Identifying and hiring the right candidates is key to the success and growth of any business, here’s how you can leverage your hiring data for a better outcome
We are now living in a world where human capital is one of the most sustainable competitive business advantages. No matter the sector or industry, businesses are made up of people. Everyone from the CEO to the newest entry-level employee must work together to accomplish the company’s goals.
While human capital is a company’s greatest asset, it is clear that some companies do a much better job of attracting and retaining quality talent. There are also companies like Alphabet or Facebook that do a phenomenal job of identifying the right individuals who can make a significant impact on their business. Along with creating a positive workplace culture and retaining these stellar employees, these companies consistently lead their sectors and create immense value for their customers.
Every company wants to become a sector leader yet finding the right human capital that can get the company ahead is much harder to identify. It is therefore worthwhile to explore different hiring metrics that companies should monitor.
Keeping a close eye on the following metrics can help any business get better at hiring.
8 hiring metrics that every company must monitor
1. Time to Hire
Time to hire is a useful metric that provides insights on your recruitment process as a whole. Essentially, it is the average number of days that it takes for a candidate to proceed from applying for a vacant position to accepting that position with your company.
From a candidate’s perspective, a low time to hire is often preferred. This signals that there are few internal delays and that your company aggressively wants to hire him or her.
Ultimately, time to hire is a useful metric for identifying inefficiencies in your hiring process. If your time to hire is above your ideal level, think about identifying bottlenecks when you are considering candidates. Removing those bottlenecks and having a crisp time to hire can satisfy candidates and bring in new talent in an efficient manner.
2. Yield Ratio
While time to hire was a good measure of how efficient your organization is in hiring employees, the yield ratio is more focused outward. Mostly, this hiring metric shows the percentage of candidates from a particular recruiting source that proceeded to the interview stage.
The yield ratio is an excellent gauge of whether a particular source is forwarding high-quality candidates.
Ultimately, with the yield ratio, you want to be sure that you aren’t wasting time with potential candidates who consistently fail to make it to the interview stage. The yield ratio can help you identify those poorly-performing sources so you can avoid them in the future. On the other hand, you can use the yield ratio to identify excellent candidate sources and continue to rely on them.
3. Application Complete Rate
The application complete rate is an important metric that can provide more context on the applicant’s journey. This hiring metric tracks the number of applicants who have completed your company’s application form. If you don’t have a universal application form, you can modify this metric to account for all of the parts of your “application.” Things like a resume, cover letter, and CV are fair game.
Your company’s application complete rate can reveal how your applicants are thinking about your application process. If you find that your company’s application completion rate is low, you may discover that a technical glitch is preventing candidates from submitting their applications. It may also signal that your application process is seen as too lengthy by some candidates. While you may have chosen your request to be deliberately protracted, the application complete rate can nonetheless provide some interesting insights about the application process.
4. Applicants per Opening
Applicants per opening is one of the more basic metrics out there yet it can provide a wealth of information. As you can guess, this metric tabulates the number of applicants who apply for a particular job opening.
This hiring metric can show the popularity of individual job openings. It can also be a signal of the current macroeconomic environment. If there is a high unemployment rate, for instance, you likely notice that your applicants per opening will increase. That being said, applicants per opening can help you see which one of your job posts are resonating with applicants.
5. Cost per Hire
Also called cost to fill, cost per hire is a great hiring metric that measures the return on investment for your recruitment efforts. It does this by determining how much of your budget is being spent on new hires.
Let’s face it: hiring new candidates is an extremely time-consuming and expensive process. From reviewing CVs and cover letters to conducting in-person interviews and reference checks, the costs of recruiting can add up quickly. When computing the cost per hire, you’ll want to account for all costs, including things like recruiter fees and ad campaigns.
Like any other expenditure, it is critical to ensure that you are meeting your recruiting goals while staying within your recruiting budget. Tracking cost per hire can help you accomplish this objective.
6. Hiring Diversity
Hiring diversity is another essential hiring metric that you should track. The simple reality is that more diverse organizations tend to be more successful. This is for a variety of reasons. For instance, diversity among your team leads to more innovation. A team with different backgrounds and experiences can identify compelling gaps in the market. Diversity also creates a better work culture.
There is no universal formula or way to calculate diversity. This lack of method provides an excellent opportunity to craft a diversity policy to accomplish your organization’s specific hiring goals. Focusing on variety throughout your hiring process is a great way to unlock many of the benefits listed above.
7. Offer Acceptance Rate
Another insightful hiring metric is offer acceptance rate. Your company’s offer acceptance rate is the number of candidates who accepted an offer divided by the number of offers that are actually made.
Offer acceptance rates can vary depending on the company. That said, there are some general principles when looking at this figure. A low offer acceptance rate is a signal that there is something that is holding applicants back. One potential reason is compensation. If you are offered a lower salary compared to your competitors, you will find that applicants will decide to work somewhere else.
In the end, pay close attention to your offer acceptance rate. It is frustrating to see stellar candidates work for a competitor, so closely monitoring this metric will help reduce this outcome.
8. First-year Attrition
Finally, first-year attrition or candidate retention rate monitors new hires who leave your company in one year or less.
While there may be many reasons for their departure, a high first-year attrition rate is often a warning sign. It can signal that you and your colleagues are using a flawed hiring process or are failing to identify candidates with longevity.
Companies prefer a low first-year attrition rate. Achieving this shows that the company is doing an excellent job of retaining new hires.
Ultimately, the hiring metrics listed above can go a long way in helping your company identify and retain the right talent. Better yet, many of these metrics are mutable. In other words, you can create modified parameters to support your company’s specific needs.
Whether you use these “out-of-the-box” metrics or modify them for your own needs, we encourage you to start tracking them today. Doing so will help you identify and retain the best possible talent for your organization.