recruiting metrics that support roi

Recruiting metrics: measurement tools for today’s recruiter that demonstrate return on Investment SkillSurvey Webinar Series

Presented by:Stephen Lowisz

Author, Educator and Speaker

Understand what metrics are and why we use them

Understand why traditional

metrics may not support today’s business objectives

Understand how to measure

metrics that drive desired recruiter behaviors and outcomes

Review sample metrics dashboards

In this discussionYou will…

How do you define

metrics?

Standards of measurement that

HR professionals use to gather,

analyze and present important

information regarding the hiring

process.

They are used to make better

informed

decisions in order to receive

the best return on investment.”

(NAS Recruitment Communications)

What are recruitingmetrics?

Steve’s definition:

A Quantifiable Measurement

that can be compared to established benchmarks

andencourages behaviors focused

on

candidate quality and return on investment (ROI).

What are recruitingmetrics?

Advance the relationship betweenrecruitment and the hiring managers — align the RIGHT objectives

Provide credibility to the recruitment department by displaying that theyunderstand the overall business goals and objectives

Define what is important and expected of each recruiter

Drive consistency in delivery of recruitment services to the organization

Provide a platform to measure recruiter accountability and performance.

What do recruiting

metricsdo?

If we use metrics correctly, they…

Be actionable and predictive

Be consistent in what they measure

Be tracked over time in order to generate internal benchmarks and analysis of internal performance

Be open to peer comparisons*

Be able to drive recruitment behavior focused on “quality of hire” and“return on investment”

The Bottom Line: What gets measured, gets improved!

The purpose and importance of utilizing correct recruitingmetrics

Effective recruiting metrics must…

Why are most metrics wrong?

The Lesson is Simple….Metrics must derive from and align with business goals and objectives.

Metrics selection should only occur after understanding the needs the metric addresses.

Most do it backwards! We create processes around the metrics we want to see.

Example: Continental Airlines• Post Bankruptcy• Initiative only to reduce cost• Reward Pilots for reduced fuel costs• Result – customer satisfaction fell and they went to competitors

The purpose and importance of utilizing correct recruitingmetrics

What are you today? measuring

Cost per hireTime to Fill

more HR and a lot more transactional

Traditional Metrics:

Recruiter of the past:

Cost Per Hire:

• Only looking at initial cost and not the long-term cost of hiring the wrong candidate

• Does not account for “quality of hire”

• Does not consider the production the candidate will/will not deliver

• Drives recruiter to “sell” candidates internally

• Creates conflict between recruitment and hiring managers

Recruiter of the past:more HR and a lot more transactional

Problems caused by thesemetrics

Time to Fill:

• Recruiter often manipulates ATS system

• Recruiter focuses on “lowest hanging fruit”

• Recruiter focuses on “filling the seat” faster and cheaper, not better

• Focus is on immediate cost of vacancy, not Long-term cost of greater turnover % and additional recruitment costs

Recruiter of the past:more HR and a lot more transactional

Problems caused by thesemetrics

Recruiter of the past:more HR and a lot more transactional

Constant change

What is changing?Candidate Trends

Recent economic uncertaintyhas made employed talent more passive and less likely to switch employers

“My job isn’t great, but I’d rather stick it out here than be last in - first

out somewhere else”

Percentage of new hires rated above average has fallen significantly over the past year

The percentage of very passive talent willing to switch for better pay has decreased significantly from 2006 - 2010

New hire satisfaction with the recruiting process has fallen significantly over the past year

Metrics focused exclusively on time to fill and cost per hire have created conflict with the business and potential candidates.

The profile of today’s recruiter needs to dramatically adjust to support the needs of the business.

What matters most to business leaders is not always in line with what matters to recruiters and their leaders.

Regardless of intent, recruiting metrics drive specific recruiting behaviors.

What is changing?

The Conclusion:

What’s important to your business?

What matters most

The Aberdeen Group Study

metrics

Develop and maintain a function

capable of identifying and

recruiting qualified candidates who

have both short term and long term

impact on the organization —

CANDIDATE QUALITY

Provide a level of service that

would be considered “priceless”

while driving down cost and

increasing return on investment

Key performance indicator What do our leaders want?

How to measure?

What to measure?

• Sourcing Channels• Recruiter Efficiency• Acceptance Rate

• Candidate Satisfaction

• Manager Satisfaction

• Quality of Hire

• Efficiency Ratio

Results-producing

Key Performance Indicators

Critical Success Factors

metrics

and how to apply them

How to apply these metrics:• Difficult to track, difficult to define

• Source is only as good as the recruiter who uses it!

• Track in ATS as source of candidate • Report quarterly source of hire

• The percentage of new hires from each defined candidate source • Candidates should come from multiple sources

• Using talent pools that are appropriate for the position • Active AND passive candidates

• Percentage per hire per source, with highest on-the-job performance ratings

to measure: Sourcing channels

metrics

Efficiency ratio/acceptance rate

metrics

How to apply these metrics:

• Recruiter Efficiency/Acceptance Rate

• # Calls made compared to # Return Calls

• # Return Calls compared to # Candidates Developed

• # Candidates Developed to # Candidates Presented

• # Candidates Presented to # Hires

to measure:

• Phone call• # of Calls Made 20 50%• # of Calls Returned 10

• Screens• # of Calls Returned 10 50%• # of Candidates Developed 05

• Interviews• # of Candidates Developed 05 60% • # of Candidates Presented 03

• Offers• # of Candidates Presented 03 42%• # of Offers Made 1.25

• Hires• # of Offers Made 1.25 80%• # of Offers accepted 01

Results-producing and how to apply them

Efficiency

Acceptance

metrics

How to apply these metrics:

Candidate Satisfaction • The percentage of new hires who are satisfied with the hiring process

Candidate Survey • 4-6 Questions regarding process • Scale of 1-5 • Positive experience improves company brand and increases referral rate

Results-producing

metrics

What would you ask each candidate?

Candidate Satisfaction Survey

Lowest Rating = 0Highest Rating = 5  Criteria Importance

RatingNumber of interviews held 0 1 2 3 4 5

0 1 2 3 4 5

Scheduling and timeliness of interviews 0 1 2 3 4 5 0 1 2 3 4 5

Recruiter’s explanation of benefits 0 1 2 3 4 5 0 1 2 3 4 5

Length of overall recruiting process 0 1 2 3 4 5 0 1 2 3 4 5

Recruiter’s knowledge of position 0 1 2 3 4 5 0 1 2 3 4 5

Communication’s from recruiter 0 1 2 3 4 50 1 2 3 4 5

First day new employee orientation 0 1 2 3 4 5 0 1 2 3 4 5

Manager’s ability to lead and provide direction 0 1 2 3 4 5 0 1 2 3 4 5

Tools provided to complete job (computer, phone) 0 1 2 3 4 5 0 1 2 3 4 5

Job as described compared to actual position 0 1 2 3 4 5 0 1 2 3 4 5

Review of goals and objectives by manager 0 1 2 3 4 50 1 2 3 4 5

Recommend as a good place to work to others 0 1 2 3 4 50 1 2 3 4 5

How to apply these metrics: Manager Satisfaction

• The percentage of managers who are satisfied with the hiring process

Manager Survey

• 4-6 Questions regarding process

• Focus on key deliverables

• Communication

• Quality of Candidates

• Understanding of Goals/Objectives of Position

to measure: Manager satisfactionmetrics

What would you ask

each manager?

Hiring Manager Satisfaction Survey

Lowest Rating = 0Highest Rating = 5  Criteria Importance

RatingTimeliness of initial recruiter contact 0 1 2 3 4 5

0 1 2 3 4 5

Effectiveness of planning 0 1 2 3 4 5 0 1 2 3 4 5

Recruiter’s understanding of position 0 1 2 3 4 5 0 1 2 3 4 5

Process overview 0 1 2 3 4 5 0 1 2 3 4 5

Recruiter’s knowledge of market 0 1 2 3 4 5 0 1 2 3 4 5

Sourcing options 0 1 2 3 4 50 1 2 3 4 5

Quality of presented candidates 0 1 2 3 4 5 0 1 2 3 4 5

Quantity of presented candidates 0 1 2 3 4 5 0 1 2 3 4 5

Diversity of presented candidates 0 1 2 3 4 5 0 1 2 3 4 5

Information provided to candidates 0 1 2 3 4 5 0 1 2 3 4 5

Assessment of candidates 0 1 2 3 4 50 1 2 3 4 5

Offer/closing effectiveness 0 1 2 3 4 50 1 2 3 4 5

Recruiting costs 0 1 2 3 4 50 1 2 3 4 5

Communications from recruiter 0 1 2 3 4 50 1 2 3 4 5

Recruiter’s ability to solve problems 0 1 2 3 4 50 1 2 3 4 5

to measure: Candidate Quality

Why does it matter

metrics

• Greatest impact on the performance of each organization

• Financial Impact of poor candidate quality exceed twice the candidate salary

• Quality is both specifications and performance• Specifications answers the question: “Did we hire the

appropriate person?”

• Performance answers the question: “ Did that person actuallyperform well in his/her job?”

to measure: Quality of hire

metrics

Quality of Hire Metric (6 Month Rolling)

PR – Performance Rating of new hire

EP – Employee Performance as a % of new employees

ER – Employee Retention of new hires after 12 month

N – Number of indicators used

QH=(PR

+EP+ER

)/N

Performance Rating:

• Average job performance rating of

new hires with at least 6 months of

tenure and hired in previous 12

months.

• Based on a numerical average.

• If based on letter ranking such as

A, B, C, convert to number and

percentage.

• 10 new employees

• Average 3.5 out of 5.0 = 70%

to measure: Quality of hiremetrics

to measure: Quality of hire

metricsEmployee

Performance %:

• % of new hires with at least 6

months of tenure, hired in the

past 12 months and meeting

expectations.

• 8 of 10 are meeting

acceptable levels = 80%

Employee Retention %:

• % of new hires meeting

expectations and retained after

12 months.

• Same employees used in PR/EP

• 10 new employees/6 remain after 12

months and meeting PR

• Average = 60%

to measure: Quality of hire

metrics

QH = (PR + EP + ER) / N

to measure: Quality of hire

metricsQuality of Hire = (70% + 80% + 60%) / 3

QH = 70%

The Impact:

“One top notch engineer is worth 300

times or more than the average. We

would rather loose an entire class of

engineering graduate then one

exceptional technologist.”

Allan Eustace, SVP R&D

Google

to measure: Quality of hiremetrics

The Impact:

• Googleo Average employee generates $1.3 million

in revenue.o If the “Game Changer” produces just 10

times more than an average employee’s performance ($1.3 million multiplied by 10).

o For every “Game Changer” Google hires it could result in $13 million in new revenue each year!

o If that employee only stays 3 years, that is still $39 million in potential new revenue!

to measure: Quality of Hiremetrics

How to apply these metrics:• Efficiency Ratio

• Is a more accurate measurement of efficiency than cost-per-hire

• Takes into consideration that higher paying positions are more costly to fill

• Includes differences associated between compensation and candidate supply

• Includes candidate demand due to variations in market, position level, industry and geography

• Is the calculation of dividing the total staffing (internal & external) cost by total compensation recruited – 14.8% avg.

to measure: Efficiency ratiometrics

Total Recruiting Costs

Total CompensationRecruited

Recruiting EfficiencyRatio

to measure: Efficiency ratiometrics

Dashboardsmetrics

Dashboard: Sourcing Metrics

Question“What are the things we need to be doing to increase the passive candidate initial response %?” “What are we doing to help with efficiencies around active candidate screening to determine quality earlier on in the process?”

Dashboard: Sourcing Metrics

Questions“Does the talent pool of the target companies support business demand for the next 3 years?” “At current pace we will exhaust target companies talent pools?”“Do we need to expand targets or revisit profile requirements?”

Target Compa

ny

Total Candidates in

databaseTotal Hires

% We reject

Candidates

% Candidates

reject us

% of hires to applicati

ons

A 337 21 67% 9% (16:1)

B 222 13 57% 8% (17:1)

C 135 13 70% 8% (17:1)

D 533 16 71% 10% (33:1)

E 351 8 74% 7% (47:1)

F 64 1 80% 1% (64:1)

Dashboard: Sourcing Metrics

Manager Satifaction Results

0%

50%

100%

Qtr 1 Qtr 2 Qtr 3 Qtr 4

Actual Goal

Candidate Satisfaction Results

0%

50%

100%

Qtr 1 Qtr 2 Qtr 3 Qtr 4

Actual Goal

Candidate Quality - Survey Results Only

0%100%200%

Qtr 1 Qtr 2 Qtr 3 Qtr 4

Actual Goal

Efficiency Ratio

0%5%

10%15%20%

Qtr 1 Qtr 2 Qtr 3 Qtr 4

Actual Goal

Dashboard: Executive Summary

Recruiting metrics: measurement tools for today’s recruiter that demonstrate return on Investment SkillSurvey Webinar Series

Presented by:Stephen Lowisz

Author, Educator & Speaker