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Measuring successful recruitment: KPI�s
This article takes a view on how to analyse the KPI�s that are most closely associated to effective recruitment management. Looking at how recruiters assess an employer�s part in the process and also how the employer can understand which recruiters are effective and why.
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Measuring up as a good recruiter or a good client
From the clients viewpoint the simplest and crudest form of effective measurement is the number of �placements� or hires that are made. The recruiter could be an internal recruiter sitting in HR, an RPO (Recruitment Process Outsourcing) provider working in partnership with HR but essentially a 3 rd party, or alternatively an external recruitment agency (master vendor) that are supplying all candidates.
The problem with measuring simply the number of placements is that it suggests that the employer�s role in the recruitment process is not important or influential to the outcome. Ask any experienced recruiter and they will probably be able to recall several instances when candidates that have turned down offers because the candidate was not impressed by the employer. This obviously works the other way too. Recruiters that measure clients only by the number of placements they make are not truly looking at the whole picture. So, whilst results ultimately count, there is more to measurement of performance than placements alone.
Key Performance Indicators in recruitment should therefore take a view of the whole recruitment process. Both the recruiter and the employer should have expectations on the other and these should be clearly communicated and understood.
Performance indicators should demonstrate the recruitment lifecycle effectiveness measured against cost and time;
1: Reach � how many candidates from how many sources, routes and backgrounds are being identified and considered for the position?
This is a measurement of effective marketing of the position. It also goes some way to understanding if the media by which candidates are being sought is effective, e.g. how many people are responding to web adverts as opposed to press adverts. Balance that against cost of advertising and you have an approximate cost per head of advertising: �1000 advertisement delivering 50 applications = �20/candidate.
Taking this a step further, over time you can seek to understand the most effective sources of recruitment to enable employers or the RPO to best select the media or method by which to seek particular candidates. It can also serve to calculate (within reason) and outline budget of marketing required to recruit X number of people and the time this will take.
2: Recruitment � Once �Reach� is effective then you can really start to drill down to what recruitment practices are effective. This is a measurement of how the recruitment process is performing in filtering out unacceptable candidates and securing the interest of those candidates that are worth interviewing and offering jobs to.
Measuring the conversion ratios for candidates moving through the process is a good assessment of return for time invested, e.g. 7 of 10 candidates sent the manager are selected to interview. That�s good. 10 out 10 would mean that unless the market is flooded with perfectly acceptable candidates then either the manager is not being selective enough or criteria for selection is not limiting enough, which could be in terms of technical skill or cost (remuneration could be lowered). Most employers like to have a proportion of unacceptable candidates that don�t make the grade � this gives them comfort that they are selecting the best of a good bunch. 2 out of 10 selected means either the recruiter doesn�t know what they�re looking for, or the manager�s expectations are too restrictive.
This must involve a balanced view of what part the recruiter plays and what part the employer pays. The old adage that �time kills deals� applies and hence performance should be measured against time. All parties involved should be able to answer the questions that are important to them, for example:
| Recruiters ask� | Employers ask� |
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But at what point in the process should you ask which question? The diagram below shows a simplistic conversion chart. You should analyse recruitment performance as you move from one stage in the recruitment process to the next, e.g. conversion of CVs supplied to the number selected to interview. Then the number selected to interview to the number successful in receiving an offer and so on.
| Number of Applicants at Each Stage | Conversion: stage 1-2 | Conversion: stage 2-3 | Conversion: stage 3-4 | Conversion: stage 4-5 | Conversion: Stage 5-6 |
| Stage 1: Candidate Applications | Is the employer prepared to invest time in recruitment? Is the recruiter focusing on fulfilling the spec ? | ||||
| Stage 2: Interviews Completed | Is the employer prepared to make a hiring decision ? Is the recruiter supplying the right people? | ||||
Stage 3: Offers Made | Is the recruiter closing the candidate for you? Is the employer making realistic and sensible offers ? | ||||
Stage 4: Offers Accepted | Are the candidates committed and being managed effectively by the recruiter? | ||||
| Stage 5: Candidates Starting | |||||
Stage 6: New employees 12 months on | Is the employer staff retention a concern? |
3: Retention - Measurement beyond recruitment
This is a simple statistic that measures the number of new recruits that have left the employer within the first 12 months of their employment. Of course, this cannot always be totally born by the recruitment process as other factors can play a part e.g. redundancy, project cancellations etc. But clearly, there are lessons that can be learned from understanding the reasons why new recruits leave � some of which can influence how the recruitment process is managed in the future.
4: Cost of Recruitment
This is obviously very important. Recruitment is an expensive process with or without recruitment agency fees. It takes up precious time and costs the business money.
The best measurement of cost is the cost per hire statistic.
Cost per hire (�) = total cost of recruitment over a fixed period etnetynetynjhetyhetyhetyhetyhetyhetyhetyhe gggg ggggg gggggg ggggggggtotal number of new recruits in the same period
Within this calculation should be a consideration toward the staff cost of completing the interview process. A general rule is that each interview completed costs �500 in staff time. (in terms of total cost to the business).
5: Time Bound
Measuring the time taken to recruit is useful but not altogether important. It provides indicators as to why the resourcing process may be failing (or not) however does not itself provide a solid statistic that good or poor resourcing can be measured. We have stated that �time kills deals� and thus time is a factor than influences success. But more importantly and truthfully, momentum is the key. The recruitment process should be swift but not rushed. It should flow and not stall. Stagnant pauses in the recruitment process will almost always introduce negative factors to decision making. The process should be mapped out and the shortest, most reasonable process should be identified. The process should be challenged to question whether it can be done quicker, slicker, faster, smarter. If not, you�ve got a good process, now measure yourself against keeping to it.
Consider some of these:
- the time taken to Respond to CVs
- the time taken to Arrange interviews
- the time taken to make post interview decisions
- the time taken to sanction and generate offers
6: Look out for Unrealistic Recruitment KPI�s
It is a frequent frustration to all decent recruiters when a hiring manager says the words, �Just show me CVs�. This encourages vast amounts of work on behalf of the recruiter without any commitment from the manager as to his part in the process. It is also likely to result in a lower than necessary conversion ratio. Notwithstanding that it should be the role of the recruiter to know specifically enough what the hiring manager is looking for to enable them to deselect the wrong candidates without wasting the manager�s time in reviewing them first. Of course, the more CVs the manager has to review the longer it takes to get feedback to the CVs sent and hence back comes the �time kills deals� adage. A good professional recruiter will rarely work in such a haphazard way. Bad recruiters on the other hand are often more than happy to blinding keep sending dozens of CVs that only to take up the manager�s time and in essence feed the general stereotype that recruitment agents consultants add little value.
� that�s the dodgy recruiter practice of sending candidates CVs to employers A good recruiter should be able to shortlist the best fit candidate to the specification. A good recruiter will, therefore, obviously expect to see conversion for supplying the right candidates. It�s this �conversion� statistic that measures a quality recruitment delivery.
The next classic promise of performance demonstrated in KPI�s is delivery of a minimum number of candidate CVs within a fixed period of time upon being given an order, e.g. �Deliver 10 CVs within 48 hours�. This promotes the wrong type of activity. It encourages �fling it and wing it� activity before the recruiter has had time to speak to the candidate, gain their interest in the role and carry out their background checks to ensure a quality service. This dilutes the value of the recruiter�s role in the process. Most recruiters will have access to a database of candidates and can easily pick off 10 CVs to send to any position � whether any of the CVs will be relevant is a different question. Perhaps, there will be 1 or 2 candidates of the 10 worth meeting, but the other 8 are a waste of time� including the candidate�s time, that is if they are aware their CV has been sent forward. Finally, sending CVs to managers without the candidate�s permission is likely to break not only the Data Protection Act rule but also the Code and Conduct of Agencies Act 2003, sadly, weak recruiters continue to do it. And for as long as they are measured against irrelevant KPI�s they will likely continue to do so.
So to summarise, here are the 10 Top Performance Measurement Rules
- Make any measurement realistic � if not they will soon be ignored
- Performance should look at before, during and after the recruitment process
- All parties must commit to performance measurement utilizing mirrored and agreed KPI�s that are transparent to all.
- Make sure every stage is time bound
- Promote the right activity � Quality not quantity, clear communication from top to bottom and vice verse
- Measurements must encourage quality
- Be able to draw out specific improvement recommendations if underperforming
- Ensure all parties know how they will be measured and the review process clear to all. Typically this should be monthly or quarterly, follow a formatted structured and chaired by HR or the RPO.
- Report performance continually to the entire business to raise awareness of good hiring practice - to reference the old adage � �No involvement, no commitment�
- Address non-performance squarely and swiftly � else apathy will kick in.
Further information like this can be found here....
10 Considerations to Risk when Implemeting RPO
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