Recruitment KPIs - You cannot manage what you cannot measure
Home care nurses know exactly how many seconds (!) they dispose of to perform a treatment before having to move on. Amazon workers know precisely how many parcels they need to pack per hour, per day, per week to stay within the tolerance zone of required productivity. This is not new; Charlie Chaplin, back in 1936, in his famous feature film Modern Times already satirized and dramatized the quest for increased and unbridled productivity. Fortunately for us all, times have changed: we are no longer the slaves of our employers. Nevertheless, the need to monitor performance at work to be more efficient has remained, and it is not always just about speed.
Measuring, calibrating, and sanctioning
In the wake of this evolution, Key Performance Indicators (KPIs) have become sort of a buzzword in the past twenty years. This trend is fueled by the increasing access to data. The digitalization of work processes has enabled the measuring and timing of almost every human (inter-) action. The difference with Charlie Chaplin’s era is that organizations today also record other aspects than mere speed. Qualitative dimensions have entered the KPI sphere. Other measurable indicators are used not only to punish or reward productivity but also to help us work smarter and better and increase the satisfaction of all involved parties.
KPIs & hiring: an oxymoron?
Back-office activities have generally been the last to be hit by the KPI’s frenzy: legal, accounting, and, of course, human resources. Their time has since come. In this article, we are not only emphasizing the importance of the use of KPIs in recruitment, but also taking a wider look at the different tools, methods, and best practices available to organizations to improve the output of their hiring departments.
The reality is: one can measure anything. The issue is to know what you are looking for, what numbers are relevant, and which are merely noise, and to spread the availability of useful data within the company.
It is easier to count how many bolts and screws are produced, than assessing whether a candidate is being of an adequate “quality”, hired within an acceptable time period, at an affordable cost, and has not endured a nightmarish experience during the interview process…and, if hired, will stay more than two weeks.
Measuring soft activities is in no way an easy task, it is nevertheless a business-critical one. Recruitment managers, who by nature may not be so inclined to consider hard facts (read: numbers), are under tremendous pressure. They must identify and bring in for interviewing candidates who have many other options for employment in what seems to become an extremely hot market for talent acquisition. And if economic predictions are even minimally reliable, things are due to get even hotter. On top of this, if you happen to be in a business activity that structurally lacks talent (for example, ITC, nurses, engineers), the problem is merely compounded. So, rendering your recruitment more efficient is key to the overall success of your enterprise.
How to start with Recruitment Analytics
Your recruitment practice needs a transparent process and a dashboard with a minimum number of KPIs to overview and monitor that process. To establish a dashboard, you need first to set objectives. The first question is, what are you trying to achieve? The minimum common requirements for most companies, large or small, are:
Finding the best-suited candidate for the specific position who will create the highest value-add.
In the fastest possible time to avoid (or totally cancel out) downtime due to an unfilled position.
Managing an optimal recruitment process so that the candidate, whether hired or not, goes through a positive experience, which in turn affects employer branding and influences the overall attractivity of your organization.
Internally, the hiring manager must have been able to provide quality work, having a sense of contribution to the company instead of feeling the pressure to hire anyone with a pulse.
And all of this, of course, in the most cost-efficient way.
Recruitment KPIs – also called Recruitment Analytics – are thus the metrics you need to establish and use to be able to improve on all five points. Below are several best practices, and pieces of advice, that are useful to consider.
1. A mere volume reporting is the basis for all KPI analysis. If you are lacking an overview of how many recruitments get opened, filled, or canceled this is where you need to start before moving into actual KPIs.
A minimalist dashboard contains the following numbers:
Number of openings (i.e., recruitments started)
Number of hires
Recruitment processes canceled
And all this over a given time interval.
2. Monitor those KPIs, which give you a unique perspective on the same process: should you choose to measure time-to-hire (a classical one among the classics), you will get just one angle while ignoring the cost, candidate, and hiring manager satisfaction as well as the adequacy of candidates. In a fast-paced environment, there is a natural tendency to throw as many CVs as possible at the line managers, to keep them happy. Unfortunately, such an attitude will soon backfire because too much time is wasted checking the CVs and replying to candidates who should not have been considered in the first place.
3. It is critical not to focus only on the operational part - real-time monitoring of ongoing recruitments that will generate immediate changes in the course of action. It is essential to think strategically and analyze past recruitment processes that can also reveal areas of improvement. For example, should you identify a correlation between a given department and the number of interviews per recruitment, you just pinpointed a strategic finding that can be used to improve efficiency.
What to do with all that information?
Experience shows that the tendency is first to accumulate lots of information because one does not know exactly what they are looking for. Additionally, once the KPIs and ratios are revealing some interesting facts, you may want to dig further and further. It can become quite fun! Before you know it, you are drowning in numbers. The need to identify the KPIs that are necessary, useful, and add value, arises. So, before you start disseminating the information, and overwhelming everyone in the company with it, which, ensures that it will not be read, you need to identify the KPIs that actually demonstrate something. For example, talent acquisition managers controlling the budget for job boards and resources will be interested in conversion rates for each of the channels and sources while for line managers only advancing on ongoing recruitment counts.
The closer you get to the operational level, i.e., recruiters, the more numbers need to be real-time. You can then step in if things go in the wrong direction. For example,
if you notice that a recruitment process exceeds the average time-to-interview compared to historical data.
Different people (general management, middle management, HR, etc.) require different information. Instead of second-guessing, ask each of them what they find useful and, importantly, determine at what time interval they need the information. Too often is as overwhelming as too much. Both exaggerations individually lead to reluctance. Both together practically ensure bottom-of-the pile treatment. By experience, managerial levels will benefit from retrospective KPIs that give an insight into the overall process and help strategic adjustments. In this instance, a monthly or quarterly interval is sufficient.
In real life, the tallest hurdle for HR departments is the consistent tracking and consolidation of data along with generating and distributing the reports systematically and regularly.
Still, more important is the content of the information provided: what is the need of the recipient? The piece of advice here is to start modestly.
With time, experience, and special requests from the line and upper management, you will add and remove KPIs while refining the ratios. It is essential to keep an open mind to the relevance of the KPIs you produce and review them on a half-year basis to assess whether they are still appropriate (and looked at!).
What if you lack data?
Remember: the more data points you have, the more useful and relevant are the KPIs. Over time, you will be able to derive your own benchmarks. Therefore, if you recruit only very few people, you risk working on statistically irrelevant numbers, information that is not useful and can lead to wrong conclusions. Benchmarking with competitors in related industries or benchmarks from industry associations is one solution to this problem. Another way is comparing your KPIs with that of Serendi, which has accumulated significant historical data and, thanks to its large basis of clients, has access to an impressive amount of information.
How can we help?
At Serendi, included in our Recruitment Process Outsourcing (RPO) service package, we provide our clients with a so-called platform solution: the recruitment analytics team is an integral part of every single RPO solution. In close collaboration with your HR department and Serendi’s dedicated account manager, this team analyses your specific needs for KPIs, sets up all necessary instruments to collect relevant data, specifies useful ratios, and sets up a dashboard. This enables consistent improvement of the hiring process. Evidently, all these tools, intelligence, and experience remain with the company even after the RPO mandate comes to an end. Serendi specifically works on four strategic KPI dimensions:
Speed of process. Here we consider not only the overall process but also various steps in that process, such as the time-to-interview, time-to-HM-feedback, or the time-to-offer. Benchmarks need to be chosen carefully to take geography, industry, and function into consideration as these elements influence considerably.
Effectivity of channels. We monitor the channels and sources of candidates (presented - interviewed - hired candidates) through ratios and relate these to the cost of the individual source (e.g., as a benchmark for the channel distribution, approximately 60-65% direct external hires, 15-20% internal hires, 15-20% referral hires, and less than 5% agency hires are considered “healthy”).
Quality of the recruitment (candidates and hires). We measure the quality of candidates in the pipeline and how hires perform over time in the organization with conversion rates for different points in the recruitment process. For example, for the probation-time-pass rate, the benchmark should be above 95%, meaning that less than one in twenty hires does not pass the probationary period.
Satisfaction with service. We measure the satisfaction of hiring managers and candidates with direct, systematic feedback, including qualitative direct comments and recommendations. For example, candidate satisfaction is defined by various aspects, including candidates that have not been hired (turned down the offer or not offered a position). The latter is key as it impacts the overall result, therefore the benchmark needs to reflect this bias.
In the following table, you can see some of the KPIs that can be measured based on a KPIs' dimension.
Conclusion and summary
Set clear and understandable objectives: what exactly do you want to measure?
Define KPIs clearly from the start. For example, if you monitor time-to-hire, then you should indicate whether you measure in work days or calendar days.
You will only get meaningful and comparable values if the data definition remains the same.
Check the added value and relevance of the KPIs after six months to a year. You may find that you are missing something at some point or that a KPI provides little relevant information.
Advice to SMEs: don't reinvent the wheel; what data can be collected without too many additional resources?
How to find the right KPIs for my company: this is very individual and depends on the objectives and means of the company. Over time, one learns what is relevant for the company and what is less relevant. The basic KPIs are Time-to-hire, Cost-per-hire, Source-of-hire.
In an employee-driven job market, candidate satisfaction plays an increasingly key role, and this should also be measured.
One-dimensional measurement: KPIs imply the acceptance of a certain abstraction, therefore different perspectives are important. At least three out of four dimensions should be considered. First: the quality of recruitment. Do we have the right person in the right place? Second: speed. How long does it take to fill a position? Third: Is the process efficient? And fourth: are the costs appropriate? Measuring speed alone would be too simplistic. A faster recruitment process is not a better process.
“If you think hiring professionals is expensive, try hiring amateurs”