Top KPIs for HR: Recruitment
You cannot manage what you cannot measure
These wise words have been attributed to many well-known management experts: from Drucker, Welch, to Deming. Whoever said this sentence, the most important takeaway is that Key Performance Indicators (KPIs) are crucial in recruitment.
‘But you can’t measure people’, many HR professionals say. It’s partially true, but you can always measure processes. Therefore, KPIs for HR are usually financial and non-financial metrics used to measure the effectiveness of human resource processes, which allows for their optimization.
Recruitment KPIs
Recruitment is one of the most easily measurable areas of HR: if you look from the right perspective, you can measure almost everything. A proper selection of KPIs, based on the goals you want to achieve with your recruitment processes, can help assess the progress you’ve already made. KPIs monitoring gives you information regarding your current status in terms of accomplishing your objectives. Moreover, it’s a way to observe trends and changes in recruitment processes, both internal and external.
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Recruitment KPIs can become your company’s competitive advantage
Any company that tracks its recruitment processes KPIs, can access information regarding the best ways to look for candidates, as well as how to attract them, assess their skills, and get to know their needs. It’s also possible to analyze which HR activities truly support the company’s recruitment objectives and which not. As a result, these businesses simply recruit better employees than competitors.
What are the most important KPIs and metrics for HR?
Strategic KPIs,
or how recruitment activities are consistent with the company’s strategy.
KPIs in this area show whether your recruiters’ activities are in line with the company’s values and business goals, reflect the approach to employees, clients, products, as well as the organization’s culture. Below you’ll find some examples of strategic KPIs that you can measure:
- employee turnover rate after the trial period,
- Effectiveness of referral program (eg. measured with the quality of applications and the employment rate),
- The number of successful recruitment processes,
- The level of customer satisfaction in the case of consultants after the first three months of work, etc.
Operational KPIs,
or the effectiveness of recruitment activities.
This kind of KPIs refers to the methodology and management of every single recruitment process (or the whole recruitment strategy). Example KPIs:
- Recruiters’ workload,
- Time-to-hire, or the average time needed to recruit a candidate,
- Average recruitment time per recruiter (the number of their recruitment projects, etc.),
- The effectiveness of job offer distribution channels.
Financial KPIs,
or the value generated by the costs of recruitment processes.
These KPIs are primarily financial metrics that show recruitment costs or the ROI from a specific tool or solution. Example KPIs:
- Cost of acquisition of one application (or a quality application that qualifies to the contact stage),
- The average cost of hiring an employee (measured as a whole: from application cost, cost of recruiter’s working time, to onboarding costs),
- The cost of tools used in recruitment per hiring process.
Client KPIs,
or how the recruitment impact employees (internal clients) and candidates (external clients).
The role of these KPIs is to evaluate processes related to building employer image both internally and externally, and how they translate into employee satisfaction and engagement, as well as into the Employer Branding and its results.
- Hiring process satisfaction rate (rated by the candidate),
- The number of spontaneous applications,
- The number of non renewed contracts with the employee after the trial period,
- Time spent on the recruitment process by line manager.
KPIs in recruitment: business type, metrics cannibalization, and interpretation
The above examples of KPIs are still only a fraction of possibilities. Currently, we are working on a KPIs in recruitment cheatsheet that will include a more extended list of metrics. Follow our blog to stay up to date! Finally, there are some important rules regarding KPIs:
Designing KPIs in your organization, take into account its specific nature: for instance, for some organizations, it’s more important to hire fast than decrease the cost of recruitment (eg. because the cost of vacant positions is higher than those of speeding up the hiring process). For other businesses, reducing costs and looking for the cheapest acquisition channels may be crucial.
Another important aspect is the KPI cannibalization—a situation when two different metrics exclude themselves or have a negative impact on each other.
A third key matter is to design unambiguous, precise KPIs that correctly measure what was intended.
Optimization of hiring processes can be only possible if you test specific hypotheses based on metrics and its evolution in time. This optimization has to be carried out having in mind the objectives that were set at the beginning of the process.
Let’s say, if the rate of non-renewed contracts after the trial period is high, and one of the strategic goals is to build a stable team with a low turnover rate, then it’s possible to test multiple hypotheses: the hiring tools are not effective, the onboarding has flaws, the competences for job position were selected incorrectly, etc. These hypotheses should be checked while analyzing how the metric changes.
Recruitment KPIs are essential to design and create a whole hiring strategy. They should be measurable and easily reported. An Applicant Tracking System is a handy tool: you can try out our platform, tomHRM, for free!
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author: Sabina Stodolak
