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Why is Recruiting Efficiency an Important Metric?

October 27, 2022

The transformation of the recruitment space is not unknown to recruiters and organizations today. However, with all the awareness around recruitment becoming more candidate-centric than ever before– not a lot of enterprises are actually acting on it. Talent hunters are constantly struggling to find and hire quality talent. 

Amidst the intense noise in the recruitment space today, recruiters are racing against competitors and time. In order to boost hiring results, organizations regularly need to measure and improve their recruiting efficiency. But what does it mean at a deeper level? Recruiting efficiency directly relates to the various recruiting strategies and methods employed at your organization to source, recruit, and onboard candidates. 

Whether it is about hiring top-notch talent, simplifying the recruiting process, or optimizing the usage of available resources – efficient recruitment can empower your company’s growth and expansion plans. If you’re wondering how the process impacts the quality of talent hired – the answer is candidate experience. How candidates in the workforce perceive your recruitment and employer brand largely drives your talent acquisition. 

In this blog, we will discuss how recruitment efficiency impacts your hiring outcomes, how to measure the impact, and what areas you need to work on for amplifying the results. Stick around for a deep discussion about all you need to know about recruiting efficiency and a step-by-step approach to improve it.

What is Data-Driven Recruitment?

Before we hop into different metrics that define recruiting efficiency, let’s try to understand data-driven recruitment briefly. Data-driven recruitment is leveraging statistics to inform your hiring decisions and choose the right methodologies. Talent teams utilizing data to move their recruitment are more likely to hire better candidates while optimizing the cost, time, and other crucial hiring metrics.

Here are the top reasons why data-driven recruitment is vital today:

  • Helps boost recruitment efficiency and productivity
  • Enables recruiters to save more time while recruiting
  • Pulls out the errors and shortcomings of the current hiring process
  • Makes it possible for you to forecast your hiring
  • Helps improve overall hiring effectiveness

What are the Different Recruiting Metrics? 

The standards used to measure hiring success and enhance the overall recruiting process in an organization are referred to as recruiting metrics. These measurements help in figuring out if you’re hiring the right talent if your recruitment methodology is optimal and what are the different aspects you need to work on in your talent acquisition process. 

Data-driven recruitment works on the basis of numerous recruitment metrics and enables you to make decisions that lead to better hiring outcomes. Here are the most crucial recruitment metrics you cannot miss out on to curate your recruitment as and when required. 

  1. Time to fill: The number of days required to find and hire a new candidate is the time to fill. It is usually measured in terms of the time between the release of the role requirement and the day when a candidate accepts the offer letter.
  1. First-year attrition rate: Out of all the candidates hired, the percentage of candidates retained for at least a year – form the first-year attrition rate. This is a critical metric as it conveys if the candidates’ expectations were met and if the recruiters communicated effectively or not.
  1. Cost per hire: This is measured by calculating the total cost of hiring divided by the number of candidates hired. Numerous costs are included in the total hiring costs including job board fees, external recruiting consultant charges, recruiting team payroll, tools purchased, etc.
  1. Quality of hire: Although different organizations have varied meanings attached to this metric, it is mostly defined by the performance rating of a candidate during the first year of employment. Additionally, recruiters also measure the success ratio as a part of the quality of hire by dividing the total number of candidates satisfying the performance threshold by the total number of candidates hired.
  1. Applicants per opening: The total number of applications received for each open role is another vital metric that recruiters need to track. It tells you about the complexity of the application process and if the job description is easy enough to decipher.

Also Read: Top 10 Recruiting Metrics to track in 2022

What is Recruiting Efficiency?

Recruiting efficiency is a combined term used for various metrics covering your recruitment cycle end-to-end, primarily the speed and cost of hiring. Every company’s objective of growing fast and effectively is driven by hiring more in less time and that is where recruiting efficiency comes into the picture. In each stage of the recruitment funnel, different metrics are utilized to measure the efficiency, the most relevant of them are:

  • Number of applications received
  • Number of resumes reviewed/screened in a certain time period
  • Average time between Receival and screening/review
  • Percentage of resumes qualified
  • Number of candidates screened via phone in a certain time period
  • Average time between resume screening and phone screening round
  • Percentage of candidates qualifying for interviews 
  • Average time between phone screening and interview
  • Percentage of successful candidates in interview 
  • Average time between interview and final decision
  • Number of offer letters generated
  • Average time between final decision and release of offer letter 
  • Percentage of candidates accepting offer letter
  • Average time between offer letter release and acceptance
  • Time between offer acceptance & starting date

It is evident that recruiting efficiency covers each stage of recruitment funnel – right from the application to offer letter acceptance and joining stage. While the above-mentioned metrics define the quantitative measure of recruiting efficiency, each has a deeper qualitative meaning attached. Let’s now find out how each of these impacts your hiring and its outcomes.

How to Measure Your Recruiting Efficiency?

Similar to measuring the success rate in other aspects of your business, recruitment needs continuous analysis and data-driven optimization too. However, there lies a big difference – hiring is not an internal operation. Whatever you do has a direct impact on your employer brand and how the external workforce views you - so the candidates’ recruitment experience matters inherently.

Keeping all the dimensions of recruitment in mind, we figured out the ideal way to distribute recruiting efficiency, and it is in line with the sequence of the candidate’s journey down the recruitment funnel. 

  1. Application Efficiency

The productivity of your application to interview stages forms the first major part of recruiting efficiency. This is measured to analyze how closely the sourced candidates match the job description. It can be measured with a simple calculation:

Application Efficiency = (Number of candidates selected for an interview/ Total number of Resumes shortlisted for the role) x 100

If the outcome is too low, it means either your recruitment team is being too specific with shortlisting or the posted job description doesn’t quite align with the requirements. And hence these factors need to be worked upon.

On the other hand, if the rate is too high, the shortlisting isn’t intense enough to satisfy the role requirements. 

An ideal rate is around 60- 75% of application efficiency. If the rate is significantly lower than 50% – it directly means your strategy needs restructuring, as you’re losing out a lot of time in getting enough candidates to the first interview stage.

  1. Interview Efficiency

Moving a step forward – interview efficiency reflects your hiring team’s shortlisting procedures. The way to measure it is,

Interview efficiency = (Number of candidates who are given the offer letter/ Total number of interviewed applicants) x 100

Although this metric varies for different positions, an interview efficiency rate that is too low signifies the cost and time of hire are high. How? As your hiring managers take more time and too many shortlisted candidates to fill in fewer positions, you know something’s missing in the recruitment process that can be corrected to boost interview efficiency.

In ideal scenarios, the interview efficiency should at least be around 25-30% in order to sustain the hiring costs effectively and acquire quality talent fast.

  1. Onboarding Efficiency 

The ultimate recruiting efficiency is the final results, i.e., how many of the total candidates offered a role actually accept the job. Onboarding efficiency can be measured by a simple calculation of -

(number of candidates accepting the offer letter/ Total offer letters released) x100

If your onboarding efficiency is lower than 60%, it means that the recruitment process needs to be optimized for candidate experience. It might also mean that the hiring manager is unable to negotiate the salary effectively and communicate the perks of joining the company.

No matter how well-established your organization is, the onboarding efficiency rate is something you might still struggle with if the recruiting process isn’t convenient and satisfying enough.

And if a company manages to get to a 100% offer acceptance level, it definitely means that their compensation for the corresponding role is higher than others in the same space.

Why Measuring Recruiting Efficiency is Crucial Today?

The success of your business directly depends on the talent you acquire. And so far we have seen how recruiting efficiency drives the outcomes of the hiring journey. Here are the top reasons why measuring recruiting efficiency is critical for your organization today.

#1 You Want to Hire Top Talent

Bad hires cost you as much as 30% of the candidate’s yearly wage, it’s pretty clear that as a recruiter you need to be very specific about the talent that you want to hire. And that begins with knowing your business requirements, framing your recruiting processes correspondingly, and executing those strategies efficiently. 

Continuously analyzing your recruiting efficiency not only helps in enhancing the process for recruiters and the cost of hiring for companies but also boosts candidate experience. That further means that brands can extensively retain quality talent in their funnel, reduce drop-offs and attract more qualified candidates with their employer brand.

#2 Optimize Time and Cost of Hiring

The primary outcome of working on your recruiting efficiency is reducing the time and cost of hiring. The better your hiring process is – the more you understand your requirements and the closer you would be to your target candidate. Along with the shortened time between sourcing and onboarding, it will also impact the cost of hiring as fewer resources are spent on hiring more candidates. 

Winning the confidence of candidates with amplified recruiting efficiency also ensures you retain more employees once they are hired – which is a major factor in saving up human resources costs.

#3 Boost Company Productivity

When your candidates have a seamless recruiting journey with your organization that they enjoyed – the momentum with which they begin work would be phenomenal. So efficient recruiting ensures satisfied candidates, and motivated employees and you retain them for longer too. 

Not to forget – happy employees bring in 20% more productivity as compared to others.

Recruiting Efficiency vs Recruiting Effectiveness: What’s the Difference?

The efficiency of recruiting covers the optimization of the process for improving metrics like time, cost, and candidate experience. These metrics have a direct impact on the success rate of an organization’s hiring. Hence, working on recruiting efficiency is much needed for talent teams and hiring managers today.

Recruiting effectiveness, on the other hand, involves the ultimate outcome of recruiting which is the quality of talent hired. Although it’s a very subjective metric and organizations often have varied approaches to measuring it – candidates’ performance rating is one of the top metrics used to analyze that. The ROI generated after investing resources in recruiting is the recruiting effectiveness at a ground level. Additionally, the volume of hiring, sourcing channels, outsourced hiring agency’s performance, and referrals also contribute to this metric.

Boost Your Recruiting Efficiency with Recruitment Automation

The talent market today is more challenging than ever. With outbound recruitment being the primary gateway to acquiring quality talent, recruiters have a lot on their plates all the time. From finding qualified candidates to reaching out, engaging, and recruiting them – hiring teams are stuck in the same never-ending loop of recruitment. The best opportunity to improve recruiting efficiency and hence hire better talent by optimizing the lengthy mundane hiring journeys is now brought by recruitment automation. 

Nurturebox enables recruiters and talent teams to automate mundane top-of-the-funnel tasks of recruiting that take most of the recruiters’ time. By delegating admin tasks and focusing on the human side of recruiting, talent teams can now work with dedication towards improving their recruiting efficiency. The platform allows you to automate outbound sourcing, outreach, and engagement and pulls your entire recruitment funnel on a single platform – eliminating all the hassle for you. Scaling up your recruitment is incredibly easy with Nurturebox’s Chrome extension. It integrates with your existing recruitment tech stack for a truly seamless experience, try it out now!

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