Recruiting Metrics - The Rules Have Changed

There is much talk today about how the recruiting industry continues to change due to economic and demographic conditions.  Qualified candidates are becoming scarce as the Baby Boomer generation begins to retire at an alarming rate and the subsequent generations do not have the numbers to replace them.  In addition, the department of labor estimates that more than 19 million new jobs will be created by 2014, increasing the void between available candidates and open positions.

This shortage of available talent has caused both corporate and 3rd party recruiting organizations to reevaluate their processes, people, and performance metrics.  This is a topic I have been requested to address at a recent recruiting conference.  The big question seems to be; “How do we measure the success of our recruiting teams?”

Before metrics are implemented within any recruiting organization, it is imperative that we understand the following three concepts and how the changes in the economy and demographics affect the way we view the role of today’s recruiter.

• We must understand what recruiting metrics are and what their real purpose is.
• We must understand the role of traditional recruiters and the pitfall of their associated metrics.
• We must understand the role of today’s recruiter and create metrics that encourage necessary recruiting behaviors.

Recruiting Metrics – What are they?
Recruiting Metrics should be defined as:  “A quantifiable measurement that can be compared to established benchmarks AND encourages behaviors focused on candidate quality and client experience.”  Most often metrics are designed to measure the outcome or production of a recruiter regardless of the manner in which those specific metrics are attained.  In other words, focusing only on a production based outcome will most often encourage recruiting behaviors that never really address the candidate or client need.  In order to be effective, metrics must measure the correct results and drive the right recruiting behaviors!

Metrics of the Past – Are they effective?
In order to understand how metrics drive specific behaviors, it is imperative that we understand the role of a traditional recruiter as well as the metrics most associated with their success.  Ten years ago recruiting was often seen as a stepping stone to an HR Generalist role.  Recruiters were trained to “screen out” applicants, thus making their positions transactionally focused.

Measuring the number of transactions a recruiter could perform in a specific amount of time led to the creation of the two most commonly used metrics: Cost-Per-Hire and Time-to-Fill.  Many organizations continue to employ these same metrics on today’s recruiter with poor results and low client satisfaction. 

Cost-Per-Hire, the most common measurement applied to recruitment, only looks at the initial cost and not the long term cost associated with hiring the wrong candidate.  Focusing purely on initial cost will drive recruiters to place a ‘butt in a seat’ without regard to the quality of hire or the long term production the candidate will or will not deliver.  This metric can inadvertently create conflicts between recruiters and hiring managers by driving the recruiter to ‘sell’ candidates internally that may not be appropriate but come at a low cost.

Time-to-Fill measurements are often popular due to the cost associated with positions remaining unfilled.  Although this cost can be significant, this metric does not take into consideration the long term cost associated with greater turnover percentages and additional recruitment costs for hiring the wrong candidates.  Recruiters will focus on candidates considered the ‘lowest hanging fruit’ in order to fill positions faster.  I have seen many recruiters even manipulate their Applicant Tracking System in order to pad their Time-To-Fill numbers – Is this the behavior we want to create?

Metrics of Today – Keeping our eye on the prize!
As I speak with staffing and talent acquisition executives from around the country, they all express frustration in creating measurements that drive one main objective – getting the right candidate for the job.  In order to achieve this objective we must first look at how the recruiter of today differs from the traditional recruiter of the past.  Once we have the right recruiter, we can then focus on defining metrics that drive the right behaviors.

The recruiter of today has to move from being transactionally driven to relationship driven.  Candidates are not flocking to the door steps of prospective employers and recruiters are now sales professionals responsible for prospecting, building relationships and advancing the sale.  With this change in function it only makes sense that the metrics associated with success of today’s recruiter must change as well. 

Although the following is not an all inclusive list, the following 6 metrics are examples of measurements that drive the right results and create the necessary behaviors needed to achieve these results.

• Performance/Quality of Hire – Data is driven by performance appraisal ratings and/or production 6 to 12 months into the new employee’s job as compared to their peers.  Greater focus on Quality of Hire.
• Manager Satisfaction – Data is driven by the percentage of managers who are satisfied with the hiring process and the candidates through a manager survey.  Greater focus on Quality of Service to those you support.
• Source of Hire – Data is driven by the percentage of new hires from each defined candidate source.  Data also driven by percentage of hires per source, with highest on the job performance and tenure rates.  Greater focus on Quality of Hire, Quality of Sourcing Strategy, Cost-Per-Hire, and Time-To-Fill.
• Referral Rates – Data is driven by the percentage of hires from employee referrals generated by the recruiter.  Greater focus on Quality of Hire, Cost-Per-Hire, and Time-To-Fill.
• Candidate Satisfaction -  Data is driven by the percentage of new hires who are satisfied with the hiring process through a Candidate Survey.  Greater focus on Quality of Service and Brand Positioning.
• Pipeline Development – Data is driven by the number of potential candidates the recruiter has developed relationships with for key strategic positions.  Data is managed through an effective CRM system.  Greater focus on Time-To-Fill, Cost-Per-Hire, and Quality of Hire.

By utilizing the right metrics you will encourage recruiters to focus their behaviors on the causes, and not the symptoms of recruitment success.  The combination of having the right recruiter with the right measurements will cause your costs and time necessary to fill positions to decrease over time.