We need a new recruitment metric – hiring quality - to allow us to understand and improve recruitment performance.
In this blog, I am going to look at the relevance of commonly-used recruitment KPIs in a time where talent acquisition leaders want to become more data-driven.
Amongst experts in the recruitment industry, there is one big conversation that continues to rumble on – the demand for real quality-based recruitment analytics.
However, despite all the discussion about this being the end goal, are we really any closer to achieving it?
My worry is that recruitment teams are analysing and reporting on data that is easy to capture – not necessarily what is the most relevant. These are typically time-to-hire, cost-per-hire and size-of-shortlist.
You may think that new ways of gathering and analysing these traditional recruitment metrics will help achieve this aspiration of data-driven recruitment. But whilst the information may be more accurate, I believe it remains being of limited value.
To demonstrate my assertion, let’s look at time-to-hire, cost-per-hire and size-of-shortlist in turn.
Traditional measure #1 – time to hire
Time-to-hire is one of the most popular recruitment metrics. But it is often used in a way that can negatively affect recruitment performance.
For instance, if your recruitment team’s average time-to-hire is too high and are under pressure to reduce it, they will speed up the recruitment processes they can influence most i.e. sourcing and pre-screening candidates. Result! Time-to-hire will reduce.
However, the result of this is that the number and quality of the candidates being submitted to the hiring managers will fall.
Will this be clear straight away? Probably not, but the effect will show itself in the coming months when you start receiving fierce feedback from disgruntled hiring managers.
And although you may have set an internal target for time-to-hire, does it reflect the recruitment timescales required for each hiring process? There are many roles for which getting the right candidates will be more important than hiring them quickly.
So time-to-hire is a blunt instrument that can create the wrong behaviours in recruiters.
Traditional measure #2 – cost-per-hire
Are you spending too much on recruitment? Do you use agencies too much? Are your agency fees too high? Do the Board question you about the number of LinkedIn recruiter licences you have or the cost of your ATS?
Or, are you spending too little on recruitment? Are you sourcing all your new hires via your careers page and a few cheap job board ads – even though it’s affecting candidate quality and throughput? Have you cut the size of your recruitment team to bring it in budget even though there is more recruitment?
When it comes to managing your organisation's recruitment performance, cost-per-hire is one of the most used yet least relevant metrics available.
Now don't get me wrong: measuring costs associated with recruitment is important. As with all business costs it should be monitored closely. However, reporting on (and usually looking to reduce) cost-per-hire without looking at this metric on a larger scale and as part of your overall hiring performance is a big mistake.
You know what they say, you get what you pay for. And it's no different for recruitment.
Is it really worth cutting the cost of recruitment? It may lengthen the time it takes to recruit and reduce the quality of employees you are hiring leading to talent gaps in key areas of the business.
So cost-per-hire is a tricky metric to use when looking to make quality-based data-driven recruitment decisions.
Traditional measure #3 – size-of-shortlist
I used to really like this metric. I could see that the average number of shortlisted candidates was a really good benchmark of how well the recruitment team was doing. Fewer shortlisted candidates – better recruitment!
However, a few years ago, I was in a meeting with an HR Director reviewing the performance of his recruitment team. During the meeting, he commented although the KPI target was being met, his hiring managers were getting both too few and too many shortlisted candidates.
Confused? Me too!
What he was trying to say is that some hiring managers were unhappy because they were getting too many CVs and some were unhappy because they weren't getting enough.
And working away in the background were the recruitment team with their "one size fits all" target to send a shortlist of five CVs to all hiring managers regardless of their wants or needs.
But what does it matter if a hiring manager gets 5 CVs or 1 CV? If a recruiter finds a candidate that is perfect for the role, should they waste time searching for another simply to tick a box? Does the hiring manager really need to spend their time on five interviews when one could be enough?
The challenge for recruitment leaders moving forward is putting the processes and tools in place to set and track individual role specific shortlisting targets.
Let’s ditch the old metrics and embrace a new one – “hiring quality”
Just to summarise, I believe the traditional metrics we use are of limited value, because:
- Firstly, when using these traditional KPI's recruitment teams are set standard "one size fits all" targets. The targets do not consider whether they will improve hiring for a specific role.
- Secondly, more and more recruitment leaders agree that recruiter and hiring manager collaboration is a key driver in improving recruitment. However, when was the last time you heard of a hiring manager being involved in setting KPIs? And, the KPIs never assess the hiring manager's contribution or perception of the recruitment process.
- Lastly, where is the proof that these typical metrics really help deliver a data-driven approach to recruitment? Because I don't see any.
To achieve a truly data-driven approach to recruitment, we must embrace a new KPI that combines both the quality of candidates being recruited, and the quality of the recruitment process.
This new KPI would then allow us to make informed, evidence-based decisions.
The recruitment industry is crying out for this new KPI which is why I like the hiring quality metric. The hiring quality metric considers both:
- Data on Candidate Quality – looking at candidates during the recruitment process and the successful applicant’s performance throughout their first months/years with a business.
- Data on recruitment Process Quality – looking at how successful the overall recruitment process has been and the perception of each stakeholder involved in the hiring process.
About Howard Flint
I am Chief Strategy Officer at Talenytics, the Hiring Quality platform. For 15 years I have worked at the interface of recruiters, technology and data pioneering ways of improving recruitment performance. For more information about measuring quality of hire, check out the Talenytics.