3 Recruitment Metrics:  Every Company Needs to Know

3 Recruitment Metrics: Every Company Needs to Know

Data is the language most business leaders speak very fluently and as the talent wars continue, it is becoming increasingly important to back up recruiting activity with numbers. We shouldn’t take business leaders into data immediately. An overall picture or a summary is a must before we take them into individual data elements.

So now, the question becomes what are the best metrics to show. It’s easy to get caught up in pages of numbers only to find that no one is reading them.To make things easy, here are the three metrics one should start with:

1. Cost per hire

It’s absolutely essential to understand the cost of hiring someone. Here are a couple of scenarios to illustrate the point.

You’re the vice president of human resources for a retail operation. Your company is getting ready to open a new location and will need to hire 100 employees. The senior leadership team is putting together the budget to build and open the new location. You will need to provide them with the cost of hiring those 100 employees.

You’re the director of human resources for a consulting firm that was just awarded a huge contract. In the proposal, the company indicated that they would need to hire 3 employees who would be dedicated to the project. The cost to hire those employees was included in the proposal.

The Society for Human Resource Management (SHRM) and the American National Standards Institute (ANSI) have partnered to develop a universally accepted calculation for cost per hire (CPH):

CPH = (EC + IC) / THP

EC = external costs for all spending outside the organization including staffing agencies, advertising, job fairs, travel, drug testing, background checks, signing bonuses, etc.
IC = internal costs include recruiting staff salary and benefits, time cost for the hiring manager, fixed costs for infrastructure, government compliance, referral bonuses, etc.
THP = total number of hires for the time period being evaluated.

2. Source of hire

This data tells the company where their applicants, candidates and new hires are coming from. Examples might include job boards, social media sites and mobile platforms. Please note, there is a difference in where sources come from. It’s possible that a source can provide a lot of applicants that don’t turn into candidates, much less new hires. Companies need to spend their resources where it has the greatest impact.

Speaking of impact, employee referral programs continue to provide an effective cost and quality per hire. It’s the reason many companies offer a referral bonus. In essence, the employee is helping to offset the cost of hiring and providing a quality candidate. But this also means that companies need to carefully consider the referral bonus amount. To do it right, the referral bonus should be established with cost per hire in mind.

Let me also add that employee referral bonuses should be given for doing just that – providing the referral. Referral bonuses are not retention bonuses. If an employee provides the referral and the candidate is hired, that’s when the bonus should be paid – not three months or six months down the line. The company – not the employee – needs to accept responsibility for employee retention.

2. Quality of Hire:

(PR+HP+HR)/ N

Where,

PR= Performance rating

HP= % of new hires reaching acceptable productivity with acceptable time frame.

HR= % of new hires retained after 1 year.

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