Prakhar Bansal Hiring the right employee is difficult. Businesses like yours are spending thousands of dollars and investing hours to fill a vacant position. And it stings when the candidate is not as good as you thought. Well, here is some good news. I have identified a quick workaround for that and help you make better hiring decisions. How? By teaching you about recruitment metrics and how they fit in your recruitment funnel.
Here's what you will learn
Introduction
To celebrate 100 years of Bentley, their Mulliner line created The Continental GT Number 9 Edition.
Only 100 of these cars were made.
There are more than 2000 billionaires in the world.
Assume that every one of them wants one of these cars. Is it possible? Of course, not. Let us imagine you are also one of the prospects. How do you make sure that Bentley gives one to you?
Maybe you will show why it’ll be a proud moment for Bentley if you own one of these cars. Or maybe you will keep an eye on how many other people are directly competing with you. You will spend time devising a strategy to outbid them and secure your win.
But what you won’t do is go to the Bentley dealership and cry your lungs out begging them to give you one. Doesn’t work that way, right?
Recruitment works similarly.
Recruitment is a war for talent
Hiring the right people and business growth leaders is one of the most difficult parts of getting high ROI on human capital.
In his book, The Talent Delusion, Dr. Tomas Chamorro-Premuzic says, “The science of personnel selection is over a hundred years old yet decision-makers still tend to play it by ear or believe in tools that have little academic rigor. When managers are asked how they go about identifying talent, their most common response is ‘I know it when I see it’, or ‘well, you just know’.”
“When managers are asked how they go about identifying talent, their most common response is ‘I know it when I see it’, or ‘well, you just know’.”
Dr. Tomas Chamorro-Premuzic
Lou Adler, CEO and founder of The Adler Group, also expands on this in his book titled Hire With Your Head: Using Performance-Based Hiring to Build Great Teams. He sums up the entire recruitment landscape and role of the HRs in one sentence, “There is nothing more important to your personal and company’s success than hiring great people.”
Every business wants to hire the right people for their roles. You are no different. You are not doing anything different from those 5000 other recruiters trying to get their hands on that “amazing Python developer”.
It is not possible to cut that candidate into pieces and give everyone a part of his brain. So, what should be done? To make your recruitment so amazing that the candidate is compelled to not look beyond your offer.
You want this amazing candidate to join your business. This person is the one who will play a direct role in business growth in the future and gives you a better return on the investment. But it is easier said than done, right? It is not like this perfect candidate will just walk in those doors and ask you to give him/her a job.
But how do you do that?
By one thing – tracking recruitment metrics and improving them.
Simple.
But you surely need an action plan for that. And that is what I am here for. Do not worry, I will guide you step by step through this journey and tell you everything you need to know about recruitment metrics, how to track them, how to improve them, and most importantly how to use them in making better hiring decisions. Because this is what you came for.
Knock knock, disclaimer
It all sounds great and beautiful and I know you are already dreaming of receiving the employee of the year award for hiring that amazing salesperson who closed the $3MM deal which you all have been trying to get for the past one year.
But hello reality check. You are not there yet. Do not count your chickens before they hatch. There is a gap between you and that sweet prize. What’s that? Yes, hiring the person.
Can you just start creating a pie chart immediately by listing down the metrics I am going to discuss? Hmmm, let me think. No. Because before you get all excited, it is necessary to set your priorities straight.
A recruitment metric that another business weighs more may not be that useful for you. For example, at Vasitum, we emphasize on the quality of hire. This often pushes back the recruitment timeline or sometimes takes more time to hire but we onboard a candidate only when we are convinced that we made the right choice. No compromises on that.
On the contrary, look at companies like Tata Consultancy Services. Do you think they care about the quality of the candidate they hire that they will wait for months before the shining star comes running along? Not at all. Quality of hire is not their center of attention because most of their employees will be shipped off to the training center anyway where they will be trained from zero.
Another common example of this strategy can be seen in the hiring way of Infosys. Most of their employees also undergo a training program at their dedicated campus. Do you think they will also sit there waiting for the perfect candidate to bump the hiring manager down the street someday? Of course not. Similar to TCS, they also do not emphasize the quality of hire.
The basics of recruitment metrics
“Be curious. Use data. Leverage imagination. Be an expert. Be an enthusiast. Be authentic. Know your competition.”
Jim Stroud, HR Consultant, Speaker, and Author
Great candidates won’t choose you unless you track metrics and improve the recruitment funnel. So, where do you begin? Or more thought provoking question: why should you start? Because:
- The CVs you are screening are relatives of your existing employees
- Candidates get frustrated waiting for their interview
- Your nickname is “The Underpayer”
- Someone said “Smoothen the onboarding process” so you spread oil at the entry of your office
- Candidate like you, your job, but still make the “meh” face
- You want to attract Gen Z so you pretend your employees are alcoholic and smoke weed all day
Why is this happening? There is only one reason for that. Note it down, tattoo it, paint it on the wall, I don’t care: Recruitment metrics.
“If you think it’s expensive to hire a professional, wait until you hire an amateur.”
Red Adair, American oil well firefighter
Here’s why you should care about it.
Imagine you go to a market to buy a pair of jeans. You will come across a number of windowless stalls selling jeans from different brands you have never heard about. They all scream “I also give comfort” and “I am the jeans you are looking for.”
But you do not take notice of them and enter the shopping mall built at a distance.
Now, when you are browsing various stores in the mall, you see that there are some brands who have huge stores that look like an entirely different world. They are rich, upper class brands charging a premium amount for their clothes. And then there are some brands who sell their product inside a super store and not a dedicated store. They are relatively poor brands, selling clothes for the economy class at average prices.
The candidates see a job in the exact same way.
Tracking and improving the recruitment metrics means you are establishing yourself as a premium brand that people want to buy and line up for despite their high price. You want the candidates to work for you even if it means they have to wait and hustle harder.
How do you become a brand? How do you leverage recruitment metrics to do that for you? And how do even recruitment metrics help you achieve this task that is more suited for the, ahem, branding team? Why do people want to work with businesses who have mastered their recruitment process?
“My dream company is Google.”
“I want to work with Adobe someday.”
“Oh my god, I would kill to get a chance to work at Goldman Sachs.”
First of all, recruitment metrics are a form of measurement. Measure what? Measure how efficient your recruitment process is and how well do you manage to attract and interview the top talent. Recruitment metrics help you gather and analyze the information about the hiring process for effective decision making.
Here is a crash course on recruitment metrics and why they are important for any recruiter.
1. Standard form of measurement
Your employees are your assets so the salary you pay them is an investment. How much ROI is the employee generating is important for you, right? So, measure their ROI.
How do you do that?
By using recruitment metrics which are a set of tools that help business owners and recruiters like you to make better recruitment decisions and get a higher return on investment.
“People are not your most important asset. The right people are.”
Jim Collins, Author of Good to Great
Here’s Priyanka Choudhary, business head at Maven Workforce, a recruitment & staffing agency on why you should care about these recruitment metrics:
- All recruitment metrics are quantifiable. Monitor them to determine what kind of candidate you are attracting and play with them to analyze their effect on the candidate types.
- HR functions are no longer confined to just hiring and firing of employees. Now, HR executives play a strategic role in the business growth by directly impacting the kind of people they are sending on your team.
- Recruitment metrics are measurement standards that you will use to gather, analyze, and present actionable information related to the hiring process.
Remember, you are just a job for any candidate. It is your duty to make sure that they are loving this job and are working with dedication to contribute in the growth of the business.
2. They are business innovators
You do not need to be at the pinnacle of innovation like Google, Apple, IBM, or some other tech giant. You just need to be innovative enough so that you are able to meet your business objectives without the drama and a little bit faster than before because hundreds of other businesses are also hoping to catch the same fish as you.
But businesses are still recruiting without having to go through all the headache that I am talking about, right? Surely you can continue to hire candidates the same way you have been doing before. Why all of a sudden a focus on these data figures?
Because all recruitment metrics are quantifiable.
Recruitment metrics are your best friends. See, over the years, the function of an HR manager has changed. You are not someone in the organization whose job is to resolve disputes and prevent them. Today, as an HR, it is your responsibility to hire the right talent who drives the engines of business growth.
The focus of these metrics varies from one organization to another. These statistics can be used by your team to make better hiring decisions and get the best ROI.
3. They improve efficiency and effectiveness
Go back 10 years. Businesses did not think of HR people to be an important part of the organization. The HR function existed just because it did. No real thinking behind that. Snap, come to today. Business leaders now realize that their employees are the one who bring organization to life. And who will find such people, manage them, and retain them?
Yes, human resource executives.
Recruitment metrics will help you find such people. They align recruitment standards with the objectives of the business. Additionally, tracking the metrics helps businesses in gaining critical information on challenges faced. With this information, business leaders can develop strategies to focus on what is most important and what is expected.
Tracking the recruitment metrics allows you:
- Effective and efficient use of limited resources
- To create a wider business impact and improve the recruitment process
- To align hiring needs with the objectives of the role
Additionally, with the help of the recruitment metrics, you get credibility and consistency in the hiring strategies which drive the business to pursue aggressive recruitment.
What recruitment metrics should you track?
It all sounds cool and fancy when you talk to someone that you are tracking and monitoring recruitment metrics. But when they ask you, “Oh really? Which ones are the top performing ones for your business?” what do you say?
It is important to know where you should start. This will help you.
1. Recruiter efficiency
“Efficiency is doing things right; effectiveness is doing the right things.”
Peter Drucker
Studies show that when a position opens up, businesses spend around 36 days and $4000 in making the hire. That’s a lot of time and money which most businesses do not have or do not want to spend. The moral of the story being?
Nobody wants to spend $4000 in filling one vacant role. Let us imagine life is good, profits are all time high, and you do not mind investing this much in hiring one candidate. What when you have 10 vacancies to fill? Or 20? Or 50? What about large enterprises which have hundreds and thousands of vacancies to fill? They are not spending $4k in every hire.
Are they cheating? No. They are just doing it better. And what is that? They are playing on the efficiency of their recruiters. Their team uses various tools to automate or streamline their tasks in order to do more in less time. And if they are doing it, so can you.
You can take the help of various tools that help you perform tasks faster and improve your efficiency. For example, you can use an ATS, like the one in the Vasitum recruiter dashboard, to screen resumes received on the dashboard. Tools like Calendly allow you to schedule meetings on your calendar. And there are many other tools! All of this will help you make recruitment decisions faster.
2. Acceptance rate
Let’s be honest, not every candidate you send the offer letter will accept it.
They may turn it down for a number of reasons. Nevertheless, the acceptance rate also becomes an important metric to track in your recruitment process. If your acceptance rate is quite low, then it will be hard for you to get good candidates onboard.
Without good candidates, you will not be able to fulfill your goals. Also, the selected candidate will be unaligned with the business objectives and may be a hurdle instead of being a driver for growth. If a lot of candidates are turning down your offer, then you have to analyze why it is happening.
Is it because they were dissatisfied with the salary or benefits? Maybe they found a better offer with some other company. Or maybe they leveraged your offer letter to negotiate better pay in their current organization.
The sure-shot way of combating the low acceptance rate for your business is to measure your jobs against other jobs out there. Benchmark and track how much other businesses are paying for a similar role. Studying your competition will help you analyze if you are making poor offers to the candidates.
Another way to have a great acceptance rate is to screen the candidates properly. The last thing you want to do is interview and extend an offer to a candidate who is not interested in working with you. Place more stringent screening barriers and questions to filter a candidate’s interest in working with you.
3. Quality of hire
You cannot improve if you do not measure. If most of the employees that you are hiring are just doing the bare minimum, they are not contributing to the business growth.
When they are not contributing to the business growth, they are not a great employee. Meaning, they are not a quality hire. And you do not want to listen to your boss saying, “Susan, that marketing guy you hired is a total loser. He doesn’t know anything and is not even trying to learn. We have decided to let him go and this time, please, find me an actual marketing guy for the love of god!” when you invested so many hours to onboard the employee just a week ago.
When you track the quality of hire, you realize your weak points and can improve business strategies accordingly. No more guesswork. It also helps you in plugging weaker areas. Suppose the past five “low quality hires” came from the cheap consulting firm down the lane you thought you saved a lot of money on. So, goodbye cheap consulting firms down the lane.
How do you determine the quality of a hire? Well, you can track how well they are performing in the job, what is the retention rate, what is their relationship with others in the organization, how talented they are for the work they do, do they contribute and bring value to the company, and so much more.
4. Candidate satisfaction
There is a new automobile manufacturer who is making premium luxury cars. You have a million dollar lying around and want to buy a new car. Someone told you, “Hey, why don’t you try that new car brand? I heard they are good and they have only one dealership right now in the whole country and that is in your city.”
You take a big grin and your checkbook to the dealership. But they treat you rudely. They laugh at your face telling you there is no way someone like you can afford this car. They do not even let people like you touch the car, let alone take a test drive.
Would you buy the car after this experience because of all its technical specifications and this is a masterpiece in the price? Not at all. You will never set foot again in any dealership of that manufacturer and advise your friends to go for some other brand. The same thing happens in recruitment.
Everything about your hiring process, from applying to a job to interview, should provide the candidate great experience. Send out surveys and read interview reviews for your company to know how satisfied are candidates with your interview process and make improvements to make it better.
5. Cost per hire
“Acquiring the right talent is the most important key to growth. Hiring was – and still is – the most important thing we do.”
Marc Benioff, Founder, Chairman and CEO of Salesforce
Cost per hire is the amount of money you are spending in attracting, interviewing, and hiring a candidate. It gives your business an understanding of how much they are spending to fill a vacancy.
And this is important to track and manage because – wait for it – cost per hire is a part of the company budget.
You do not want to spend thousands of dollars in attracting and interviewing unfit candidates. And you do not want to spend thousands of dollars in hiring a great candidate either. There has to be a balance between spending on hiring and attracting the right talent.
But how will you know that you are not overspending? How will you measure which parts of the funnel are costing you more than others? Your excellent power to reduce the cost of hiring? Your dream to become “the man” of the company?
Simple. You just need to track the key elements of the recruitment funnel, how much are you spending there, and what is the ROI you are getting out of it. The major elements are:
- advertising expenses
- recruiting events costs
- recruitment software fees
- relocation expenses
Let’s say the advertising agency is charging you $5 per ad impression but the only candidates you are getting from there are good for nothing. Then you know which section you need to plug or replace.
6. Time to fill
If you are waiting in line at the billing counter to buy your favourite dress and the clerk is doing it very slowly and seem to be least bothered with the line getting longer, would you wait? Most people won’t. They will put the dress back from where they picked it up, exit the store, and buy from a place where the billing counter is much faster and smoother.
People are hungry for attention. They want to feel valued. The same thing goes for the candidates. They understand very well if a business is valuing their time or not. They place importance on how long they had to sit at the waiting area, how long it took for them to sit in front of the interviewer, and how deviated it was from the mentioned time.
When a candidate is sitting at the waiting area and looking at their watch, they are thinking, “I could have watched two more episodes of The Queen’s Gambit instead of coming here.” or “I could have eaten another bread slice if I had not hurried down here thinking I am going to be late.” or maybe “What an unprofessional company who doesn’t care that it is past the interview time and I am still here in the waiting room.”, etc.
You get the message, right?
The exact same thing happens when you take too long in finding a good candidate and getting them onboarded. The longer a position remains vacant, the more it will cost the business to fill it with the right talent.
7. Application completion rate
The 21st century is all about personalization and customization. People are looking for personal experience, the human touch in everything. Simply identifying the ideal candidate for the role is not enough. You have to attract them and make sure they come in for the interview.
It is not like they are going to come across the vacancy on your website and think, “Whoa, this is everything I had ever wanted.” and just dive inside filling the application like an ocean of candy they enjoy swimming in. Nope, doesn’t work that way.
And especially in a world where candidates are aware of their skills, their value, and are busy handling so many things at once. “Hey, I think I am going to stop my GOT finale in the middle and first fill my application to this job,” said no candidate ever.
Also, you do not want them to leave the application in the middle. There may be hundreds of candidates who find your job attractive but a very small percentage of them fill the application completely.
Having a low application completion rate means that candidates do not find the application filling process worth their time, were not able to comprehend the information easily, and had to fill unnecessary details that were not related to the job.
Remember, it is hard to find the right talent for your job. And you do not want to have a lengthyyyyyyyyyyyyyyy application form that makes the process even more excruciating and drives them away. Enhance the user experience, limit the data fields, and avoid unnecessary drop-offs that may lead to low application completion rate.
8. Turnover rate
If you buy a car, will you continue to drive the same car for the rest of your life? Of course not. Once your needs change, your aspirations go higher, and your social status reaches the next level, you will not drive around in that Ford Explorer you bought in 2000.
The same thing happens with your employees. Not everyone will choose to stay there, coming in daily and greeting those 30 or 300 faces every morning for the rest of their lives. They decide to leave.
But the problem comes in when you have to look for a replacement. And that doesn’t come cheap. Studies show that it can even cost 50-60% of an employee’s annual salary to replace them. Phew, that is something to worry about.
“Great vision without great people is irrelevant.”
Jim Collins, Lecturer and Author of Good to Great
And having a high employee turnover rate is bad news for you. Because one, it impacts your employer image in the market. “A company whose employees leave the organization regularly must not be a good one,” thinks everyone. Two, high employee turnover means having to hire more and more people, investing in their training, meeting their pay demands, etc.
To reduce your employee turnover rate, there are some methods that you can adopt:
- Use technology and artificial intelligence powered portals like Vasitum to find the candidates who are the right fit for your job
- Cut loose the underperformers. Employees who are not productive bring down the floor morale and should be let go before they sink the ship.
- Keep up with the employee welfare trends. If your competitors are handing out $500 amazon vouchers to their employees as bonus, meet that or beat that.
- Reward the performers. People love it when their work is recognized and rewarded in front of others.
Allow underperformers to go on their merry ways and retain the top talent as hard as you can. Because it is only the top talent in your business that will attract other right fit candidates to join the team.
How do these metrics align with your business objectives?
“The key for us, number one, has always been hiring very smart people.”
Bill Gates, co-founder of Microsoft Corporation
When the large corporations started going uphill on empathy and strategic leadership, much of the new businesses did not get the whiff of what they were trying to achieve.
Concepts like employee retention, emphatic workplace culture, great onboarding experience, lower time to hire, and all these metrics did not make sense to most recruiters and business leaders. For businesses, it was a pool of fish. All they had to do was drop their rods in the pool with the bait (job) and tens of fish (candidates) will fight each other.
You wanted to hire a new candidate? You would first float the information everywhere, advertise the job, and then collect relevant CVs, screen them to decide which one is the best, and hope that by the time you send out an interview invite, they haven’t joined somewhere else.
Imagine this is the late 2000s and you are part of a board resolution about appointing the new CEO of KGI Consultants. There are two contenders who offered their neck for the sacrifice – Marc from Business Development and June from Human Resources.
Cross your heart and tell me who do you think the board members will vote in favor of?
Marc from business development. No brainer. But why?
Is June incapable of handling the responsibilities that come with that chair? Is she not smart enough to drive the organization forward towards its goals?
Well, if I am being brutally honest, this is exactly what people thought of the HR department.
And the situation has not improved exponentially till now. In fact, most SMBs do not even think that HR functions have any effect on the business objectives and outcomes.
But I know that it is not true. And I want you to believe that it is not true.
So, here is an overview that shows how exactly these recruitment metrics help your business achieve its outcomes. These synergies will allow you to stand your ground the next time your boss asks you, “Jane, why should I pay you the hike you are asking for just to hire new employees and resolve small time disputes in the company?”
1. Boost employer image
You know that no business likes it when their employees decide it is time to jump out of this plane. Because that means finding a replacement, training the new hire, and expecting him/her to deliver the results immediately.
By the time the new kid starts getting the grasp of what is happening, the patient of your boss runs out and they blame you for not retaining Joe and for bringing in candidates like Anthony who are incompetent and putting the company behind schedule on this million-dollar life-changing once-in-a-lifetime project.
By tracking these recruitment metrics, you can predict who is prone to leave the business, why employees are leaving the business, and you start focussing on attracting the right kind of employees, those who love coming to work everyday and your bosses can rely on to get work done.
2. Saving thousands of dollars annually
We told you earlier that most businesses spend about $4000 in filling one position. That is a lot of money you could be used for so many different things. By simply improving the recruitment funnel with these metrics and taking the employee retention rate a notch higher, you can save thousands, if not millions, of dollars in revenue every year.
And you know what they say, every penny saved is a penny earned. And by spending less money on hiring new employees, you can spend that money on buying tools and packages that the team needs to do their work more efficiently.
3. Contributing directly to company’s earnings
By hiring and working with the top talent and people who are the right fit for your business, you can be assured that they are going to work hard and bring in revenue to the business. Studies show that the top few most performing executives are the direct contributor for most of the productivity in a business.
And what is even more eye-catching is what recent research and studies show. The top-performing employee is capable of generating up to 4x the output that an average employee of your business will generate.
Parting words
“I’ve learned over the years that, when you have really good people, you don’t have to baby them. By expecting them to do great things, you can get them to do great things.”
Steve Jobs, American business magnate, Co-founder of Apple
In all businesses, recruitment is the most important function of the human resource department. It does not matter that you are heading a small business or a large organization, you need the right people in your team. The better attraction and choosing process your recruitment funnel follows, the better quality of human resources your firm will have.
When you recruit and select the wrong candidate for a role, it has a negative impact on the business revenue & loss of opportunity cost. Your objective is to get the right person to the right job. Such a person will help your business become a good employer and make your hiring process cost-effective.
It is important for you to spend time refining the selection process because the performance of the firm is directly proportional to the people working. Consequently, hiring the right people means the success of your business.
But it can be expensive to bring a new resource into the organization. Thus, businesses hate it when they invest time and money in hiring an unsuitable candidate. Selecting the right candidate can be difficult but tracking the above recruitment metrics helps make the decision easier and the process smoother.
Start Hiring Right Talent
Congratulations for making it to the end. Phew, it must be a tiring journey, right? But I got something little special for you.
Now that you know almost everything about recruitment metrics, you can check out Vasitum. Our AI-based recruitment automation platform allows you to track all these metrics and help you improve them. Here’s something to boost you.
