Guest article by Scott Rivers
Cost-per-hire only gives you short term metrics about cost as it relates to your recruiting and hiring efforts. In order to fully understand your hiring and recruiting effectiveness, you should include five metrics on every dashboard.
Effective hiring is critical for a smooth-running company. The way to know if what you are currently doing is working is by tracking critical metrics. Stay on top of these five important hiring measurements. They give you essential insight into what is working and what needs improvement in your hiring process.
Candidate Quality Ratio
This metric is also called the ratio of qualified applicants to total applicants. Tracking this ratio lets you monitor how many candidates you spend time on in the recruiting process that are actually a good fit for your team.
It ties directly to those chosen for an interview. According to experts, the goal is to get a minimum of three-quarters of your candidates selected for an interview. If your rate is less, it indicates those chosen for you to review are not measuring up to your needs and expectations, not those of your hiring team.
For hiring managers, this translates into you becoming the “quality metric” for your hiring practice. Work to train and empower your recruiting team to be the “quality metric” of all candidates submitted. If the candidates you are seeing do not measure up to your expectations, spend some time re-calibrating with your team.
Set clear expectations, and more importantly, establish an uncompromising standard for your minimum criteria. The better this metric gets, the more efficient your time is spent as a hiring manager in the hiring process.
Time to Fill
The industry-accepted calculation for this metric is:
Time to Fill = Total Number of Days Job Is Available and Unfilled.
Because your focus is to find the right candidate as soon as possible, we measure this in two distinct ways.
1. Candidate Sourcing Time
It makes a major difference in a company’s efficiency when the time to fill a job, from starting a job requisition to hiring a qualified candidate, is short. The standard, according to Recruiter.com, is 10- to 14-days for presenting a qualified slate of three candidates. The experts recommend tracking how long it takes to present a slate of three qualified candidates and how many slates are assembled.
For difficult roles in Clinical Research or Clinical Diagnostics, the areas in which Cerca Talent+ specializes, you might find the 10- to 14-day window is consistently too short of a time frame. This is especially true in some highly technical environments. Continue to track this metric to see how your organization manages different areas of your business and decide on a time frame that best fits your hiring standards.
2. Candidate Processing Time
The processing time refers to how long it takes from the introduction of the candidate who is ultimately hired to the time when they finally accept the position. Many will say processing time is the time it takes from approval for hiring a candidate to the actual time they begin working in the new position, yet measuring in this way includes too many variables and does not provide a reliably stable statistic that can be managed. According to ERE Media, a variety of circumstances add to this time period. For example, if the new hire needs to relocate, it can add weeks to the process.
Make this a simple metric that can allow for gains in efficiency and effectiveness in the actual interviewing process. Measure this retrospectively with each hired candidate and work to improve your interviewing process. This makes for a better candidate experience and can even improve the quality of hire, when done correctly.
Quality of Hire
According to research done by the Aberdeen Group, the most critical hiring metric is Quality of Hire. While this measure can be difficult to assess without some subjective bias, find a systematic way to do this at your company based on the desired profile for new employees. Your Quality of Hire (QoH) metric could be based on the first two years of performance reviews, or for commercial teams, it could be a calculation based on their performance to goal. For a long term QoH metric, one could look at the number of promotions a new employee receives over a one, two- or three-year time period.
According to the Recruitment Metrics and Performance Benchmark Report done by Staffing.org, there are definite benefits from frequently measuring the quality of those hired. The more often it is done, the happier managers are with the quality, and teams measured in this way will outperform peer groups.
Cost of Hire
A bad hire is expensive. According to a Harris poll, over 40% of people responding said it was more than $25,000, and a full 25% said it was more than $50,000. I was recently speaking with a client whose finance team conducted a sensitivity to turn over study for sales which indicated the cost of a mis-hire was in excess of $800,000.
Clearly, the cost of hire is an important metric! Investing well in the effort upfront is essential, especially within leadership roles or for all elements of commercial teams, where this number can skyrocket due to lost revenue or mismanagement of revenue-generating personnel.
This metric should include:
- Sign-on bonuses
- Advertising fees
- Employee referral bonuses
- Employee relocation costs
- Third party recruiter fees
- Recruiter salary and benefits
- Lost revenue for open territories
- Travel expenses for applicants and staff
- Lost revenue from mismanaged employees or customers
Tracking these five+ metrics will help any organization, large or small. Combined, they shine a bright light on your hiring practices to reveal just how effective your talent acquisition efforts are. When you know the numbers, you can pinpoint where change needs to happen, speeding up improvements to your efforts of bringing the best possible talent to your team.
— Article courtesy of Scott Rivers, President and Managing Director of Cerca Talent +, a full-service talent firm with a strategic focus in the areas of Life Sciences, Diagnostics, and Biotechnology.