Recruiting Metrics - Part 1

This post we are looking at the issues of reporting in recruiting. It's not something that seems to come naturally to HR and recruitment professionals. So why use metrics, what ones should you use and how do can they provide something meaningful that will help your recruiting activity? It's a two part blog - this is Part 1.
Analysis by paralysis
Lies, Dammed lies and Statistics.

"In any bureaucracy, paper work increases as you spend more and more time reporting on the less and less you are doing" Franz Kafka

Let's be honest, most people in HR (it does seems a lot) hate collating facts and figures and doing reports. We are not like the accountants or marketeers. At a basic level we are used to dealing with people and issues, not fact and figures…

However to add yet another quote into the mix: “If you can't measure it, you can't manage it” as the legendary Peter Druker said. So, let's spend some time looking some into the world of facts and figures and reporting with a view to what is useful, and what perhaps may not be quite so useful... This post focusses on two things in recruitment reporting: Efficiency and Effectiveness - we will look at the more common metrics used in Recruiting in Part 2.

We stress two things in recruiting: efficiency and effectiveness. It's what our systems are built to deliver and what our partners expect from us. We call it e-squared in our marketing, see the graphic, as it demonstrates the power comes when you do both together. Let's look at Effectiveness first.

At its simplest, this is getting a good hire. Making sure you have got the best available candidate you can and making sure that they become an effective staff member in your organisation. Sadly, it can be quite difficult to measure and many businesses we come across simply don't seem to make an effort to measure it. However, we think this is well worth while and there are a couple of things you can do to help.

In the recruitment process itself, the one thing that really irks managers is where they have spend considerable time; sorting, sifting and interviewing. We have all come across the situations where you have a candidate, or candidates in yours sights. But then the candidate wont take up your offer - or drops out. We call this latter-stage attrition, where candidates (a) suddenly are revealed to have problems that should have been screened out earlier, or (b) are good candidates but they just drop out, i.e. decide not to go further in your recruitment process. Either way it's an annoying and time-wasting issue.

An effective recruitment operation will not only provide a good pool of candidates. It will weed out problems very early on and will engage the more suitable candidates to be motivated to accept a position if asked. You can measure this, or at least make an assessment of how well (or not) you are doing. We for instance, notice that where clients do both focus on this and measure it, that reduce such instances. Your systems help with this, clients tell us that ours have a good correlation with helping them. However its not just the system is how you manage your processes and what you focus on. So as an example, if you want to have happy managers and focus on Effectiveness then give this some focus to reducing latter -stage attrition.

As another example of Effectiveness measures/reporting/metrics: what about surveying your employees? It's not a traditional metric. But well done this can provide really useful actionable information - and this is exactly the point. So, once a new candidate comes on board, ask/survey them what they thought of their experiences with the recruitment process and how it compared to other organisations they considered? Perhaps more telling, is to also ask them for suggestions as to how you can improve things? That will tell you where you fell short. Look for patterns in the responses - they will tell you a lot.

Also look at the performance of those you hire after you have hired them. Relate this back to their recruitment journey. Are you for instance, finding that your agency candidates are performing better on-the-job than those in your Talent Pool? Or, are those who are referred by your own staff, the ones who outperform? Knowing this, can really help justify where you spend your dollars and effort. If by way of example that you find - as many do by the way - that candidates who come from staff referrals tend to stay the course longer and perform better. Then you might be well served, providing more support and encouragement to generating such referrals. The point is - if the reporting data is not providing you with useful and actionable insights then it's not worth bothering with. Having this data can really help you make your activities more effective.

This is about making the best use of your resources. It's generally about 'cost-down'. Efficiency is generally much easier to measure and forms the bulk of most HR traditional reporting that does happen. However we would strongly argue it is much less important than Effectiveness. There is no point in driving down costs in your recruitment operation when you end up with poor, or less productive, staff.

Costs however, are important and they are the one thing that finance and other departments really understand. Money is a great leveller and it allows many different things to be compared. We suggest you ensure you do have some ready metrics to show you have this under control. But don’t lose sight of trying to focus on Effectiveness in your drive for Efficiency. For example, taking the recruitment journey referred to in the Effectiveness section above: the costs of sourcing between Agencies, Talent Pools and Staff Referrals is likely to be very different. However if you find that e.g. that agencies whilst being one of your more expensive options, also provides the candidates that really perform, then the additional cost may be one the business is well prepared to accept. Similarly if you need someone fast, and other sourcing methods see you waiting months, then going to an agency may well look like very good option. However you may well find that your Talent Pools and Referrals produce the better performers (this seems to be the case in may instances that we see). If so, and given their low costs, there will likely be a very strong business case for running such programmes.

To finish off, here is an idea for you to use. It is also not a ‘traditional’ HR metric: ROI. It's the most common business metric, used extensively to justify plans and a business case. However you don't really see it used much in HR. ROI - Return On Investment - is the ratio of financial cost compared to financial return. So here is the idea: what about calculating an HR ROI for your business? Take your revenue/profits and then divide by labour costs (making sure you add in the cost of HR etc) that will give you an overall measure of how you are doing and a measure for your staff productivity. Ideally the ratio should improve each year . You can also use guesstimate benchmarking for your competitors (you probably have a good idea of their staff numbers and revenue) as a comparative measure. It's a bit different to the traditional measures but as Part 2 will show next month, the usual metrics are not that straight forward anyway...