There is an abundance of data that recruiters can look at; however, every organization has different needs that determine how do you use data as part of your recruiting strategy. Let’s look at some of the key recruitment metrics related to tech roles that every hiring team needs to measure. This is a good starting point to optimize the recruiting and onboarding process using a data-driven approach.
Cost per hire
Even though recruitment is the foundation of any organization’s success, there is still a push to reduce the cost of hiring. The best way for companies to get a real insight on the spend is to analyze the cost per hire (CPH) metric. It encompasses all recruitment costs divided by the number of hires. What’s more, is that you can track this year-on-year to determine if there is any considerable change.
The formula used is: CPH = Total recruitment cost / Total number of hires = Total internal cost + Total external cost / Total number of hires
Incorporating both external and internal costs gives you a complete picture of your recruitment cost. Internal recruiting costs would be any internal expense such as employee referral incentives, recruiters’ salaries, and interviewing costs (number of hours multiplied by the hourly salary of involved employees).
External recruiting costs refer to marketing costs, recruitment software and events, and external recruiter agency fees. This metric is good to calculate as a monthly or annual cost per hire result.
Time to fill
Time to fill analyzes the amount of time required to fill a position. Count the days from advertising the job until a candidate accepts the job offer. Do not confuse this metric with Time to hire, which estimates the time from the first contact with a candidate (either through an application or sourcing) until you hire them.
Time to hire indicates the speed at which the recruiting team identifies a quality candidate and moves them through the recruitment process. Whereas time to fill supports the process of creating a recruitment strategy and can highlight if the initial advertising isn’t working. Both metrics can identify if there are any bottlenecks in the hiring process. Time matters because it affects productivity, which in turn affects revenue.
Quality of hire
Quality of hire (QoH) presents the value that a new hire adds to the organization i.e. the new hire’s performance compared to pre-hire expectations. Determining the QoH in the first year of an individual shows how recruitment practices deliver outcomes. This hiring metric ensures filling the right position with the right talent.
While there is no exact calculation for measuring QoH, there is a general formula that recruiters can adapt and customize based on what the organization perceives as performance factors.
QoH = (Indicator A% + Indicator B% + Indicator C%…) ÷ Number of Indicators
Measure these indicators with the scores you get from measuring time to productivity, onboarding, manager surveys, team productivity, and team reviews. You can also look at the speed at which the employee is promoted, as well as the end of probation reviews.
Alternatively, you can use the Net Hiring Score. This employs a 0-10 scale with 0 being poor and 10 being excellent. The manager can rate the employee on their performance and job fit, and the employee can rate if it’s a good job fit or not.
The percentage of great fits (scaled 9 or 10) is subtracted from the percentage of poor fits (0-6) and then multiplied by 100. If the result is <0, too many poor fits are being hired but >0 indicates more great fits are being hired. Zero being neutral.
Job Performance and Efficiency
Efficiency metrics in recruiting track an employee’s performance and productivity. These include work quality, work quantity, work efficiency, and organizational performance metrics. There are over 20 employee performance metrics. Recruiters can select the ones that are relevant to the organization and which ones can be practically implemented.
The most common method has been an appraisal between employee and manager translating the business goals into the employee’s goals. These objectives look at appraisals using points or a certain weight to measure employee’s progress.
Another method that can be combined with objective and subjective appraisals is the 360-degree feedback or multi-rater survey. This includes rating an employee on their performance by colleagues, managers, customers, and other parties that are part of the professional interaction.
Fairness, diversity, and inclusion are becoming more important than ever in recruitment analytics. Diversity dimensions can extend beyond gender to include race, nationality, education level, age, disability, family status, employment status (full-time, part-time, flexible), immigration status, and much more.
These metrics should be pertinent to the organization’s local context and the correct diversity issues should be targeted. The legal, political, historical, and cultural environments of nations are different and determine which diversity metrics are relevant. While gender inequality is a global issue, religion and ethnicity may be predominant in certain parts of the world. Developing a multicultural organization that’s all-inclusive can be challenging but data can highlight where a company is being exclusive or biased. Identifying the voids is the first step to adapting and developing diversity in recruitment.