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The latest news, trends and information to help you with your recruiting efforts.

Posted September 24, 2020 by

Should high-volume hiring employers of students and recent grads measure the effectiveness of their campus recruiting programs by cost-per-hire?

— By Dennis Theodorou, Managing Director at JMJ Phillip Executive Search

Utilizing cost per hire for mass hiring is useful as it allows you to understand the total cost of onboarding a large number of employees.  It allows you to keep track of how much money you’re spending during the recruitment process, in particular, where the money is spent and how much money was spent to hire each candidate. You’re able to track the efficiency of your processes and team members.

Cost per hire lets you analyze your external and internal resources and how long it’s taking you to onboard a particular position. You can then judge whether you are investing in the right processes and platforms for your organization’s hiring needs. When you identify the appropriate method of hiring for your needs, you can then really streamline the process over the long-term.

— Article courtesy of Dennis Theodorou, Managing Director at JMJ Phillip Executive Search, a boutique, global, executive search firm specializing in the manufacturing, supply chain, and technology sectors.

Posted September 24, 2020 by

Cost-per-hire is a key hiring metric but there are four others.

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

Conclusion

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.

Photo courtesy of Shutterstock.

Posted September 23, 2020 by

Why do employers of college students and recent grads care about cost-per-hire?

Until about five years ago, very few employers of college students and recent graduates even attempted to calculate their cost-per-hire, let alone cared about it.

Sure, there were many exceptions who looked carefully at their hiring, retention, and productivity metrics when deciding on their best strategies and tactics for students and recent graduates for part-time, seasonal, internship, and entry-level jobs. If pressed, I could probably name 10 of them without a problem. But for every one of those, there were probably 100 that decided what schools, job boards, and other sources to use based on the number of hires per source. That approach, thankfully, has largely gone the way of the dinosaur.

The problem with looking only at the number of hires by source is that it can make poor sources look great and great sources look poor. For example, let’s say that you’re trying to hire five students and you go to two schools and use one job board. The first school is across the street from your office and you hire one student there. The second school is across the country and in a very rural area but you hire three students there. You also hire one people from the job board.

In terms of cost, the school across the street costs you one staff day, so call that $300 when you include the employee’s wages, benefits, payroll taxes, etc. For the school across the country, you’ve got a day’s worth of travel in both directions so three days at $300 each plus the $500 airline ticket plus another $500 for hotel and other costs, for a total of $1,900. For the job board, your cost is one posting at $75.

If you look only at which sources generate the most hires to determine which is your best source, then the school across the country would win as you hired three students there. The job board and school across the street would be the losers with only one hire each. An analysis like this might cause you to stop recruiting at the school across the street and the job board. But that would be a mistake.

A better approach would be to look at the cost-per-hire by source as the costs associated with each source differs markedly and it is your return on investment that matters. The return, in this case, is the number of hires. The investment, in this case, is your total cost per source. So, looking at it this better way, you’ll see that the school across the street had a cost-per-hire of $300. The school across the country had a cost-per-hire of $633. The job board had a cost-per-hire of $75. Using this ROI approach, the best source is the job board then the school across the street and then the school across the country. Incidentally, the National Association of Colleges and Employers (NACE) reports that the average cost-per-hire for a student hired through on-campus recruiting is $6,110.

Even better is to use productivity data. Cost-per-hire is okay at best, but it only accounts for what it costs to hire the average person. If one hire stays with you for two weeks and another for 12 years, you’d much rather have that second hire, right? If you only used cost-per-hire, you wouldn’t even look at the productivity of each person, and that would be a mistake. To determine your return on investment, your return isn’t so much how many butts you put in seats but what those butts do, and to know that you have to look at the value they deliver to your organization over the lifetime of their employment with you.