A critical part of the recruitment process is regularly measuring and monitoring your agency’s recruiting activities and optimizing them to remove identified problems.
Or else, your recruiting strategy becomes irrelevant and obsolete, ultimately leading to negating all your efforts of building a solid workforce for your clients.
This is where recruitment KPIs come in.
By using the right KPIs you can better interpret and evaluate a wide range of talent acquisition factors to aid your hiring process.
They help you source the right talent for your client, plus fit them into their internal culture and boost motivation and engagement.
Read on as we discuss the top 8 recruitment KPIs, along with tips to help you track them to advance recruiting efficacy.
What Are KPIs in Recruitment?
Recruitment KPIs (Key Performance Indicators) are strategic business metrics that help optimize the recruiting process by aligning activities with the client’s short-term and long-term goals.
KPIs look like numbers—but just on the surface.
They provide you with critical data and insights into how close (or far) you are from achieving your recruiting goals and facilitate strategic decision-making.
When analyzed in the context of a client, KPIs inform you how to connect with ideal candidates and make the required adjustments to promote their workforce productivity.
How to Use Recruitment KPIs?
Recruitment KPIs can align your recruiting efforts to your overall business strategy and objectives—provided they are specific, measurable, achievable, relevant, and timely (SMART).
You’ll understand how your efforts are saving the organization money, building a stronger workforce, and improving efficiency.
The right KPIs also reflect the return on investment for recruiting costs.
Below is a short step-by-step rundown to use recruitment KPIs and measure your success–
- Consider your industry niche and company size: Choose KPIs that make the most sense for your agency. Ensure they align with your overall recruitment plan. If your strategies change over time, so should your KPIs.
- Build a solid recruitment pipeline: A recruitment pipeline is your agency’s talent pool filled with suitable candidates for roles or positions with high turnover. Identify specific roles or types of positions that need an extra boost. For instance, if your client’s sales team needs extra attention, focus on strengthening that specific hiring pipeline. Work on building your brand as an attractive workplace and finding passive candidates (and staying in touch with them).
- Analyze your recruiting funnel. Invest in resources like customizable KPI dashboards and a CRM software to build and maintain your talent pipeline. Tie these efforts to measurable outcomes to eventually boost your recruitment agency’s growth.
KPIs vs. Metrics: How Are They Different from Each Other?
All KPIs are metrics, but all metrics are not KPIs.
For instance, a recruitment metric refers to the number of candidates who apply for an advertised position. A KPI, in this case, would be the number of qualified candidates who make it past the initial screening.
Recruitment KPIs are SMART metrics that add more value to your organization’s recruitment process and help ensure a healthy return on your recruiting investment.
8 Recruiting KPIs You Must Track
Below are some of the most impactful recruitment metrics with tips to track them and measure your recruiting performance.
1. Qualified Candidates per Opening
Qualified candidates = Total candidates who go past the first hiring stage
While it’s nice to have a lot of candidates applying to your job openings, it won’t be useful if none of them meet the required criteria.
Instead, focus on having enough qualified candidates—ones that fulfill the job requirements and can go beyond the first stage of your hiring process—so that you have more choices for making a good hire.
If you aren’t connecting with qualified candidates, it’s likely your job descriptions aren’t attractive enough, or you aren’t posting them in the right places.
Another possibility is having unrealistic expectations about the type of candidate you want to hire.
Track the ratio of qualified candidates you get for each job opening to know what percentage of people applying for a job position is actually qualified for the role.
A low ratio of qualified candidates means you need to rethink your job ads and work on better targeting your ideal candidates.
2. Time to Hire
Time to hire = Date of hire – Date candidate accepts the job offer
Time to hire, also known as days to offer, is one of the most important recruitment KPIs to measure hiring efficiency as it helps you identify bottlenecks in your recruitment process.
It’s unlikely for desirable candidates to stay on the market for more than a few weeks, so you want to keep the time-to-hire as short as possible.
The faster a candidate accepts your offer, the better your quality of hire and the lower your costs.
This metric also helps you make informed hiring decisions for specific timelines and facilitates better workforce planning.
Measure the time-to-hire KPI separately for each department or type of role for best results.
3. Cost per Hire
Cost per hire = Total recruiting cost / Number of hires
The cost per hire KPI considers all the expenses that go into hiring a new employee, including the fee to post jobs on portals, setting up a referral system, and your recruitment team.
The purpose behind measuring cost per hire is to measure the economic value of the recruitment resources.
It lets you find and eliminate unnecessary costs and reallocate resources more effectively, as defined in your company expense policy.
For instance, you may be spending a substantial amount of money on job boards when most of your qualified candidates are coming from social networks and employee referrals.
Of course, this isn’t a race towards zero.
You’ll always have costs associated with hiring, but measuring this KPI will ensure your funds are used optimally.
4. Offer Acceptance Rate
Offer acceptance rate = Number of accepted job offers / Total offers extended) x 100
After screening and interviewing candidates, you obviously want shortlisted candidates to accept your job offer.
If they don’t, there may be problems with your client’s reputation, or their compensation and benefits strategy isn’t competitive.
Perhaps the time-to-hire is too long.
Talk to qualified candidates to understand what they want from you as an employer.
Get more insights into whether your client’s pay is competitive and if adjustments need to be made.
We also recommend asking your client’s current workforce for suggestions to improve your hiring process.
5. Sourcing Channel Efficiency
Sourcing channel efficiency = Number of qualified candidates from a specific source – Average number of applicants from all sources
Sourcing channels are the different places where you advertise job openings.
Measuring sourcing channel efficiency (also known as source quality) will inform you where your most qualified candidates come from and its ROI.
This way, you can develop better social strategies and improve the overall recruiting process.
To track sourcing channel efficiency, use conversion tracking tools like Google analytics. ATS’ are also helpful to track sourcing channel data for each candidate.
Pay attention to trends and compare results with related metrics like sourcing channel cost, cost per hire, and application drop-off rate.
6. Quality of Hire
The whole point of quality of hire is to understand how well a candidate ultimately fits into your client’s company.
Since there isn’t a cookie-cutter approach, you need to consider two things– pre-hire quality and post-hire quality.
Pre-hire quality satisfaction rate = (Number of managers satisfied with the candidate pool / Number of surveys filled out) x 100
Are you attracting ideal candidates who can do the job to your satisfaction?
Look into factors like time-to-hire and first offer acceptance rate. Send your hiring managers surveys asking them how satisfied they are with the pool of candidates they get for each job posting.
One-year turnover rate = Number of employees who leave within one year of hire date / Total number of employees that leave during the same period
At this stage, you’ve hired new employees.
Next, you need to figure out how long it takes them to become productive—and how that productivity compares to their peers.
Besides this, you also need to consider important aspects like cultural fit and employee engagement for effective team building.
We also recommend asking your clients to use employee surveys and conduct performance reviews to determine post-hire quality.
One-year attribution, for one, is an excellent KPI for this use case. A high turnover rate indicates you’re not matching the right person to the job.
7. Retention Rate
Retention rate (%) = Total employees still employed at the end of a specific period / Total employees at the start of the same period) x 100
Tracking recruitment metrics makes zero sense without measuring retention rate.
What good will it be if the candidates decide to leave within a short span of time? You’re back to square one!
Retention rate tracks the total employees who stay at your client’s company over a given timeframe out of the total number of employees at the beginning of the same period.
You can also use this KPI to track turnover rates and measure how many employees leave voluntarily in the same period.
As the retention rate goes up, your turnover rate goes down.
Low retention rates mean you need to review your hiring techniques and your client needs to focus on improving the workplace culture.
8. Candidate Net Promoter Score (NPS)
Candidate NPS = % of promoters – % of detractors
An excellent KPI to measure candidate experience, Candidate NPS gives insight into how likely candidates are to recommend your company based on their experience.
Here’s how to go about it— conduct a survey asking applicants how likely they are to recommend your client to others on a scale of 1-10.
Subtract the percentage of 1-6 respondents (detractors) from the percentage who answer 9-10 responses (promoters).
Don’t include the percentage of candidates who rate you 7 or 8. Having an NPS above 50% is considered excellent.
For deeper insights into your hiring process, collect NPS data at each stage of the recruiting process and segment the data by the recruiter and recruiting stage.
Simplify & Make Recruitment More Effective with Recruit CRM
Delivering a positive hiring experience and cutting down recruiting costs are a recruitment agency’s biggest priorities, regardless of its size.
Luckily, selecting the right recruitment KPIs and regularly monitoring and optimizing them will help you assess and improve your recruiting efforts.
Use an integrated Applicant Tracking System like Recruit CRM to effectively store and organize all candidate data as well as track critical recruitment KPIs and metrics to enhance hiring and make better decisions.
Rana Bano is a one-part B2B content writer and one-part content strategist. She uses these parts to help SaaS brands tell their story, aiming to encourage user engagement and drive traffic.