Recruiting metrics that support ROI

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Understand what recruiting metrics are, why they are important, what affect they have on recruiters, and how to employ the right ones.

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Recruiting metrics that support ROI

  1. 1. Recruiting metrics: measurement tools for today’s recruiter that demonstrate return on Investment SkillSurvey Webinar Series Presented by: Stephen Lowisz Author, Educator and Speaker
  2. 2. Understand what metricsare and why we use them Understand why traditional metrics may not support today’s business objectives Understand how to measure metricsthat drive desired recruiter behaviors and outcomes Review sample metrics dashboards In this discussion You will…
  3. 3. How do you define metrics?
  4. 4. 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 recruiting metrics?
  5. 5. Steve’s definition: A Quantifiable Measurement that can be compared to established benchmarks and encourages behaviors focused on candidate quality and return on investment (ROI). What are recruiting metrics?
  6. 6. Advance the relationship between recruitment and the hiring managers — align the RIGHT objectives Provide credibility to the recruitment department by displaying that they understand 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…
  7. 7. 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 recruiting metrics Effective recruiting metrics must…
  8. 8. 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 recruiting metrics
  9. 9. What are you today?measuring
  10. 10. Cost per hireTime to Fill more HR and a lot more transactional Traditional Metrics: Recruiter of the past:
  11. 11. 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 these metrics
  12. 12. 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 these metrics Recruiter of the past: more HR and a lot more transactional
  13. 13. Constant change
  14. 14. What is changing? CandidateTrends Recent economic uncertainty has 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
  15. 15. 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:
  16. 16. What’s important to your business?
  17. 17. What matters most The Aberdeen Group Study metrics
  18. 18. 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 indicatorWhat do our leaders want?
  19. 19. How to measure? What to measure?
  20. 20. • SourcingChannels • 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
  21. 21. 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
  22. 22. 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:
  23. 23. • 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
  24. 24. 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
  25. 25. What would you ask each candidate?
  26. 26. Candidate Satisfaction Survey Lowest Rating = 0 Highest Rating = 5 Criteria Importance Rating Number 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 5 0 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 5 0 1 2 3 4 5 Recommend as a good place to work to others 0 1 2 3 4 5 0 1 2 3 4 5
  27. 27. 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 satisfaction metrics
  28. 28. What would you ask each manager?
  29. 29. Hiring Manager Satisfaction Survey Lowest Rating = 0 Highest Rating = 5 Criteria Importance Rating Timeliness 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 5 0 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 5 0 1 2 3 4 5 Offer/closing effectiveness 0 1 2 3 4 5 0 1 2 3 4 5 Recruiting costs 0 1 2 3 4 5 0 1 2 3 4 5 Communications from recruiter 0 1 2 3 4 5 0 1 2 3 4 5 Recruiter’s ability to solve problems 0 1 2 3 4 5 0 1 2 3 4 5
  30. 30. 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 actually perform well in his/her job?”
  31. 31. 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
  32. 32. 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 hire metrics
  33. 33. to measure: Quality of hire metrics Employee 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%
  34. 34. 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
  35. 35. QH = (PR + EP + ER) / N to measure: Quality of hire metrics Quality of Hire = (70% + 80% + 60%) / 3 QH = 70%
  36. 36. 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 hire metrics
  37. 37. The Impact: • Google o 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 Hire metrics
  38. 38. 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 ratio metrics
  39. 39. Total Recruiting Costs Total Compensation Recruited Recruiting Efficiency Ratio to measure: Efficiency ratio metrics
  40. 40. Dashboards metrics
  41. 41. Dashboard: Sourcing Metrics Source: Building a proactive sourcing function to fill Critical Positions, Rob McIntosh, www.linkedin.com/in/robmcintosh
  42. 42. 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 Source: Building a proactive sourcing function to fill Critical Positions, Rob McIntosh, www.linkedin.com/in/robmcintosh
  43. 43. 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 database Total Hires % We reject Candidat es % 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 Source: Building a proactive sourcing function to fill Critical Positions, Rob McIntosh, www.linkedin.com/in/robmcintosh
  44. 44. Efficiency Ratio 0% 5% 10% 15% 20% Qtr 1 Qtr 2 Qtr 3 Qtr 4 Actual Goal Dashboard: Executive Summary
  45. 45. Recruiting metrics: measurement tools for today’s recruiter that demonstrate return on Investment SkillSurvey Webinar Series Presented by: Stephen Lowisz Author, Educator & Speaker

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