Recently, while working on a project to evaluate aspects of a client’s recruiting process, I started thinking about the reality that businesses today have become increasingly more focused on understanding performance metrics out of a desire to squeeze greater levels of efficiency from key operational functions. The simple reason for this is that efficiency often translates to greater organizational effectiveness.
But before one can meaningfully address the relevance of performance metrics, in any business area, it’s important to understand the overarching goals that a organization is trying to achieve. In my view, when considering the goals that drive just about any recruiting function, I think it’s fair to say that all employers ideally want their hiring process to accomplish 4 primary objectives: These include:
- Identifying and engaging the best and most qualified individuals for available openings;
- Efficiently qualifying and validating that candidates possess the requisite skills, abilities, experience, and temperament to do the work at hand, as well as fit in the company’s culture;
- Assuring that a candidate’s individual career motivators and goals are well aligned with the opportunity at hand, as well as potential future opportunities; and,
- Cost effectively, engaging and on-boarding talented individuals who can contribute to the organization and ideally become tenured employees.
When thinking about metrics, it’s highly useful to keep in mind how they correlate to stated goals and objectives. Over the many years that I’ve been involved in talent acquisition, I’ve observed that some organizations have adopted a somewhat myopic view when trying to understand and assess the relative efficiency of their hiring process. Increasingly, employers of all sizes are equipped to capture vast quantities of data regarding their hiring process, as well as evaluate metrics that may offer useful insights.
For some organizations, Cost-Per-Hire is the key performance indicator of choice. Let there be no doubt that assessing the cost structure of recruitment, as with any operational area, is a prudent exercise, perhaps especially for organizations that house a high volume recruitment function where a large number of positions are being staffed on a weekly or monthly basis. While Cost-Per-Hire is an important consideration, 3rd party recruiters may appropriately argue that they are able to bring candidates to the table that a hiring organization would never have otherwise seen let alone hired, and that the extra cost is offset by the attendant ROI.
Other firms are fixated on Time-To-Fill as their principal recruiting metric of choice. There’s certainly merit to the idea that a shorter hiring cycle should translate to what is ultimately a more efficient recruiting process, as a good recruiting process, by definition, is both timely and linear.
In thinking about truly measuring a recruiting function’s efficiency, however, there may be greater value in considering Time-To-Find. In other words, how long did it actually take a recruiter or the recruiting function to find the person who ended up accepting an extended job offer? This spin on the more conventional Time-To-Fill metric considers the reality that many aspects of the interview and/or offer process are out of a recruiter’s control. For example, a recruiter doesn’t have control over a hiring manager’s or candidate’s interview availability, interview process deviations, or other related activities (which could potentially include things like references, background checks/drug testing, etc.) depending on when in the process these items are completed. My point is that these variables can all cause the process to drag, and the Time-To-Fill metric to bloat.
Another metric worth considering is the relative quality or “stickiness” of a new hire. I will certainly acknowledge that the stickiness or quality of hire metric may not be applicable to every company, particularly those with seasonal employment considerations, or where significant, industry-wide workforce turnover in specific position categories is an ongoing reality.
But, for other companies, quality of hire may be a very useful metric. If you bundle new hires within a given year and treat them as being part of a firm’s annual “recruiting class,” for example, you can start to evaluate trend data over a given timeframe that may highlight quality of hire issues specific to a year, a particular project, or even an individual department. When it comes to talent selection, professional sports teams are especially scrutinizing. Long-term success is impacted by their ability to draft quality players. It’s easy to understand why they regularly evaluate the performance of a given year’s draft selections. While they can’t expect that every draft pick will end up on the team’s roster, I think that it’s fair to argue that the best performing teams are also the best at identifying and landing quality players.
Clearly if an individual is hired and subsequently leaves the organization in a short timeframe, because of performance issues, because there was a fundamental miscommunication or misunderstanding about the position, or because a better opportunity presented itself, I would submit that the hiring process was ineffective. In this instance, all the conventional hiring metrics are rendered irrelevant. The individual who exited the organization was a mis-hire.
In my experience, when an organization deviates from the key recruitment goals I cited earlier, the relative stickiness, or quality of hire level diminishes and attrition goes up. Mis-hires increase Cost-Per-Hire expenses. Mis-hires also skew Time-To-Fill ratios, and make Time-To-Find assessments immaterial, because at the end of the day, the wrong person was hired, and the recruiting process must begin anew.
Conversely, if a quality individual is identified, engaged, interviewed, hired, on-boarded and successfully becomes a tenured employee, measurable ROI should be readily evident.
So, what’s the most valuable recruiting metric? Well, the truth is that they all have value, and therefore they are all worth examining. At the end of the day, an efficient recruitment function should be cost effective, deliver timely results, and secure quality people who stick around.