for filling one position. With the hiring requirements soaring continuously – can your organization meet its growth objectives at this pace? It’s highly unlikely, and hence the recruitment process that you follow has to be optimized to make it more efficient. The bigger question is – how do you figure out if your recruiting efficiency isn’t enough to meet the demand? What do you analyze to make informed decisions about your hiring? Here’s where recruiting efficiency metrics come in. In order to boost recruiting effectiveness, talent teams must unfold the recruitment journey and work on enhancing each stage of the talent acquisition funnel.
Data-driven hiring (which has proven to be a successful approach) not only covers measuring the quality of talent hired but also ensures that all the candidates you hire in the future satisfy your organization’s expectations. And not to forget – with the limited supply of quality talent and stronger competition than ever, candidate experience is the key to standing out. It’s evident recruiting efficiency has a crucial role to play in your hiring productivity.
Let’s now dive into the top X recruiting efficiency metrics, their impact, and how you can measure them.
In order to examine the effectiveness of your recruitment process and hiring team, recruiting efficiency metrics are utilized. This analysis of your hiring process will provide insights into how likely are you to achieve your talent acquisition goals. Additionally, it also helps you in figuring out the strategic tweaks needed in your recruitment approach.
Measuring recruiting efficiency is vital to allocate your time and resources optimally, and growing your organization with quality talent acquisition. Now at a ground level, it’s a quantitative analysis – but you need to extract data-driven insights for improving the candidate experience and team’s productivity.
The key here is to compare your metrics accurately. Whether you should compare to the benchmarks or to your previous performance depends on your goals and priorities. Consistent and dedicated work towards recruiting process optimization sets the pathway right for boosting your efficiency. The metrics that we are going to talk about, when explored well – can give a significant push to your recruiting efficiency.
When it comes to keeping a check on your recruiting efficiency, a large number of metrics can be tracked based on your prior goals. For instance – some organizations source good candidates successfully but struggle to drive them down the recruitment funnel. While others face severe difficulties in getting the right applications for their open positions.
So as per your company’s growth and hiring objectives – you can choose the relevant metrics to measure and analyze continuously. Here are some of the most critical ones to consider.
Traditionally, recruiting teams and organizations have been measuring the number of applications for each open job role. While it can be a great metric to brag about the masses being interested to work with you – it’s nothing short of a delusion.
Getting applications that are not qualified enough for your talent requirements is a waste of your recruitment efforts and time. To measure the percentage of qualified applications per opening, you just need to simply divide the qualified candidates by the total applications.
% of qualified applications per opening = (number of qualified candidates/total applications)x100
Let’s take a look at the top reasons why you must track this metric:
Also known as the applicants-to-interview ratio, this metric is a great step forward from tracking the number of applications (which is meaningless). Even 400 applications could be overweighed by a set of 50 quality applications when it comes to measuring recruiting efficiency.
The number of days between when a candidate enters the recruiting funnel and when they accept the offer is termed as the time to hire. It is one of the most significant metrics for measuring recruiting efficiency. If you’re wondering why – analyzing the time to hire helps determine the bottlenecks present in your recruitment process.
Once you identify the roadblocks which are halting your hiring, you can communicate with your recruitment teams and collectively act on rectifying them. Not only this, measuring time to hire accurately helps set up the expectations right. So whether it’s the executives or department heads, they would know what to expect from the talent teams and this keeps both sides out of pressure.
The benchmarks vary as per the role you’re hiring for, and tracking your average time to hire enables you to forecast recruitment strategy. So you know when to work on various stages of recruitment and the intensity of efforts you need to put in for hiring quality candidates.
Recruiting teams constantly strive to cut off their time to hire. To reduce it significantly, you need to segment and track the time each stage of your hiring takes. For example - the typical application screening round shouldn’t take more than 3-4 days if you’re a mid-sized company looking to hire fast.
Among all the qualified applicants interviewed over one or more rounds, the number of candidates getting the offer letter defines the interview-to-offer ratio. Interviews are one of, if not the most, time-consuming activities in the entire recruitment cycle. As more time simply means a higher cost of recruiting – an extremely low interview-to-offer ratio could mean you are burning a lot of cash in hiring.
If one of the primary goals is to optimize the recruitment process and know what exactly to expect from recruiting teams – you want every interview to be productive. Here’s how the interview-to-hire ratio is calculated:
Interview-to-offer ratio = Number of interviews conducted / Count of candidates offered jobs
The ideal ratio is considered to be 3:1, which means out of every three candidates you interview: at least one should be hired. Although this varies as per industry and different job profiles, this is a generic benchmark.
On the other hand, if this ratio is too high, that is if you’re offering the job to too many candidates out of the interviewed ones, you might need to review the interview process and the hiring manager’s knowledge of the role. Having this forecast in hand helps you determine the average number of applicants and interviews you need to cater to, for fulfilling the talent requirements.
If you’re wondering about multiple rounds of interviews, don’t be confused as we have got your back. A large number of companies usually have multiple rounds of interviews. In those cases, you need to measure the ratio of candidates progressing to the next round and make decisions accordingly.
Remember the term – candidate drop-off? Do you know why is it hyped so much these days? With candidates having extensive opportunities, they are actually being chased. And this further leads to most candidates having multiple offers in hand, out of which they would obviously accept only one. The offer acceptance rate defines how many candidates accept your offer out of the total offer letters released.
As a recruiter, it’s natural to expect candidates (especially after all the screening and interviews) to join your company once you share the offer letter. Although this isn’t always the case – an extremely low acceptance rate signifies that your recruitment process and candidate experience need to be optimized. Here’s how you can calculate the offer acceptance rate first:
Offer acceptance rate = (Number of candidates accepting the offer/ Total offer letters released) x 100
No matter what happens, you shouldn’t miss out on this metric as it directly tells you about the possibility of big hurdles within your recruitment process. And you need to resolve them soon to fix your recruitment and reduce the time and cost of hiring.
Two of the most common parameters affecting offer acceptance are expected compensation and candidate experience. Both need to be dealt with strategically by recruiters. Negotiating with candidates is truly an art. On the other hand, building a top-notch candidate experience can be accomplished with a step-by-step strategy.
The cost of hiring a candidate is a primitive recruiting efficiency metric along with the time to hire. Credit to talent requirements scaling up and the economy facing weird challenges – organizations are desperately looking to reduce recruitment costs. More than saving money, employers want to allocate their hiring investment in the right places. You can only work around a bit when it comes to candidates’ compensation given the market competition and shortage of high-quality talent. What remains is the other parts of recruitment – job ads, human resource cost, outsourcing, recruitment marketing, referrals, event expenses and more.
Tracking the cost per hire helps you plan and convey the budget of recruitment campaigns. Not to foget – keeping an eye on expenses always triggers saving. So the average cost per hire should be regularly checked along with the role-specific cost analysis.
Measuring the cost per hire and comparing with job-specific benchmarks would also enable you to cut costs without compromising the quality of talent acquisition. More importantly, it tells you if the quality of candidates hired can be further improved by investing more.
Some of the measures you can adapt to minimize your cost per hire are – try to improve the retention rate, maintain a top-notch engaged talent pool at any given time and hir pre-vetted talent.
Imagine filling a role after rigorous recruitment process and the hired talent leaves within months of joining. Did you experience it already? It just doesn’t get more frustrating than this. So another one that makes it to the top 6 recruitment efficiency metrics is first-year retention rate. You know how expensive recruitment is, in terms of cost, time and efforts put in.
Measuring how many candidates out of the total hired retain for atleast an year gives you deep insights on your candidate experience and company culture. It directly conveys whether or not you successfully communicated the job role expectations or not.
% First-year retention rate = (Number of freshly hired candidates retained atleast for the first-year/Total candidates hired initially) x 100
If the rate is too low, three aspects that need to be fixed –
If you’re wondering why – the talent that you hire is triggered by multi-dimensional expectations. They think of a certain compensation, have expectations from a job role, and the type of interactions they would be having when on board. So not only do you need to communicate clearly and effectively about the job role, but also ensure that you are transparent with the company culture. Enhancing the culture, on the other hand, is always the key as it’s a long journey. We should not ignore the quality of hire too - as a bad hire could cost you thousands of dollars and a low retention rate can also mean that candidates didn’t find themselves capable of working on a role.
Whether it is about optimizing the cost per hire, time to hire, or any other recruitment metric – it depends on the recruitment teams to make strategic hiring decisions. Modern hiring teams, especially in growing companies, have truckloads of requirements when it comes to talent acquisition. With so much already on their plate, taking care of the admin tasks of recruiting becomes incredibly difficult when done manually. Here’s where recruitment automation comes in.
Nurturebox is a comprehensive talent sourcing and engagement tool that facilitates recruiters with end-to-end candidate sourcing, ATS management, outreach, and engagement campaigns. The need of the hour is more efficient recruiting processes and recruiters need to focus highly on the human side of hiring – interacting with people. Nurturebox’s chrome extension runs on top of your existing recruitment stack. The best part? You can automate all the mundane and repetitive tasks of sourcing, outreach, and engagement. So hire candidates at scale with amplified ease and convenience – sign up now.
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